New York PSC Asked To Issue Declaratory Ruling On Applicability Of Broker Law, Exempt Certain Entities -- EnergyChoiceMatters.com

New York PSC Asked To Issue Declaratory Ruling On Applicability Of Broker Law, Exempt Certain Entities

November 17, 2023

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Reporting by Paul Ring • ring@energychoicematters.com

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Metergy Solutions LLC (Metergy) and Quadlogic Controls Corporation (Quadlogic, together with Metergy, the Companies) petitioned the New York State Public Service Commission (the Commission) for a declaratory ruling, or to address this issue in a related order, that, "(1) confirms submeterers and submetering service providers are not 'energy brokers' or 'energy consultants' within the meaning of Public Service Law (PSL) § 66-t, or, in the alternative, (2) exempts submeterers and submetering service providers from regulation under PSL § 66-t."

"Here, the Companies seek a declaratory ruling that the Broker Rules do not apply to submeterers and submetering service providers like Metergy and Quadlogic because the services provided by 'submeterers' and the Companies, which act on behalf of submeterers, do not meet the Broker Rules’ definitions of an energy broker or energy consultant. In the alternative, even if the Commission determines that submeterers and submetering service providers are encompassed by the Broker Rules, the Companies respectfully request the Commission elect not to apply the Broker Rules to submeterers and submetering service providers because those entities and activities are already closely regulated by the Commission and DPS Staff under the PSL and its implementing regulations (here, Part 96)," the Companies said

The Companies said, "According to the Order, an energy broker is a 'non-utility entity that performs energy management or procurement functions on behalf of customers or ESCOs, and (1) that assumes the contractual and legal responsibility for the sale of electric supply service, transmission or other services to end-use retail customers, but does not take title to any of the electricity sold, and does not make retail energy sales to customers.' Neither submeterers nor the submetering service providers that act on their behalf fit within this definition."

The Companies said, "As an initial matter, submeterers are 'utilities' under the PSL and Commission precedent. Specifically, PSL § 53 expressly defines a 'utility' as 'any entity that, in any manner, sells or facilitates the sale or furnishing of gas or electricity to residential customers.' By definition, submeterers sell electricity service directly to building residents tenants based on their individual electric consumption. Therefore, the Commission has long held that submeterers are utilities under PSL § 53. Since submeterers are utilities within the PSL and Commission precedent, submeterers cannot be 'non-utility entities' and fall under the definition of an energy broker."

The Companies said, "In addition, unlike energy brokers, submeterers 'purchase electricity for delivery by the utility to the premises and facilitate the sale or redistribution of such electricity for use by the premises occupants whose units are separately metered and billed based on the measurement of electricity use in each occupant’s unit.' In purchasing and selling/redistributing electricity to building residents, submeterers are plainly taking title to the electricity. For this reason as well, submeterers cannot fall within the definition of an energy broker."

The Companies said, "With respect to the Companies’ services, none of them are activities that are encompassed by the definition of energy broker, regardless of whether submeterers are considered energy brokers. For example, neither Metergy nor Quadlogic are 'assuming the contractual or legal responsibility for the sale of electric supply service' to end-use customers. Rather, Metergy simply provides, for example, submetered reading and billing and invoicing services on behalf of submeterers while Quadlogic assists submeterers in obtaining the necessary approvals to submeter and provides the submeters themselves. Since neither company is 'assuming the contractual or legal responsibility for the sale of electric supply service' to end-use customers, the Commission should likewise determine that the Companies are not energy brokers within the meaning of the Broker Rules."

The Companies said, "the Order defines energy consultants as entities that 'receive valuable consideration for acting as agents of a third party or an end-use retail customer, or as intermediaries between an end-use retail customer and a third-party, in the soliciting, negotiating, or advising of energy contracts,' or 'those acting as an agent in accepting an energy contract on behalf of an ESCO or DER provider.' Neither submeterers nor the submetering service providers that act on their behalf fit within this definition."

The Companies said, "Neither submeterers nor submetering service providers act as intermediaries for the purpose of soliciting, negotiating, or advising energy contracts or accept contracts on behalf of ESCOs or DER providers. Instead, submeterers directly provide electric service to tenants. In taking title to the electricity from the distribution utility company and reselling that electricity to its residents, the submeterer effectively steps into the place of the distribution utility company—indeed, becoming a utility itself as noted above—and are therefore not acting as an intermediary on any third-party’s behalf. Similarly, submetering service providers, such as Metergy and Quadlogic, are not involved in the soliciting or negotiation of electric contracts on any party’s behalf and instead merely provide various submetering support services such as reading and billing, complaint resolution, and submeter maintenance. Since submeterers and submetering service providers are not acting as agents or intermediaries in the negotiation or solicitation of electric contracts, these entities should also not be considered energy consultants under the Broker Rules."

The Companies said, "the Commission already strictly regulates submetering. For example, in order to provide submetered electricity to building residents, a prospective submeterer must seek Commission approval. As part of its application to the Commission for approval, the prospective submeterers must provide, among other things, a description of the methods to be utilized for calculation of bills (along with the entity that will conduct billing services and outreach and education to tenants), plans for compliance with the 'rate cap' and the Home Energy Fair Practices Act, and a completed submetering identification form. Further, the submeters utilized must also be Commission approved."

The Companies said, "Since the Commission and DPS Staff already strictly regulate submetering, applying the Broker Rules to this segment of the energy market would be duplicative, confusing, and inefficient.32 Thus, even if submeterers and submetering service providers fall under the definition of energy brokers or energy consultants, the Commission should elect not to apply the Broker Rules to submetering and submetering service providers for the same reasons it chose not to apply them to CCA administrators"

Case 23-M-0106

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