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New York Revokes Eligibility Of ESCO
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The New York State Public Service Commission (Commission) said today in a news release that the PSC revoked Polaris Power Services LLC's (Polaris) eligibility to operate as an energy services company (ESCO) in New York State.
A written order was not available as of publication time
The Commission also acted against seven distributed energy resource (DER) companies for what the PSC said were allegations that the DER companies, "violat[ed] the Commission’s Uniform Business Practices rules."
“Every distributed energy resource provider and energy service company in New York must comply with all applicable orders from this Commission to maintain eligibility to operate in New York,” said Commission Chair Rory M. Christian. “If the companies fail to comply, we will take swift action to revoke their ability to do business in New York State or penalize them financially.”
The PSC said, "Taken together, these companies provide services to thousands of New York consumers across the state. If a consumer’s ESCO or DER is no longer allowed to do business in New York State, the consumer’s service reverts back to the local utility, or the consumer can select another energy provider."
In a Nov. 2024 order to show cause against Polaris, the PSC summarized allegations from Department of Public Service Staff which had alleged that Polaris had apparently violated UBP Section 2.5.b by allegedly failing to honor the terms of its sales agreements, which Staff alleged required Polaris Power to purchase a specific percentage of Renewable Energy Credits (RECs). DPS Staff had also alleged that Polaris had apparently failed to enroll mass market customers on compliant products, which would be a violation of a December 2019 Commission order.
As summarized by the PSC in Nov. 2024, Staff alleged that Polaris Power retired zero RECs in its Environmental Disclosure Program subaccount in NYGATS toward Polaris's voluntary renewable load, as allegedly required by Polaris's contractual sales agreement obligations with customers.
Staff also alleged that Polaris apparently enrolled mass-market customers on non-compliant commercial sales agreements.
In 2024, Staff alleged that Polaris Power was serving over 800 mass-market customers, but Staff alleged that only 30 of these customers were on a compliant product
Staff alleged that, in a response to Staff, Polaris Power had indicated:
1) “As of March 2024, we have identified approximately 888 Polaris’ accounts that are categorized by the utilities as mass-market, or non-demand metered, but that are linked to a demand-meter customer account.”
2) “In review of our records, we also identified 99 mass market accounts that were unintentionally enrolled into large commercial, or demand metered products. We intend to drop these accounts and if necessary, re-rate them to the utility rate for the period they were enrolled with Polaris.”
3) “[W]e discovered that 17 of [a] customer’s accounts were accidentally enrolled into a large commercial product, when they should have been enrolled in a mass-market product.”
4) “We identified a few mass-market accounts receiving a large commercial product that are incidental to demand-metered accounts located within the same utility territory but were accidentally enrolled as separate- and unique customers. Each of these mass-market accounts should have been enrolled under the same customer as their related demand-metered account but were not due to a clerical error. As a result, they appear to be incorrectly receiving a large commercial product.”
As alleged in the PSC's Nov. 2024 show cause order, "Polaris Power submitted a second response to Staff, dated April 9, 2024, which included work papers and customer contracts. Following Staff’s review of those contracts, it was discovered that, in multiple instances, the customer names that appeared on the commercial sales agreements were not associated with the list of individual mass-market customer names and account numbers that were included as part of the addendum to the sales agreement. In one instance, Polaris Power submitted a commercial sales contract which contained a customer name that was not associated with any account within the utility territory where that customer is served. That contract also listed 131 individual mass-market customer names and account numbers. Polaris Power asserted that these mass market customers were associated with a demand metered customer, thereby exempting these mass market customers from the compliant product requirement articulated in the December 2019 Order. Polaris Power further provided a spreadsheet listing portions of its mass market accounts that were associated with demand metered accounts. Even if Polaris Power’s contention that demand metered accounts are exempt from the product restrictions if they are associated with commercial demand metered account was correct (which Staff contends it is not), the utility confirmed that 20 percent of the accounts that Polaris Power listed in its spreadsheet were non-demand metered accounts."
In response to the order to show cause, Polaris had stated that it would pay ACPs and provide re-rates for the relevant customers
In response to the order to show cause, Polaris had stated, "with respect to renewable energy products, Polaris will comply with the renewable obligations in its contracts with customers. As demonstrated in the agreements provided to the Department, for those limited customers enrolled in a renewable energy product, Polaris committed to offsetting 50 percent of the customer’s usage by purchasing renewable energy credits ('RECs') or making alternative compliance payments ('ACPs') to the New York State Energy Research and Development Authority ('NYSERDA'), which Polaris is prepared to do, upon receipt of an invoice from NYSERDA."
In response to the order to show cause, Polaris had stated that Section 23 of the relevant renewable energy customer agreements expressly permits Polaris to match customer’s usage by making Alternative Compliance Payments to NYSERDA
Polaris's Customer Disclosure Statement (“CDS”) for those agreements states that, “50% of the Customer’s usage during the term of this contract will be offset by the purchase and retirement of renewable energy credits. A full description of the renewable energy credits can be found in section 23 of the Terms and Conditions.”
In response to the order to show cause, Polaris had stated, "While not mentioned specifically in the Order, to the extent the Department intends to construe Polaris’s agreement to permit only REC retirements because Polaris does not expressly state within the CDS that ACPs may be purchased, such argument would be incongruous with Commission precedent and previous Department guidance. Indeed, the language in Polaris’s agreements related to its renewable energy product is nearly identical to the Department’s sample renewable agreement located on the Department’s webpage dedicated to ESCO market information (the 'Sample Renewable Contract'). Similar to the Polaris agreement, the CDS in the Sample Renewable Contract simply states that '100% of the energy provided under this agreement shall be derived from renewable resources as specified in this agreement' and then references a further section of the agreement for additional information, Section 4, which permits purchase of ACPs to satisfy the terms of the contract. Since, similar to the Polaris agreement, ACPs are not discussed within the CDS of the Sample Renewable Contract but are clearly referenced in the CDS and permitted by the full terms of the contract, it would be incongruous to penalize Polaris for adhering to the same terms and conditions as those expressly espoused by the Department as acceptable contract language with customers."
In response to the order to show cause, Polaris had stated, "While Polaris takes responsibility for the delay in providing its 2022 REC report, that delay should not result in penalties beyond payment of the required ACPs since there have previously been several other ESCOs that have had similar compliance issues that were not found in violation of Department rules. Further, this issue is a solitary occurrence that will not be repeated. Indeed, Polaris filed its 2023 compliance audit on June 15, 2024, as required, is prepared to timely file all future audit reports, and previously paid all other NYSERDA invoices associated with its 2022 RES program requirements, including those for Tier 1 RECs and Zero Emissions Credits."
In response to the order to show cause, Polaris had stated, "with respect to enrolling customers into compliant products, Polaris, while believing it was acting in good faith reliance on the law and the plain language of previous Commission decisions in enrolling customers, has accepted responsibility for the enrollment errors, taken corrective action to ensure strict compliance moving forward, and will re-rate customers in the amount of $45,000 for overcharges related to their enrollment in commercial products."
In response to the order to show cause, Polaris had stated, "Polaris is a relatively new entrant into the New York market, and did not begin enrolling customers until after implementation of the Order Adopting Changes to the Retail Access Energy Market and Establishing Further Process. At that time, Polaris was also a smaller company with limited personnel. As such, and because a significant amount of regulatory action pre-dated Polaris’s entry into the market, Polaris originally relied heavily on third parties, namely its Electronic Data Interchange vendor and outside counsel, to provide guidance and ensure compliance with relevant rules and requirements. Unfortunately, this resulted in some instances where customers were improperly enrolled into the wrong product, or classified incorrectly and therefore placed on an incorrect product. For example, a farm in National Grid’s service territory was enrolled into a large commercial product based on the customer’s usage, but was classified as residential in the utility system, meaning that the customer should have been receiving a residential rather than a commercial product. In other instances, commercial customers requested to add incidental residential accounts to their service, and those accounts were inadvertently enrolled in commercial products rather than residential products. Polaris did not become aware of these issues until the Department requested additional information about the 2022 REC audit, which led to questions about the customers enrolled during that time period (the “Information Request”).23 In Polaris’s response to the Information Request, Polaris acknowledged these errors and confirmed that it would re-rate those customers."
In response to the order to show cause, Polaris had stated, "Importantly, despite these limited misclassifications and enrollment errors, the impact to customers was minimal, and in many cases favorable. Indeed, of the customers that were incorrectly enrolled in commercial products, when comparing customer invoiced amounts against historical utility rates for the same time period, a subset of customers were charged approximately $33,000 less than what they would have been charged by the utility, while the remaining customers were only charged a total of approximately $45,000 more than what they would have been charged by the utility. Given that the net difference amounts to approximate overcharges of only $12,000, it is clear that Polaris’s enrollment issues had limited impact and were in no way willful or designed to unjustly enrich Polaris at customers’ expense."
In response to the order to show cause, Polaris had stated, "because Polaris recognizes the importance of maintaining strict regulatory compliance and ensuring proper customer enrollment, Polaris will re-rate the $45,000 in overcharges to customers. It cannot be understated, however, that Polaris is also accepting a $33,000 loss in doing so."
In response to the order to show cause, Polaris had stated, "Polaris has since hired additional personnel to ensure that the company is tracking all regulatory compliance requirements and deadlines and is adhering to all Commission orders and other guidance related to regulatory changes in the retail energy market.9 Polaris understands the importance of and takes seriously its corporate responsibility to ensure compliance with relevant rules and regulations and has taken affirmative action to ensure there are no issues going forward."
In response to the order to show cause, Polaris had stated, "At all times, Polaris believed it was acting in accordance with applicable rules and regulations for enrolling customers. Notwithstanding, and as explained further above, Polaris accepted responsibility for previous enrollment errors and committed to correcting the issue. While it is unfortunate that Polaris committed certain enrollment errors, it would be incongruous to penalize Polaris for its apparent misunderstanding since there appears to be confusion even amongst the Department and the utilities as to how to classify certain customers."
In response to the order to show cause, Polaris had stated, "This is further communicated in the Order itself, where the Department states that Staff does not agree that accounts are exempt from the product and pricing restrictions if they are associated with commercial demand metered accounts. This implication is not consistent with the Commission’s definition of mass market customers, however."
In response to the order to show cause, Polaris had stated, "The Commission originally defined mass market customers to include small non-residential customers that are non-demand metered customers. This definition was subsequently clarified in further Commission orders, however, to allow for aggregation of accounts and exclude those customers that have one or more demand metered accounts. This means that there are small commercial customers that do not in fact fall under the threshold of mass market customer. Given that there appears to be confusion amongst all parties about how to classify certain customers, it would be improper and unduly punitive to further penalize Polaris for the same misunderstanding."
Case 24-M-0482
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July 17, 2025
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Reporting by Paul Ring • ring@energychoicematters.com
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