Direct Energy Urges New York PSC To Act On Its Green Gas Proposals, Leave Issues Related To "Secret" Products Proposed By Competitors To Further Proceedings

Direct Energy Says Approval Of Competitors' Plans Without Public Disclosure May Contravene Constitutional Prohibition On Grant Of "Exclusive Privilege"

June 8, 2020

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Reporting by Paul Ring • ring@energychoicematters.com

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In May 29 comments to the New York PSC, Direct Energy Services, LLC and Gateway Energy Services Corporation urged the Commission to act expeditiously on Direct Energy’s publicly disclosed green gas proposals, "while leaving to another day the complex issue of how to obtain meaningful public comments on the confidential proposals of," several other ESCOs

See background on Direct Energy's proposed green natural gas plans here. Direct Energy did not file any details of the plans under seal

As previously reported, Direct Energy is seeking a declaratory ruling from the PSC, finding and declaring that each of Direct Energy’s Green Gas Programs for mass market customers constitutes an Energy-Related Value Added ('ERVA') service that may be offered to mass-market customers without an additional requirement of being paired with a compliant guaranteed savings or fixed-rate product as required by the Commission’s Order Adopting Changes to the Retail Access Energy Market and Establishing Further Process issued on December 12, 2019

"The Commission can and should act expeditiously to authorize all ESCOs to offer Direct Energy’s 'RGGI Gas' and 'Cleaner Heat' gas products to their mass market customers. The 60 day period for comments on these product offerings initiated by the Commission in response to Direct Energy’s February 28, 2020 Petition expired on May 24, 2020. Moreover, both the NRG Companies and Spark have made clear their willingness to also provide these products to their mass market customers once they are approved by the Commission, and no comments have been submitted in opposition to either of those proposals. Accordingly, the Commission can and should act at its Session Meeting currently scheduled for June 11, 2020, to make these products available to all ESCOs serving mass market gas customers as soon as possible," Direct Energy said

A preliminary June 11 agenda issued by the PSC does not show consideration of Direct's petition on the agenda. The agenda is subject to change

Direct Energy noted that several other ESCOs (collectively referred to as "Indicated Petitioners") have filed for waivers or declaratory orders for their own green gas programs, but have sought confidential protection for information concerning the plans, and filed substantive details of the plans under seal

Direct Energy noted that, "The Notice of Proposed Rulemaking for Alpha’s and Kiwi’s confidential, ESCO-specific green gas proposals appeared in the April 29 and May 27, 2020 editions of the New York State Register, respectively. The comment periods established in those notices end on June 28, and July 26, 2020, respectively. Notices of Proposed Rulemaking for the confidential, ESCO-specific green gas proposals submitted by the rest of the Indicated Petitioners have not yet appeared in the New York State Register." [as of Direct's May 29 comments]

"The Commission should take care to ensure that the belated submission of Indicated Petitioners’ confidential, ESCO-specific green gas proposals will not unfairly delay prompt action on Direct Energy’s pending green gas proposals. This is particularly true in light of the fact that each of these proposals raises a number of complicated legal issues which may take some time to resolve," Direct Energy said

Among other things, Direct Energy alleged that, "Indicated Petitioners’ secret rulemaking proposals do not appear to be consistent with New York’s State Administrative Procedure Act."

Direct Energy said that, "Section 202.1(f)(v) of New York’s State Administrative Procedure Act ('SAPA') requires that any notice of proposed rulemaking issued pursuant thereto contain 'the complete text of the proposed rule,' unless such text exceeds two thousand words, whereupon 'the full text of such statement shall be posted on a website maintained by the agency.'"

Direct Energy alleged that, "By redacting the details of their proposals from the public versions of their green gas petitions posted in DMM and by submitting the full details of those proposals to the Commission only subject to a demand for exemption from disclosure under FOIL, each of the Indicated Petitioners has created a situation in which it may be difficult if not impossible for the Commission to fulfill its obligation to obtain meaningful comments on their proposals. Because it would be unwise for the Commission to approve those proposals until all interested parties are provided with a full and fair opportunity to provide meaningful comments on those proposals, the Commission should leave the issues raised in the petitions submitted by the Indicated Petitioners for resolution at a later date."

Direct Energy further alleged that, "approval of green gas offerings on a trade secret basis may violate Article III, § 17 of the New York State Constitution."

Direct said that Article III, § 17 of the New York State Constitution provides, in pertinent part, that, "The legislature shall not pass a private or local bill . . . [g]ranting to any private corporation, association or individual any exclusive privilege, immunity or franchise whatsoever."

"As a creature of the Legislature exercising only delegated legislative powers, the Commission is also subject to this limitation on its permissible actions," Direct Energy said

"By seeking Commission approval of a product offering that other ESCOs and utilities are not authorized to provide -- or even to know about -- Indicated Petitioners appear to be seeking to use the Commission’s regulations implementing FOIL to create precisely the sort of 'exclusive privilege' that Article III, § 17 of the New York State Constitution prohibits both the Legislature and the Commission from granting. Thus, the Commission may well be without jurisdiction to consider or approve any of these proposals at this time," Direct Energy alleged

Direct Energy also alleged that, "granting the trade secret approvals requested by indicated petitioners may undermine the proper operation of competition and market mechanisms."

Direct Energy quoted the PSC's emphasis on the need for transparency of product information and disclosures to assist customers in their choices, as set forth in the PSC's recent retail market reset order

"Indicated Petitioners’ requests for Commission approval of their green gas proposals on a confidential basis would deprive consumers and competitors alike of this essential transparency and would therefore appear to be inconsistent with the proper operation of market mechanisms and consumer choice essential to the proper operation of competitive markets," Direct Energy alleged

Case 15-M-0127 et al.

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