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New York PSC Issues Show Cause Order To Multiple NRG Retail Suppliers
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The New York PSC has issued a show cause order to multiple NRG Energy retail suppliers directing the suppliers to respond to allegations from Department of Public Service Staff that the suppliers, among other things, allegedly served customers on non-compliant products and allegedly provided to customers non-energy-related value-added products and services, in alleged contravention of the PSC's 2019 retail market reset order and related orders, including the PSC's Green Gas order and Low-Income order, and precedent
NRG provided the following statement concerning the matter:
"NRG is committed to a strong customer-focused culture, operational transparency, and regulatory compliance. While we fundamentally disagree with the Order’s premise, we are committed to continuing to work with the PSC staff to resolve this matter. We remain focused on providing best-in-class service to our customers and will vigorously defend and protect our relationship with New York customers through this process."
--- Statement from NRG
The PSC noted that the show cause order, "does not constitute final findings of fact or conclusions of law."
An Order to Show Cause (OTSC) was issued to the entities Direct Energy Services, LLC (Direct), Energy Plus Holdings LLC (EPH), Energy Plus Natural Gas, LLC (EPNG), Gateway Energy Service Corporation (Gateway), Green Mountain Energy Company (Green Mountain), Reliant Energy Northeast LLC d/b/a NRG Home, NRG Business and NRG Retail Solutions (Reliant), Stream Energy New York, LLC (Stream), XOOM Energy New York LLC (XOOM), and NRG Business Marketing, LLC f/k/a Direct Energy Business Marketing, LLC’s (NBM)
Direct, EPH, EPNG, Gateway, Green Mountain, Reliant, Stream, and XOOM are collectively referred to as the NOAV Entities. The NOAV Entities and NBM are collectively referred to as the NRG Entities.
The order to show cause follows earlier Notices Of Apparent Violation issued against several of the suppliers listed above (see story here)
As previously reported, NRG in 2024 responded to the NOAVs, but the entire substantive portion of the responses were filed on a confidential basis
As summarized by the show cause order, DPS Staff alleged that:
1) Staff alleges that the NOAV Entities apparently failed to transition customers to compliant contracts in violation of the Reset Order;
2) Staff alleges that Green Mountain apparently failed to transition 'green gas' customers to utility service or enroll customers on compliant contracts in violation of the Reset Order and the Green Gas Transition Order;
3) Staff alleges that certain NOAV Entities apparently failed to comply with REC locational and delivery requirements in violation of the Reset Order and UBP §2.D.5.i;
4) Staff alleges that multiple NOAV Entities apparently failed to comply with the prohibition on non-energy-related value-added products and services in violation of the Reset Order;
5) Staff alleges that the NOAV Entities apparently failed to de-enroll low-income customers in violation of the Low-Income Order and UBP §§2.D.5.c and 2.D.5.f; and
6) Staff alleges that NBM apparently failed to disclose that it is currently serving mass market customers in violation of UBP §§2.B.1.a.ii, 2.D.5.a, and 2.D.5.d.
As summarized by the show cause order, Staff alleges, "that the NRG Entities’ apparent violations were not isolated events but rather encompass numerous instances of non-compliance that extend across the Companies’ business practices that may reflect a pervasive disregard for the UBP, the Reset Order, the Green Gas Transition Order, and the Low-Income Order."
The show cause order directs the NRG retail suppliers to demonstrate why their ESCO eligibility should not be revoked or why other potential remedies should not be imposed, including, "prospective debarment," refunds or re-rates to customers who may have been impacted, and/or installation of independent third party monitors (at ESCO expense) to police and report unauthorized conduct.
Two issues are most notable to the broader retail market.
First, it appears that the NRG suppliers argue that certain contracts, which were entered into prior to the December 2019 reset order, remain in effect, including when and after such contracts are auto-renewed. The NRG suppliers thus appear to argue that such contracts are not subject to the reset order's compliant product provisions.
Second, it appears that DPS Staff alleges that reward programs offered by ESCOs to existing customers are in violation of the reset order, due to being, in Staff's view, non-energy-related value-added products and services which are meant to induce a customer's enrollment
However, the PSC's 2019 reset order specifically provided that, "ESCOs are prohibited from offering them [non-energy-related value-added products and services] to
prospective customers as inducements to sign a contract. " [emphasis added]
While, as noted below, the 2019 reset order did broadly find that non-energy-related value-added products and services provide no value, the PSC's language prohibiting the offering of such was explicitly stated as, and only as: "ESCOs are prohibited from offering them to
prospective customers as inducements to sign a contract."
More specifically, the 2019 reset order contained the following provision:
"Non-Energy-Related Value-Added Products and Services
"Value-added products and services that have no energy-related benefit and/or that are offered as a one-time promotion
do not further the energy policy goals of the State and,
therefore, provide no value in the context of the retail energy
market. These promotional items, such as gift cards or other
'swag,' are frequently offered as promotions to induce customers
to sign a contract with the ESCO. However, the market value of
these items often is significantly less than the price the
customer ultimately pays for the item or service over the term
of the contract. Accordingly, because these promotional items typically do not provide any energy-related benefit to
customers, ESCOs are prohibited from offering them to
prospective customers as inducements to sign a contract.
In another section of the 2019 reset order, reciting the then-current market, the PSC was more broad in listing non-energy-related value-added products and services, and listed items which potentially could be both sign-up bonuses as well as loyalty rewards (frequent flyer miles, sports tickets, gift cards), but in such discussion, the PSC, while finding no value to such offerings, did not explicitly prohibit every enumerated item, in contrast to the explicit prohibition on the offering non-energy-related value-added products and services to
prospective customers as inducements to sign a contract, as noted above
Specifically, the 2019 reset order does state:
"[T]o the
extent that any value-added products and services are available
to New York customers, those products and services are, by and
large, not energy related. Rather, they are typically products
that are more accurately described as marketing devices or onetime offers intended to induce customers to enroll with the
ESCO. The items -- such as frequent flyer miles, gift cards,
sports tickets, LED light bulbs, and 'smart' thermostats --
frequently have a market value that is much lower than the
amount customers ultimately pay to the ESCO over the course of
the contract in excess of what they would have paid to the
utilities. Moreover, many of the aforementioned items have
nothing to do with providing energy services and therefore serve
none of the goals of the energy retail market. As to the items
that have a tangential relationship to energy services –
lightbulbs, thermostats, etc. - these items offer little or no
value for the purposes of the energy retail market given that
customers can easily purchase these items outside of that
market; we find no convincing proof that customers receive any meaningful value when these easily accessible retail items are
tethered to the receipt of commodity energy."
For its part, the PSC appears to agree with Staff's stance on interpreting the 2019 reset order as providing a broad prohibition on non-energy-related value-added products and services, notwithstanding the order's specific language
In the order to show cause issued today, the PSC summarized the 2019 reset order as providing that, "to ensure mass market customers received value from the retail energy market, the Reset Order instituted a prohibition on non-energy-related value-added products and services. The Commission observed that these products, which often take the form of gift cards or 'swag' to induce customers to sign contracts with ESCOs, frequently have a market value that is significantly less than the price the customer pays for that item or service and do not further the State’s energy goals. The Commission, therefore, determined that those products do not provide any energy-related benefit to mass market customers."
In such pronouncement, the PSC footnoted to the language from the 2019 reset order quoted above (which is specific to prospective customers as inducements to sign a contract), and not any other language from the 2019 order or any clarification or reconsideration issued by the PSC
DPS Staff alleges that XOOM has improperly offered non-energy-related value-added incentives by advertising and enrolling New York customers in its 'XOOM Xtras' rewards program.
The order states, "This program apparently promotes the use of rewards points to earn gift cards and other rewards."
Staff alleges that these rewards points are inducements to encourage customers to "enroll and remain" on XOOM service.
Staff alleges the following concerning the XOOM rewards program, based on the program's website: "As of August 19, 2025, that website apparently references multiple non-energy-related value-added items, from 'local deals, from your favorite restaurants to retail shops,' to 'hotel bookings and vacation packages,' to 'insurance savings.' XOOM informs customers that they can redeem KOIYN for gift cards at retail stores 'like L.L. Bean, Macy’s, Nike, Bass Pro Shops, and more!' and can also use KOIYN to obtain 'top, name brand merchandise items from electronics to home goods and beyond.' It appears that XOOM customers can earn KOIYN through online games, by making monthly payments as a XOOM customer, and by enrolling in autopay. Notably, the bottom of the XOOM Xtras home page specifically associates 'XOOM Energy New York, LLC' with the rewards program."
While Staff alleges that the rewards induce enrollment in addition to inducing continued service, the order to show cause does not appear to specifically allege any example of a reward specifically tied to enrollment onto XOOM retail supply service
Staff alleged that XOOM provided a customer with a $25 gift card to resolve a complaint
Staff appears to allege that any provision of a gift card by an ESCO is prohibited
As summarized by the order to show cause, Staff alleged, "XOOM’s reliance on incentives forbidden by the Reset Order in order to resolve complaints filed with the Department suggests an overall lack of familiarity with New York’s established marketing requirements. It appears to Staff that XOOM improperly sought to remedy a problem with a prohibited solution by offering to resolve a complaint with a gift card. The Reset Order forbade ESCOs from offering '[v]alue-added products and services that have no energy-related benefit' -- such as gift cards and savings at retail stores, restaurants, hotels, and insurance -- because these items 'provide no value in the context of the retail energy market.' It is Staff’s position that XOOM’s rewards program does not offer any value-added, energy-related benefits, and thus appears to violate the Reset Order."
In addition, Staff alleges that potential EPH or EPNG customers could be induced to sign up due rewards advertised on EPH & EPNG's shared website not specific to New York, with Staff alleging that the site does not inform customers that New York customers are ineligible (to the extent that is the case).
The order states, "Staff alleges that the Energy Plus company website for both EPH and EPHG [sic] (https://www.energypluscompany.com/) contains representations about improper value-added, non-energy-related rewards that could induce prospective customers in New York to initiate service with one or both companies."
The order states, "Staff observes that, as of August 19, 2025, the 'Our Services' page of the joint EPH and EPNG website (https://www.energypluscompany.com/services/services.php) states that Energy Plus offers 'some nice rewards' in connection with energy service. That page also advertises '[m]iles/points awards typically earned after at least 2 months of service,' without any limitation on redeeming these rewards based on a customer’s service territory. While this webpage mentions New York customers, it does not indicate that these '[m]iles/points' rewards are unavailable in New York. The website only advises New York customers that they can call a phone number to obtain historical non-promotional price information. Additionally, a link on the 'Our Services' page invites prospective customers to 'start earning rewards!' and directs to an 'Enroll Today' page (https://www.energypluscompany.com/care/enroll_today.php). That portion of the website discloses that Energy Plus is now part of the NRG family of companies, but states that potential customers can still – apparently without any details or caveats - '[c]hoose from plans with rewards,' and that customers can visit PickNRG.com to sign up."
Concerning Staff's general allegation that the NOAV Entities served customers on non-compliant products, Staff alleges that in excess of 50,000 customers were served on such non-complaint products
Although, as noted above, the NRG suppliers' responses to the NOAVs were redacted, it appears, from the context in the order to show cause, that most, if not all, of such allegedly non-compliant service was to "legacy" customers who had a contract executed prior to the PSC's December 2019 reset order
The order to show cause does summarize, in the PSC's words, the NOAV Entities' response to the NOAVs
The order to show cause summarizes as follows: "In the NOAV Entities’ omnibus response to the NOAVs, dated February 13, 2024 (Response to the NOAVs), the NOAV Entities claimed that: (1) the NOAV Entities and other ESCOs sought clarification on the contract renewal issue and the Commission confirmed in the Clarification Order that the Reset Order only applied to 'prospective' contracts; (2) the NOAV Entities disclosed their customer agreements and the products they offered to Staff, and Staff approved these submissions as in compliance with both the UBP and Commission Orders; (3) the NOAV Entities justifiably relied on the Commission’s and Staff’s actions, and adopting Staff’s interpretation in the NOAVs would raise concerns under the State Administrative Procedures Act, the Good Faith Reliance Doctrine, and constitutional doctrines including ex post facto enforcement; (4) Staff’s interpretation of the Reset Order conflicts with the language of the NOAV Entities’ continuous service agreements, and is also incompatible with the UBP and the New York General Business Law (GBL), which contemplates such continuous service agreements; and (5) Staff’s position would result in an impermissible regulatory taking. The NOAV Entities argued that Staff should therefore withdraw the NOAVs and close these matters."
The order to show cause further summarizes as follows: "In particular, the NOAV Entities asserted that the Commission intended that the Reset Order 'not impact any existing customer agreements,' largely based on the Clarification Order’s directive that the Reset Order 'only applies to prospective contracts.' The NOAV Entities further claimed that automatic renewal of a contract’s initial term is simply continuation of a contract, not a new contract, and that the NOAV Entities are essentially exempt from Commission regulation of existing customer contracts because the companies’ 'automatic renewal provisions do not create new contracts.' The NOAV Entities contend that they need not follow Commission directives impacting continuing contracts because their 'contract language clearly states the parties’ intention that 'the' contract automatically continues unless there is a clear action from either party to cancel the contract.' As the legacy contracts at issue are purportedly 'an extension or continuation of the term in the contracts entered into prior to the [effective date of the Reset Order],' the NOAV Entities claim that Staff’s interpretation would infringe on the parties’ rights under the original contracts."
Addressing this response, the show cause order states that the, "NOAV Entities avoid directly engaging with Commission practice regarding billing and contract terms."
The show cause order states, "We note that the Commission previously ordered -- and the Appellate Division Third Department subsequently affirmed -- that the expiration of a customer’s month-to-month agreement is at the end of the current billing period. Low-Income Order, p. 21; Nat’l Energy Marketers Ass’n v New York State Pub. Serv. Comm’n, 167 A.D.3d 88, 98 (3d Dept. 2018)."
In several instances, Staff alleges that, notwithstanding any legacy service, certain of the NRG Entities provided a commodity type or served a customer class for which Staff alleged that the ESCO was not eligible to provide or serve
Staff alleges that, "Staff now contends that Green Mountain apparently continued serving its legacy gas customers rather than transition them to compliant products following the effective dates of both the Reset Order (for gas customers generally) and the Green Gas Transition Order (for 'green gas' customers). As stated in the Green Mountain NOAV, Staff determined that Green Mountain had apparently continued to serve gas to over 2,500 mass market customers in Con Edison and KEDNY’s service territories, despite lacking eligibility to serve gas at all after April 16, 2021."
As noted above, the PSC's reset order prohibits ESCOs from offering non-energy-related value-added products and services as an an "inducement" to "sign" a contract
Staff alleges multiple instances in which Green Mountain, "improperly distributed gift cards to prospective customers in 2024 and 2025 as an incentive to enroll on ESCO service."
Staff alleged that a customer complainant, "alleg[ed] that a Green Mountain salesperson had approached his wife in a Best Buy in Brooklyn and convinced her to sign up for ESCO service with a $5 gift card. The consumer claimed that his wife was not accurately informed about Green Mountain’s service, and the consumer requested that the contract be rescinded. The contract is dated June 14, 2025, and lists a different sales agent than QRS Case 513291."
Staff alleged that such alleged offering of a gift card occurred after Staff had already brought to Green Mountain's attention an earlier complaint from December 2024, which also included an alleged offering of a gift card for enrollment
Staff alleged that the NOAV Entities apparently failed to de-enroll customers participating in the utilities’ low-income programs
The order to show cause states that the PSC's Low Income order required ESCOs to de-enroll low-income accounts, "provided that existing contracts will continue until their expiration' (i.e., until the end of the current billing period for those customers on month-to-month contracts)."
Staff alleges that thousands of low-income customers statewide have been improperly served by the NOAV Entities over the prior three years.
The order states, "Specifically, Staff alleges that, collectively, between both regular ESCO service and CCA ESCO service, the NOAV Entities improperly served a total of 2856 [sic] low-income customers statewide as of the end of 2022, 3,354 as of the end of 2023, and 4,042 as of the end of 2024."
Staff alleges that NBM in its ESCO eligibility filings stated that it did not and would not serve mass market customers.
Staff alleges, "Despite these representations, recent migration data that Staff received from utilities between May 2025 and July 2025 (depending on the service territory) indicates that NBM is apparently serving several thousand mass market gas customers across multiple service territories statewide, including nearly 4,900 residential customers in Con Edison’s service territory alone."
NBM was not an entity originally subject to an NOAV. It is unclear if the cited "residential" and "mass market" accounts represent incidental residential accounts or mass market vs. LCI delineations which certain other non-NRG ESCOs have disputed in separate proceedings
Staff alleges that, for compliant products, the permissible REC purchases are limited to those that can be tracked and retired in NYGATS and in ESCOs’ EDP subaccounts.
Staff alleges, "However, it appears that multiple NOAV Entities contracted to provide their customers with renewable products but apparently failed to adhere to the REC and EDP locational and delivery requirements outlined in the Reset Order."
Cases 25-M-0516 et al.; 25-E-0516; Matter 23-02403
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DPS Staff Alleges Loyalty Reward Programs Violate PSC Reset Order's Ban On Inducements, "To Sign A Contract"
September 23, 2025
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Copyright 2025 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com
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