New York DPS Staff Seek Comment On Requiring Municipalities To Send Separate Communication To Customers (Aside From Opt-Out Letter) When Muni Aggregation Rate Exceeds Historic Utility Rate

May 25, 2023

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Reporting by Paul Ring • ring@energychoicematters.com

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New York Department of Public Service Staff have considered, and asked for stakeholder comment on, a new requirement for community choice aggregations (CCAs) under which the municipality would have to separately communicate to customers, apart from the opt-out letter sent from the CCA administrator, a rate which will exceed the utility posted 12-month trailing average rate

Staff's consideration came in a proposal to modify the Community Choice Aggregation outreach and education requirements, to implement certain other directives from a January 2023 PSC order on CCA program changes

Staff cited the existing requirements for CCA pricing, which are: Fixed-rate products shall be limited to a price no greater than 5% above the trailing 12-month average utility supply rate, and variable-rate products must guarantee a savings compared to what the customer would pay as a full-service utility customer. A CCA's renewable product offerings do not have a price cap.

As the PSC did not adopt a price cap on renewable CCA offerings in its January 2023 order, the PSC in such order directed that any pricing premium shall be disclosed on the opt-out letter

Staff's proposal addresses this requirement, but would also require further disclosure of any premium in a CCA's filing with the PSC

Staff proposes that when a CCA Administrator’s Municipality Filing with the PSC includes a product offering with pricing higher than the utility posted 12-month trailing average (regardless of whether the plan is renewable; an up-to 5% premium is permitted for regular products as noted above), the municipality will need to affirmatively acknowledge the pricing differences between the CCA program and the distribution utility, as well as indicating their understanding of the potential bill impacts that would be experienced by CCA program participants. This acknowledgement would be included as part of the Municipality filing, Staff proposes

Notably, "Staff has further considered a requirement that municipalities communicate such pricing disparities directly to participating customers," Staff said

"This would result in two communications to the customer; one from the CCA Administrator via the opt-out letter and another from the municipality," Staff said

Staff did not propose a specific mechanism for any such direct price premium notification from the municipality to customers (e.g. whether the communication must be sent directly to the customer, through whatever means (letter, etc.), or if CCA informational postings or announcements not sent directly to customers would be sufficient)

"Staff seeks comment on the feasibility of such a notification and the form it could take," Staff said

Staff provided rationale for its proposal as follows: "Over the last few years, due predominantly to volatile market conditions, there has been an increase in the number of contracts that included pricing higher than the utility posted 12- month trailing average for both standard and renewable supply product offerings. The CCA Modification Order imposed additional pricing requirements to CCA product offerings. However, there is still a responsibility for ensuring potential participant awareness of these pricing differences and the potential for an increase in customer bills. The municipality, who is making the decision to go forward with the pricing on behalf of all eligible participants, has a responsibility to customers who would be opt-out enrolled under these pricing terms. This municipal acknowledgement is intended to ensure that municipalities and the potential program participants are aware of the pricing and its potential for unfavorable bill impacts on participants."

Case 14-M-0224

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