New York Bill Would Ban ESCOs

NY Round-Up: On-Bill Rate Comparisons, Material Changes, CCA Price Cap

January 26, 2021

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Reporting by Paul Ring • ring@energychoicematters.com

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A bill, A01382, has been introduced in the New York Assembly, which, according to its summary, would, "ban[] non-state run energy services companies," or ESCOs

With ESCOs being banned, Section 349-d of the general business law (ESCO consumer bill of rights) would be repealed

A01382 would allow the New York Power Authority to supply end-use customers, though such supply must be entirely from renewable energy.

The bill would also give NYPA the right of first offer and refusal for acquiring any renewable generation facility, renewable energy generation project, and any power or energy created by a renewable generation facility or renewable energy generation project

A memo accompanying the bill states, "With the passage of the CLCPA, New York State has a mandate to scale up our renewable energy infrastructure. But currently, New York only gets around 5t of its energy from wind and solar, and most renewable energy in the state is purchased from Energy Service Companies (ESCOs). ESCOs employ predatory practices and are nearly always more expensive than obtaining generation through a utility, overcharging between $30 and $40 million/month. This bill would ban ESCOs and instead allow the New York Power Authority to build, purchase, and sell affordable 100% renewable energy to all New Yorkers. NYPA is the Most financially viable entity for scaling up renewables at the scale needed as it has the lowest cost of capital, doesn't need to generate a profit for shareholders, and can make renewable energy a right for all New Yorkers regardless of income, race, or class. This bill unleashes NYPA, giving it the ability to own new renewable energy generation and have the right of first offer on all new generation projects. It commits us to the renewable energy transition that New York State needs while maintaining democratic oversight of our energy system."

On-Bill ESCO Rate Comparisons

A01886 / S00438 would require the first bill of any bill to an ESCO customer (either utility consolidated bill or ESCO-generated bill) to include a side-by-side of the ESCO rate and the default service rate

A01886 / S00438 would also require the inclusion of an itemized list of prices charged by the ESCO for any energy-related value-added products provided by the ESCO during the prior billing period

Furthermore, A01886 / S00438 would require that, every twelve months, an ESCO shall provide each of its customers with a statement comparing the price charged by the ESCO for commodity and delivery services and other energy-related value-added products over the prior twelve-month period with the price such customer would have paid had they taken commodity and delivery service from their local utility corporation or municipality, as applicable, for such period.

Such statement shall convey such information in a manner that, "unambiguously conveys whether the customer is saving money or paying a premium for service from the ESCO over such period."

ESCO Material Contract Changes

A01006 / S02751 would add to the existing prohibition on material changes to contracts without express customer consent language explicitly stating that a change in price or change from fixed to variable rate is a material change

Specifically, the bill would modify the existing provision that, "No material change shall be made in the terms or duration of any contract for the provision of energy services by an ESCO without the express consent of the customer," by adding text stating that, "A change in price or a change to or from fixed or variable pricing shall be deemed to be material."

As under the current statute, the prohibition on material changes would not prohibit auto-renewals subject to notices as provided for in the existing statute; however, A01006 / S02751 would prohibit imposition of an early termination fee for any automatic renewals which include a material change to which the customer did not give express consent.

A01006 / S02751 would also require ESCOs to provide a comparison to utility rates in their renewal notices.

Specifically, the renewal notice shall include: "(i) the price charged for energy services; (ii) the price it proposes to charge upon renewal; (iii) the price that is charged by the customer's distribution utility; and (iv) information notifying the customer how they may compare past bills with what they would have been charged had they received energy services from their respective distribution utility, including, the internet address of any bill calculator offered by such customer's distribution utility's website."

Municipal Aggregation Rate Cap

A01626 would subject municipal aggregations (CCA) to commodity supply price caps, and allow CCAs to offer renewable and energy efficiency services

Specifically, A01626 provides that in awarding a supply contract to an ESCO, the CCA must ensure that per kWh supply rate for electricity and per Btu rate for gas supply services at the initiation of service is lower than the distribution utility's average monthly rate for supply services for the prior 12-month period, or lower than the distribution utility's rate at the time of a request for bids

This price cap does not prohibit CCA customers from voluntarily paying higher rates to the CCA to pay for and receive ownership benefits from energy efficiency retrofits and/or renewable distributed generation

The bill also includes requirements for the utilities to provide various information, both aggregate and customer-specific, to the CCAs, apart from and prior to customer enrollment

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