New York PSC Denies NYPA Overture To Gain Competitive Advantage Over ESCOs In Serving As Retail Supplier To Customers

New Category Of NYPA Customers Will Continue To Be Charged Same Delivery Surcharges As ESCO Customers

January 22, 2021

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Copyright 2010-21 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

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The New York PSC yesterday approved utility tariff amendments to implement previously reported changes in state law that allow the New York Power Authority to act as the supplier (LSE) for a broader universe of customers (new NYPA customers), and, in doing so, the PSC did not exempt such new NYPA customers from various public policy delivery rate surcharges

Under the statutory changes, NYPA was additionally authorized to sell, as an LSE, up to 400 MW of market power to public entities and NYPA power customers (i.e., entities participating in one of NYPA’s economic development programs). NYPA also received authority to supply municipal aggregations

NYPA's current supply program, for economic development, exempts customers from various public policy surcharges (e.g. the SBC and related charges).

NYPA argued that since the statutory changes were silent with respect to the imposition of the public policy surcharges on the new NYPA customers, new customers under the expanded cap (e.g. public entities and expanded service to existing customers) should be exempt from the surcharges as well. NYPA did not specifically opine on application of the surcharges to municipal aggregations (CCAs)

The New York utilities opposed NYPA's interpretation, and noted that expansion of surcharge exemptions affects all customers, because it would result in shifting the expense of clean energy and other public benefit programs to customers not supplied by NYPA. The utilities said that when the New York State Legislature, and the Commission, have permitted delivery surcharge exemptions for participants in economic development programs, they did so expressly, which is not the case in the recent statutory changes.

Central Hudson had also noted that exempting new NYPA customers from the public policy delivery surcharges would provide NYPA with a competitive advantage over other ESCOs

"Authorizing delivery surcharge exemptions for NYPA customers and public entities receiving power under the extension of NYPA power supply service enabled by the amendments to PAL §1005 would provide NYPA with an unjustified competitive advantage over other energy services companies, and increase the rate burden on the Company’s remaining NYPA-ineligible customers," Central Hudson had said

To the extent the surcharge exemption was granted to NYPA-supplied CCAs, the joint utilities warned that, "such an exemption would create an unfair playing field in New York State between CCA communities that have contracted with NYPA for supply and those that have not."

The utilities had said that, "This exemption could also result in significant cost shifts to non-NYPA supplied customers, if, for example, NYPA becomes a dominant supplier to CCA communities as a result of an ability for its customers to avoid contributing to state clean energy programs. Given the PAL’s broad reach, this result could spur significant NYPA expansion into CCA communities throughout the State, which could shift significant costs to all remaining customers not participating in a NYPA-supplied CCA. Such a change also has the potential to substantially undermine Commission-approved and customer-funded clean energy programs, as it would presumably eliminate the ability of NYPA-supplied CCA customers from participating in utility clean energy programs. It would also necessitate a fundamental rethinking of the scopes and budgets of Commission-approved utility clean energy programs."

The PSC rejected NYPA's argument, and accepted the utilities' tariff filings that will charge new NYPA customers the same delivery surcharges applicable to other customers

Although a written order was not yet available, discussion during yesterday's PSC session indicated that the PSC found that the exemption from the delivery surcharges is not mandated under the legislative amendments

Case 20-E-0376

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