New York PSC Clarifies Definition Of Small Non-Residential Customer, Affirmative Consent In Retail Energy Reset Order

Clarifies Use Of 12-Month Average Utility Supply Rate For ESCO Price Limit

Broadly Denies Rehearing Sought By ESCOs

September 18, 2020

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Reporting by Paul Ring • ring@energychoicematters.com

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The New York PSC issued an order on rehearing and clarification concerning its December 2019 retail energy market reset order which denied all rehearing requests, but did grant several clarifications

Definition Of Small Non-Residential Gas Customer

The PSC's December 2019 order applies to residential and small non-residential customers (mass-market customers). Under the 2019 order, small non-residential electric customers are defined by the PSC as non-demand metered customers and small non-residential gas customers are defined as those using less than or equal to 750 dekatherms (dth) per year

As previously reported, ESCOs sought rehearing and/or clarification of the small non-residential gas customer definition

The PSC, at this time, denied sought modifications to the definition of small non-residential gas customer, but did direct that Track II further review the issue

"Absent a more specific showing on this point in future proceedings, credible record evidence supported the conclusion that the Commission’s current definition of small non-residential gas customer captured commercial customers that are in need of greater consumer protections because they have, like other customers that fell within the mass market’s definition, generally failed to receive benefits from the existence of the retail market," the PSC said

"Given the ongoing disagreement on this point, however, including differing factual assertions, the Commission directs that Track II of these proceedings further consider whether the current definition of a small non-residential customers that would fall within the mass market and, as a result, be subject to greater consumer-protections regulation, best balances consumer interests. The definition of small non-residential customer shall be addressed in Track II of these proceedings, with a revised definition proposed to the Commission for consideration, as appropriate. During the pendency of Track II, the Commission will continue to use the definition of small non-residential customers in the December 2019 Order," the PSC said

The PSC did clarify certain issues related to the definition of mass market customer at this time.

"We recognize, however, that questions raised by some petitioners regarding the current definition of a mass-market customer demonstrate the need for further clarification that will provide beneficial regulatory certainty. Thus, the Commission offers the following clarifications regarding the categorization of small non-residential customers," the PSC said

"Whether a customer is a mass-market customer is considered on a per commodity basis; a customer may be a mass-market customer for natural gas but not for electricity, or vice versa," the PSC said

"The Commission further clarifies that the 750-dekatherm, or its equivalent, ceiling for natural gas small non-residential customers is intended to be considered in the aggregate as to all non-residential accounts held by that customer. Accordingly, the dekatherm use of a customer holding multiple commercial gas accounts should be considered in aggregate. As to aggregation for electric customers, an electric customer is not a mass-market customer if it has one or more demand metered accounts," the PSC said

"The annual look-back for determining where a small-nonresidential customer falls in regard to the 750-dekatherm threshold is determined at the time the parties enter the contract. The ESCO must, at that time, assess the most recent available billing data regarding customer’s prior twelve-month usage to determine the customer’s status in regard to the mass market. For any ESCO contract that has the duration of less than a year but which contains an automatic renewal clause, the ESCO is not required to reassess usage before each renewal; the ESCO is, however, required to assess the customer’s prior 12-month usage no less than once a year," the PSC said

Affirmative Consent Requirements

Several petitioners asserted that the affirmative consent requirements of the December 2019 Order require clarification.

The December 2019 Order directed that affirmative consent is not required for a customer transitioning to a variable rate product that guarantees savings, but went on to require such consent for "any change to a customer’s rate or product or service type."

The PSC said that, "This language was intended to be apply [sic] to all material changes other than the change to a variable rate product that guarantees savings discussed previously in the order. The Commission hereby clarifies that renewal of a variable rate product that guarantees savings, or renewal to a product the guarantees [sic] savings, provides an exception to the affirmative consent requirement."

"Other changes in product and service types, including changes to price and type of compliant product (fixed-rate product to renewable product, or a change in a fixed-rate for any reason, for example) shall require affirmative customer consent," the PSC said

ESCO Pricing, Product Limits

The PSC denied rehearing of the product limits adopted in the December 2019 order.

As previously reported, the PSC in December 2019 adopted various product and pricing limits for ESCO service to mass market customers. Under the December 2019 order, ESCOs are limited to offering mass market customers: (1) a guaranteed savings (versus the utility) plan, (2) a fixed rate product that is limited in price to a 12-month trailing average utility supply rate plus a 5% premium, or (3) for electricity only, a 50% (above the minimum RPS) renewable plan that meets deliverability and other requirements in the order.

"As the arguments raised by the petitions on this point simply reiterate the arguments advanced through the administrative hearing process and represent only a disagreement with the policy decision reached in the December 2019 Order, the ESCOs have failed to provide a basis for rehearing," the PSC said

The PSC did clarify implementation of a fixed rate product that is limited in price to a 12-month trailing average utility supply rate plus a 5% premium

"[I]n response to requests for clarification, the Commission provides the following clarification to this requirement. Regarding the contracting process when utilizing the trailing twelve-month average utility supply rate, the operative date is the date of contracting with the customer. The twelve-month average utility supply rates will be posted each quarter and any customers who are enrolled on a fixed-rate product must be enrolled in a product that is no more than 5% greater than the trailing 12-month average utility supply rate currently posted at the time of enrolling the customer. That fixed-rate shall remain applicable for the term of the agreement, regardless of subsequent changes to the trailing 12-month average utility supply rate," the PSC said

The PSC did not grant rehearing regarding any aspect of the 50% renewable electric product, including the locational and delivery restrictions placed on RECs from the December 2019 order

The PSC specifically denied adoption of a green gas product as an exception to the pricing limits at this time

"Some petitioners argue that the December 2019 Order fails to address the issue of ESCO 'green gas' products in that the only permissible renewable product provided for under the December 2019 Order is a green electric product. These petitioners assert that allowing ESCOs to offer a renewable electric product while not providing for a renewable gas product is arbitrary and capricious. The Commission disagrees," the PSC said

"While the Commission is aware of the petitions filed by ESCO requesting a waiver to offer various 'green gas' products, virtually no evidence related to such products was provided by the ESCO parties during the hearings. Conversely, there is ample record basis supporting a renewable electric product," the PSC said

"[W]hile the Commission is not foreclosing the option of a product offering intended to provide a renewable generation component to offset natural gas usage, an insufficient record was developed during the administrative hearing to provide for a green gas product in the December 2019 Order, or in this Order on rehearing. The Commission may revisit the 'green gas' option in response to the ESCO petitions mentioned above, or generically as part of Track II," the PSC said

As previously reported, the December 2019 order specifically allowed Agway to offer an energy-related value added (or ERVA) service (its repair protection plan) without being subject to the pricing limits. Other ESCOs argued that the order should authorize all ESCOs to offer a similar plan without being subject to the pricing limits

The PSC denied rehearing on this issue

"Agway made use of the administrative process to demonstrate that its EnergyGuard product provided unique value. The fact that Agway provided a clear record basis regarding product value explains why the Commission was able to immediately allow it to continue offering that product," the PSC said

"The Commission may, should an appropriate circumstance arise, permit other ESCOs to offer a similar product, and an ESCO can submit a petition for a waiver to offer such a product. To reiterate, this is another opportunity that permits an ESCO to depart from the satisfying the default price-guarantee rule, and ESCOs can avail themselves of this prior to the completion of Track II of these proceedings. Through the Track II collaborative process, additional ERVA products and services may be developed and proposed for Commission approval," the PSC said

Compliance Deadline, Existing ESCO Eligibility Re-applications

The PSC said that the modified UBP adopted in the December 2019 Order and amended for clarification by the instant Order shall be effective 150 days from the effective date of the instant Order, while the deadline by which all ESCOs are to file a revised eligibility application shall be 60 days from the effective date of the instant Order

Ordering Clauses

The PSC's order included the following ordering clauses, among others

3. Effective 150 calendar days from the date of this Order, energy service companies (ESCOs) shall enroll new residential or small non-residential customers (mass-market customers) or renew existing mass-market customer contracts for gas and/or electric service only if at least one of the following conditions is met:

(A) enrollment includes a guaranteed savings over the utility price, as reconciled on an annual basis;

(B) enrollment is for a fixed-rate commodity product that is priced at no more than 5% greater than the trailing 12-month average utility supply rate; or

(C) enrollment is for a renewably sourced electric commodity product that

(i) has a renewable mix that is at least 50% greater than the ESCO’s current Renewable Energy Standard (RES) obligation as demonstrated by the procurement of Renewable Energy Credits (RECs) and/or the making of Alternative Compliance Payments (ACPs) equal to the number of megawatt hours (MWH) associated with that renewable mix,

(ii) the ESCO complies with the RES locational and delivery requirements when procuring RECs, and

(iii) there is transparency of information and disclosures provided to the customer with respect to pricing and commodity sourcing.

(D) enrollment is for a product or service otherwise expressly authorized by the Commission.

4. Effective 150 calendar days from the date of this Order, any mass-market customer contract for a fixed-rate commodity service that is subject to automatic renewal shall be renewed by the ESCO only as a contract for variable-rate, commodity-only service that includes a guaranteed savings over the utility price, unless the ESCO obtains affirmative customer consent to renew the contract as a fixed-rate contract that is priced at no more than 5% greater than the trailing 12-month average utility supply rate.

5. Revisions to Sections 1, 2, and 5 of the Uniform Business Practices are adopted in accordance with the discussion of the body of this Order, as well as the discussion in the body of the Order Adopting Changes to the Retail Access Energy Market and Establishing Further Process, issued December 12, 2019, in these proceedings (December 2019 Order). The revisions shall be effective 150 days following the date this Order is issued.

6. ESCOs currently operating in New York that intend to continue to renew contracts with customers in New York and/or enroll new customers in New York following the effective date of Ordering Clause No. 3 (i.e., 150 calendar days following the date of this Order) are directed to file an application in accordance with the body of this Order as well as the December 2019 Order no later than 60 calendar days of the date of this Order.

7. Electric and gas distribution utilities that have tariffed provisions providing for retail access are directed to file tariff amendments or addenda to incorporate or reflect in their tariffs the Uniform Business Practices revisions approved in Ordering Clause No. 5. The tariff revisions shall be filed, on not less than one day’s notice, to become effective on or before February 12, 2021.

The order on rehearing is available here

Case 15-M-0127 et al.

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