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New York PSC Adopts Price Limits For Municipal Aggregation Rates, Except For "Renewable" Products

PSC Doesn't Directly Address Opt-Out Community Distributed Generation (Pending In Another Case), But Directs Proposal For Statewide Solar For All Program As Potentially Superior To Opt-Out CDG

PSC Finds Lack Of ESCO Participation in CCA RFPs "Concerning", Orders Staff Report On Guidelines For Deeming Solicitations Competitive, How To Increase Competition

January 19, 2023

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Copyright 2010-21
Reporting by Paul Ring •

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The New York PSC today adopted changes to the provisions governing community choice aggregation programs (CCAs, also known as municipal aggregations).

The PSC imposed pricing limits for "standard supply products" offered by CCAs, "consistent with the mass-market ESCO requirements."

"Fixed-rate [CCA] products should be limited to a price no greater than the trailing 12-month average utility supply rate plus a premium of no more than 5%, and variable-rate [CCA] products must be a guaranteed savings," the PSC ordered

However, the PSC said that, "Renewable product offerings will not have a price cap due to the limited ability to determine reasonableness of price."

The PSC did not specifically address whether "renewable" CCA products include renewable or green gas plans (which, as first reported by earlier today, the PSC has rejected for ESCOs, unless the green gas plans meet the standard price limits)

Concerning CCA renewable products, the PSC said, "[I]nstead of imposing a strict pricing requirement on renewable CCA offerings, the Commission adopts an additional consumer protection to ensure municipalities, and potential participants, understand the significant pricing difference before choosing to participate in a renewable product offering. Thus, Administrators offering a renewable energy product must include a disclosure on the opt-out letter regarding the price of renewable products compared to non-renewable offerings. In addition, Administrators offering a renewable energy product shall also explicitly disclose the product pricing, including a potential premium for renewable energy, at the post-award meeting detailing the supply contract terms and conditions."

Of stakeholders opposed to CCA price limits, the PSC said, "The Commission finds it concerning that parties seem to be more concerned about simply having a product to offer instead of ensuring that the CCA program creates a benefit for participating customers. CCA participants are only allowed to be opt-out enrolled when the necessary customer protections and requirements are in place and have been met. With the changes in the energy market, it is imperative that the Commission continues to ensure CCA participants are not being opt-out enrolled in a CCA program that is not providing a financial benefit, and may jeopardize the customer’s ability to maintain essential commodity service."

The PSC's order also establishes the price to compare to be used by CCAs

"[T]he Commission adopts the recommendation that the price to compare shall be the 12-month trailing average consisting of the utility rate plus Merchant Function Charge (MFC) plus any other defined adder that applies to utility supply customers but not ESCO customers," the PSC said

Furthermore, the PSC ordered that CCAs may not make comparisons to ESCO or other rates on the PSC's power to choose site.

"The Commission also affirmatively disallows the use of Power to Choose pricing not only for customer outreach and education but also in regard to the information given to the municipalities," the PSC said

"The Commission understands the CCA Administrator concerns that, especially in the current market conditions, it is becoming increasingly difficult to find and promote product offerings. However, this is a relatively recent change to the market and for the previous years of CCA program operations there have been no issues with how the price to compare was calculated. If the CCA Administrator is unable to obtain a bid for the municipality that is reasonable during the current market and feels the only way to represent program pricing in a positive manner is by deviating from existing practice for the price to compare, then it is questionable why the program should be going forward when the pricing is so much higher than the default utility price and there is no price benefit for the customer," the PSC said

"Opt-out enrolling customers in a product offering that will significantly increase their bill, without an adequate notice of rates and the price comparison, is not in the public interest. Customers must be provided with the information necessary to make an informed decision with respect to CCA participation," the PSC said

The PSC said that inclusion of a monthly price to compare on the utility bill for CCA customers will be addressed as part of the Commission’s generic Retail Access proceedings. "As utility systems evolve and the ability to show the price to compare on the bill for ESCO participants becomes available, that monthly price to compare shall also be available to CCA participants," the PSC said

The PSC also ruled that all CCA program participants on the same product are required to receive the same product pricing, regardless of when they were enrolled.

"Customers who enroll outside of the original opt-out period, whether due to the fact that they originally opted-out and are deciding now to participate or because they are new to the area, shall be enrolled on the same rate as if they had enrolled during the original opt-out period," the PSC said

The PSC also adopted changes to make price to compare and other information more accessible to customers

Specifically, the price to compare, as well as other data noted below, shall be included on mandatory CCA program websites

The information to be posted on a CCA program's website includes, "the CCA Administrator name and contact information; a list and link to all participating municipalities’ program information, including contract information with rates, identification of the ESCO providing commodity, price to compare information, opt-out periods, and outreach and education; municipal liaison information; customer service and complaint filing information; links to clearly identified opt-in offerings; links to the Department’s CCA webpage and New York State Energy Research and Development Authority (NYSERDA) CCA resource information (NYSERDA CCA Toolkit); contact information for incumbent utility; and adopted FAQs," the PSC said

"Up to this point, this level of program transparency has not been easily available," the PSC said

With respect to whether the CCA name should appear on the customer's utility bill, the PSC ruled that the CCA Administrator name (not the program name) shall be added to the utility bill -- in addition to (not in place of) the ESCO name which currently appears on the bill (as the CCA's supplier)

"Additionally, the contact information provided on the bill shall be for whomever is performing customer service for the municipal program, whether it is the ESCO or the Administrator," the PSC said

The PSC adopted a requirement that a customer’s choice to not participate in the CCA (opt-out) shall be recognized for the life of the program (not only the current supply term) and the responsibility for tracking that choice falls on the CCA Administrator.

"The Commission does not agree with Roctricity that the opt-out should only last as long as the length of the supply contract. If a customer changes their mind about participation, they can always opt-in to the program. Continuing to try to opt-out enroll customers that have clearly expressed that they do not want to participate is overburdensome on the customers and in contradiction to the customer’s stated choice," the PSC said

The PSC will no longer require opt-ins to a CCA to be verified as ESCO enrollments must be verified

"The Commission agrees that continuing to use the customer authorization verification process for customers calling to opt-in to a CCA program can lead to customers choosing not to participate," the PSC said

"While the CCA Framework Order suspends this requirement for opt-out enrollment, it does not for opt-in CCA program enrollments. When a customer is calling to opt-in, they are initiating the engagement and affirmatively making the choice to participate. Conversely, in typical ESCO enrollments, the ESCO is initiating the engagement with the customers in an effort to enroll that customer in commodity service. Therefore, the Commission suspends the requirements of UBP Section 5(B)(1) for CCA program opt-in enrollments only and reserves the right to reinstitute this requirement in the event it is needed," the PSC said

The PSC ruled that CCA opt-out letters may not include specific offers for additional services provided by the CCA on an opt-in basis, nor can the opt-out letter be used to opt-into such additional offerings. The opt-out letter may generally inform customers of additional services, and direct customers to where they may find additional information

"[T]he Commission adopts the requirement that additional opt-in product offerings not appear on the CCA supply opt-out letter. Instead, the opt-out letter can point CCA program participants to where they might find these additional offerings through a website link, phone number, etc., but CCA participants cannot opt-in to additional offerings using the opt-out letter," the PSC said

Concerning ESCO participation in CCA RFPs, the PSC said that the, "The Commission agrees with M&R [Energy Resources] that the lack of ESCOs participating in the CCA market is concerning and finds there has been a lack of competition in some of the bids."

"This has led to instances where only one bid was received, and that bid was subsequently accepted even though it was a much higher rate than previously, and no customer benefit could be demonstrated," the PSC said

"There should never be a case where a contract is signed because it was the only choice in order to keep the program going. In other words, the continuance of the CCA program should not take precedence over the benefit to customers," the PSC said

"The Commission adamantly agrees with M&R that this is problematic and therefore directs Staff to file, within 90 days of the effective date of this Order, proposed standards related to requests for proposals and energy service agreements, including but not limited to, standards for what constitutes a competitive solicitation, ways to promote the competition in CCA solicitations, pricing and education, and customer benefits. These requirements would ensure competitiveness and consumer protections are prioritized and in place. Once adopted, these changes would be included as part of the outreach and education templates including the outreach and education record, opt-out letter, and RFP/ESA guidelines," the PSC said

During a discussion of the CCA order, which appeared on the consent agenda, Commissioner Diane Burman suggested that the PSC's retail market reset order, and the manner it was adjudicated and adopted, has chilled ESCO participation in the CCA market

Concerning CCA public outreach, the PSC directed Staff to propose changes to outreach requirements to drive more customer engagement

The PSC said that, "the Commission has become increasingly aware of the need for changes to the outreach and education requirements, including: (1) extending the outreach and education period; (2) increasing the number of necessary items and events; and (3) requiring additional outreach and education when a CCA Administrator is unable to prove sufficient community awareness of opt-out enrollment or when there is a specific circumstance that should require additional outreach and education events to be performed in a community."

"Based on on-going feedback and complaints from participating communities, there continues to be a lack of awareness of the CCA program and, in some instances, this is supported by CCA Administrator Outreach and Education records that show little to no participants at the CCA informational meetings," the PSC said

"The Commission finds that it is more important than ever to ensure that CCA Administrators are doing their due diligence in providing more than just adequate outreach and education to potential opt-out program participants and therefore directs Staff to file, within 90 days of the effective date of this Order, proposed changes to the outreach and education requirements to include, but not limited to, those discussed above. This proposal would be issued for public comment and subject to subsequent Commission approval, with the expectation that any changes would be reflected in a modified outreach and education template and CCA Rules," the PSC said

The PSC's order does not specifically rule on opt-out community distributed generation (CDG) other than reserving the issue, which is pending in another proceeding (and not adopting opt-out CDG in the instant order, without prejudging the outcome of the separate proceeding)

However, the PSC does note some concerns with opt-out CDG, and suggests that a statewide "solar for all" program could achieve the same goals in a superior manner

The PSC thus directed Staff to propose a statewide "solar for all" program

The PSC said, "In relation to its consideration of opt-out CDG, the Commission seeks more information on potential alternatives to the model that has been discussed to date. One potential avenue to furnish the benefits of CDG to more customers could be the adoption statewide of a program similar to the Expanded Solar For All (E-SFA) program approved in the Niagara Mohawk Power Corporation d/b/a National Grid (National Grid) service territory. For example, such a program could potentially provide benefits to a larger number of low-income customers than the proposed out-out CDG program. While the proposed out-out CDG program would serve low-income customers in a community first, only those low-income customers who reside in a CCA participating community would receive a benefit. Conversely, with a statewide solar for all program, all low-income customers – whether in a CCA community or not - would be able to benefit from CDG savings."

"The Commission is also interested in exploring the potential for added efficiencies through the solar for all model that could streamline CDG billing and crediting. The Commission will gain valuable experience with such a model as the E-SFA program, including the credit pooling mechanism, is implemented in the National Grid service territory, and seeks additional information of the scalability of a solar for all program statewide," the PSC said

"Thus, Staff is directed to, within 120 days of the effective date of this Order, file a proposal for the implementation of a statewide solar for all program. This proposal shall be issued for public comment before coming back to the Commission for a determination," the PSC said

The PSC did not adopt certain proposals concerning the treatment of CCA enrollment errors, "partly in recognition of existing HEFPA and ESCO UBP requirements."

However, the utilities were each directed to file, within 60 days, the specific daily transactional limitations of their billing systems so that the CCA Administrators and ESCOs can properly plan their enrollments without having to worry about crashing the utility systems (prior bulk submissions have led to such crashing). Additionally, when new systems or changes are made to existing systems that impact these daily transactional limits, the utilities should notify parties of the new limits, the PSC said

The PSC said that, when CCA electric programs in the Long Island Power Authority’s (LIPA) service territory become available, they will be approved consistent with existing CCA processes. Gas programs on Long Island are already approved consistent with these processes, the PSC noted

Case 14-M-0224


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