Retail Suppliers Concerned New York PSC's Broker Rules Could Expose Them To Liability For Violations Of New York Labor Law Concerning Timely Commission Payments

August 3, 2023

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Copyright 2010-23 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

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The New York Retail Choice Coalition (NYRCC) sought an extension of various deadlines under the New York PSC's recent broker/consultant regulation order, raising, among other issues, concern about the interplay between the PSC's broker order and other New York laws

As previously reported, the PSC's order prohibits ESCOs from paying compensation to brokers/consultants that are not registered with the commission as such, including ceasing compensation under existing contracts for entities which do not register or whose registration lapses

Among other things, NYRCC sought, "Assurance that compliance with this rule will not violate labor laws requiring timely payment of commissions to sales representatives."

NYRCC said that N.Y. Lab. Law § 191-c (2023) states, "A principal who fails to comply with the provisions of this section concerning timely payment of all earned commissions shall be liable to the sales representative in a civil action for double damages."

NYRCC also sought clarification on the following:

• "Clearly defining the scope of activities that trigger the requirement for entities to register as a consultant and/or broker. It is imperative that third-party vendors and ESCOs/DERs have a clear and consistent understanding of this rule, and furthermore, that their understanding is consistent with Department of Public Service Staff ('Staff'). For example, many industry participants question whether referral partners or 'introducers' are required to register."

• "Whether there are circumstances that would exempt individuals/entities that exclusively work for a single vendor or directly for the ESCO on a 1099 basis ('1099 Agent') from the registration requirement. For example, if the 1099 Agent’s activity is de minimus, only referring friends and family to the ESCO, or if the 1099 Agent works exclusively for a registered Energy Consultant or Broker."

• "How to comply with the new rule prohibiting ESCOs from doing business with unregistered vendors. ESCOs/DERs require specific guidance from Commission Staff on what constitutes, 'doing business' to navigate this issue."

• "Confirm that ESCOs may honor existing contractual arrangements with vendors and pay commissions to unregistered vendors for customer contracts executed prior to the effective date of the UBP Amendments (and that honoring these 'grandfathered agreements' will not violate the new rules)."

"We anticipate that many of these issues will be addressed and clarified during the Technical Conference. However, with the registration deadline and effective date of UBP Amendments only three weeks after the Conference, additional time is necessary for ESCOs to integrate the clarifications gained into their internal operations and processes or as necessary, gain further clarification from Staff (or the Commission directly) on matters not resolved through the Technical Conference. Moreover, third-party vendors that learn registration is required as a result of the clarity provided at the August 8 Technical Conference will need the extension to adequately prepare their registration packages. It is also worth noting that many vendors have been informed by financial institutions that obtaining Letters of Credit ('LOC') could take 4-8 weeks. The extension would allow them enough time to ensure they are able to secure these LOCs in compliance with the requirements," NYRCC said

The Coalition requested an extension of at least sixty (60) days following the Technical Conference scheduled for August 8, 2023

23-M-0106 et al.

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