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New York PSC Provides "Reasonable" Reading Of Its Prior Language Allowing Mixed Meter Scenarios To Be Exempt From Mass Market Requirements -- Says ESCO Misinterpreted Policy
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The New York PSC, in a rehearing order "confirming" the revocation of the ESCO eligibility of Polaris Power Services LLC, said that Polaris misinterpreted the PSC's "Aggregation Rule", which sets forth the circumstances under which ESCO service to a meter, that would normally be classified as mass market, is exempt from the mass market requirements due to the meter's aggregation with a non-mass-market meter
See background on the grounds which led the PSC's original revocation order here
Much of the allegations addressed in the Polaris case ultimately stem from Polaris serving customers with non-demand meters, which in other circumstances would have been deemed mass market, but which Polaris said were eligible for treatment under the Aggregation Rule -- that is, the relevant meters were not subject to the mass market rules because of the meters' affiliation with a large C&I customer
Polaris on rehearing argued that the PSC in the revocation order ignored the Aggregation Rule, or allegedly engaged in impermissible rulemaking in changing the Aggregation Rule, due to the PSC's determination that the relevant meters were, in fact, subject to mass market protections
Of most note to the market, due to the broader applicability and precedent, the PSC in the rehearing order said that Polaris misinterprets the "Aggregation Rule"
More specifically, Polaris argues that the Aggregation Rule is set forth in a 2020 PSC order concerning what constitutes mass market service, with the PSC in 2020 stating, "as to aggregation for electric customers, an electric customer is
not a mass-market customer if it has one or more demand metered accounts."
Moreover, Polaris said that this 2020 language from a PSC order is the, "same basic rule [as] set forth in Staff Guidance on the 2016 Order that first defined mass-market."
As more fully described below, Polaris had sought rehearing arguing that, among other things, the PSC's finding that Polaris inappropriately served "mass market" customers misapplied or ignored the Aggregation Rule
However, the PSC on rehearing said that Polaris misinterpreted the Aggregation Rule, with the PSC on rehearing stating that all meters must be in the same customer's name to qualify for exemption from the mass market rules under an aggregation
The PSC said on rehearing that, in its 2020 order, the PSC had held that "an" electric customer that is mass market would not have one or more demand-metered accounts
Emphasizing the use of the article "an", the PSC said on rehearing that, "A reasonable reading of this rule is that each aggregated account must contain the same customer name."
The PSC said, "An electric mass market customer can only be aggregated with a demand metered account if both are listed under the same account name."
Accounts which do not share a common name cannot be aggregated pursuant to the Aggregation Rule, the PSC said.
Mass market meters which are associated with or affiliated with a large customer, but which are in a different account name than the large C&I customer, are not eligible for aggregation, and instead must be served under the mass market rules
The PSC said that, "the Commission is not adopting a new interpretation of the Aggregation Rule," and thus the PSC denied arguments from Polaris that the PSC's action constituted an impermissible rulemaking outside of the required rulemaking process
Other Rehearing Issues
See background on the grounds which led the PSC's original revocation order here
As previously reported, the PSC in its prior revocation order ultimately held that Polaris Power Services LLC failed to honor the terms of its sales agreement to purchase a contract-specified percentage of RECs, beyond the amount required for RPS compliance, in violation of UBP Section 2.5.b., and failed to enroll mass market customers onto compliant contracts, due to the enrollment of customers defined as mass market onto non-compliant products, in violation of the PSC's December 2019 retail market order
Polaris in a rehearing request had alleged that the PSC
made several errors in law and fact in the rehearing order, including, as alleged by Polaris:
• Departing from the established Notice of Apparent Violation ('NOAV') cure
procedure;
• Failing to articulate the basis of the Revocation Order rendering it unreviewable;
• Failing to abide by the Commission’s Order and Staff Guidance regarding
definition of mass-market customer;
• Mischaracterizing Polaris’ compliance and erroneously asserting as fact that
Polaris did not immediately come into compliance with misclassification of
customers once it was discovered;
• Failing to acknowledge mitigating circumstances, including extremely low
complaints, low amount at issue, and subsequent history of compliance;
• Failing to permit Polaris to come into compliance with REC payments as it
requested to do;
• Failing to make findings as to which specific contract enrollments were not in
compliance, while erroneously claiming that the vast majority were out of
compliance;
• Failing to make findings as to the amount of unpaid RECs owed by Polaris;
• Ignoring agency misapplication of the Aggregation Rule as set forth in
Commission’s own Order and Staff Guidance, and failing to articulate how
Polaris’ application of the Aggregation Rule was not proper, rendering
determination unreviewable and arbitrary; and
• Resting the Revocation Order on various nebulous claims of violations which it
was not charged with and which were not identified in the Revocation Order.
"
Polaris said in its rehearing request that, "As a result of this demonstrated commitment to compliance and
customer service, Polaris has only ever had one customer complaint in the nearly four
years since it started serving customers in New York."
Polaris had also said that it did not market to mass market customers, but that Polaris would accommodate requests from its large C&I clients to serve non-large-customer meters affiliated with the large C&I customers (mixed meters)
Polaris had said, "Generally, it had been Polaris’ practice
to accommodate these requests and to provide service through the overriding Large
Commercial contract based on its understanding of the Commission’s orders defining mass-market customers per the advice of industry experts such as its EDI provider and
its former legal counsel. Specifically, it was Polaris’ understanding that a customer is
not mass-market if at least one of its accounts is demand-metered. For example, a
customer who operates a commercial laundromat and has a demand-metered account,
could aggregate their second non-demand-metered location under the same demand-metered account for ease of contracting and to obtain favorable terms and conditions.
With few exceptions, all of Polaris’ non-demand customers were enrolled via an
affiliated commercial demand-metered account. However, the overwhelming majority
of Polaris’ business was still non-aggregated Large Commercial accounts."
Addressing its alleged non-responsiveness to DPS Staff inquiries, Polaris cited its belief that, under this approach, Polaris was not considered as marketing to mass market customers, whereas inquiries from DPS Staff (such as a REC audit) concerned mass market customers
Polaris had said, "Because of the fact that the REC Audit expressly referenced the 2019 Order’s
mass-market rules, and because Polaris did not market to mass-market customers,
Polaris did not initially respond timely to the REC Audit. Thereafter, Staff reached out
to Polaris by email on June 30, 2023 and requested confirmation that Polaris did not
serve any renewable load in 2022. Polaris again provided no response based on its
belief that none was required because it did not market to mass-market customers."
Polaris had said that only a later Staff inquiry revealed differing interpretations, and Polaris said that Polaris promptly responded to such inquiry
Polaris had said, "Polaris promptly responded to this request by email and after a short round of
correspondence, it became apparent to Polaris that it did serve some renewable load in
2022 which required it to purchase RECs (or voluntary compliance payments
('VCPs')). In an apparent effort to attempt to determine Polaris’ REC shortfall so it
could be invoiced by NYSERDA pursuant to the requirements in the REC Audit, Staff
requested contract data from Polaris. However, it soon became apparent that there was confusion among Staff as to whether Polaris’ aggregated customers should be
considered mass-market, and therefore included in the REC shortfall calculations."
Polaris had alleged, "While not conveyed to Polaris, Staff was seemingly uncertain as to whether the
Aggregated Customers were compliant with the Commission’s definitions of mass-market customers, and appeared to be unaware of the agency’s previous order and Staff
Guidance regarding aggregation of customers (the 'Aggregation Rule'). Indeed, this
was characterized in a Staff email to personnel at the Consolidated Edison Company
('Con Ed') wherein Staff inquired to the regulated utility how mass-market customers
were defined in New York State under the Commission’s orders. (This, itself is a
highly unusual situation, but it gets worse). As a result, Staff, the regulating body, took the utility’s definition of mass-market as dependent purely on service class as authority
(without considering the Aggregation Rule) and apparently erroneously determined that
all of Polaris’ aggregated contracts were out of compliance with the UBP. However, at
no point was this determination documented or explained to Polaris until the OTSC [order to show cause]
was issued by the Commission, nor was Polaris instructed to drop potentially noncompliant customers until the Revocation Order. (Indeed, the Revocation Order
erroneously criticized Polaris for not moving these customers to compliant contracts,
despite the fact that the Company had dropped them or transitioned them in an
abundance of caution)." [emphasis by Polaris]
Polaris had said, "Notwithstanding the lack of clarity or direction from Staff, Polaris began taking
proactive measures to prevent any further compliance issues regarding its enrollments.
First, it switched EDI providers to an established and trusted voice in the industry.
Second, it immediately stopped enrolling non-demand-metered customers under their
affiliated demand-metered accounts and continues not to do so. Third, as noted above,
it began dropping or transitioning all of the Aggregated Customers onto mass-market
contracts, which remains its practice to this day. (This is despite the fact that the
Aggregation Rule is clearly set forth in a Commission Order and Staff Guidance, such
that its reliance on the rule is -- and was -- justified, at least until clarified by further
agency order). All of these proactive measures began being implemented in the
summer of 2024 during the protracted audit by Staff."
Polaris had said, "Furthermore, Polaris stated to Staff several times throughout spring and summer 2024, that it would satisfy its RECs
compliance obligations when it was forwarded its shortfall invoice."
Polaris alleged, "However, Polaris was denied this opportunity clearly established in the REC
Audit and a clear prior practice of the agency regarding such VREC invoices."
Polaris alleged that the revocation order, "held that Polaris failure to timely pay its 2022
RECs was 'on such a large scale' that it 'demonstrated a pattern of consistent disregard
for the consumer protections and regulations set forth in the UBP'; ignoring the fact
that Polaris had timely responded to the 2023 & 2024 REC Audit, and had only a single
consumer complaint in its history of operation."
Polaris alleged, "Importantly, in addressing the REC
issue, the Revocation Order, sought to bolster its findings with new alleged issues, such
as claiming 'other Staff allegations regarding Polaris Power’s internal recordkeeping'
and 'numerous instances of non-compliance that extend across the Company’s business
practices' allegedly resulting in 'a pattern of consistent disregard for the consumer
protections and regulations set forth in the UBP' (the 'New Issues')."
Polaris alleged, "The New Issues
appear to be inserted in light of the irrational rejection of Polaris’ commitment to pay all
REC amounts due, thus resolving the alleged violation. Insertion of the New Issues for the first time in the Revocation Order deprived Polaris of its opportunity to respond to
these allegations."
The PSC in denying rehearing said that Polaris's arguments were unpersuasive.
The PSC said, "Regardless of what Polaris Power characterizes as its 'focus on non-mass-market business,' the Company admittedly -- and therefore undisputedly -- served a renewable product to mass market customers in 2022."
The PSC said, "Polaris Power admittedly did not acknowledge that terms of its mass market contracts required the Company to fulfill renewable energy purchase obligations until February 2024. The Petition for Rehearing also does not explain why the Company ignored Staff’s inquiries in 2023 and only responded when prompted by Staff in February 2024. Instead, Polaris Power references its mistaken 'belief' that a response was not required."
Addressing Polaris's argument about Polaris's willingness to pay the VCP, and Polaris's contrasting the Polaris revocation to other ESCOs which were permitted to make such late VCP payments without revocation, the PSC said, "the Revocation Order clearly stated that Staff and the New York State Energy Research & Development Authority (NYSERDA) could not address this shortfall given how much time had lapsed -- not only since the end of the 2022 REC compliance year itself, but also from when the time to make payments for that year expired."
The PSC said, "contrary to Polaris Power’s assertion that the Commission 'ignored' the Company’s request that Staff and NYSERDA provide an invoice reflecting its 2022 VCP obligation, such an invoice could not be generated because the renewable load data for 2022 had already been tabulated and reconciled."
The PSC said, "Staff and NYSERDA cannot administer this program if ESCOs such as Polaris Power fail to timely and accurately report their voluntary renewable loads and make associated VCPs.
The Company’s undisputed conduct and omissions frustrated the administration of the program."
The PSC also said that the UBPs allow the PSC to issue to an Order to Show Cause without first issuing a
Notice of Apparent Violation (with UBP language stating that "either" an NOAV or OTSC may be issued)
The PSC said that, "In this case, Staff had already identified potential non-compliance based on the contracts and clarifying responses Polaris Power submitted to Staff in connection with Staff’s investigation into the Company’s customer enrollments. Staff therefore properly determined that its review of this information supported the issuance of the OTSC."
The PSC said that its issuance of a show cause order, without first issuing an NOAV, does not violate the "Field Doctrine", which holds that agency decisions are capricious if they depart from the agency’s prior
practices without explanation.
While Polaris cited other ESCO cases in which an NOAV was first issued before an OTSC, the PSC said that, "the facts in the cases to which Polaris Power cites are readily distinguishable."
The PSC said, "Polaris Power does not distinguish between its admitted failure to timely purchase VCPs to fulfill its unique contractual commitment to its customers and its independent RES obligation to NYSERDA (which was primarily at issue in the [other cited ESCO] cases)."
The PSC said, "Polaris Power’s limited interpretation also does not account for Staff and the Commission’s discretion to determine the proper course of action in an enforcement proceeding. In this case, and as summarized above, Staff was already in possession of information that normally would have been requested of an ESCO in response to an NOAV."
On rehearing, the PSC also generally denied the various alleged infirmities of the PSC's original revocation order
As more fully detailed in the rehearing order, the PSC said that the revocation order made factual findings to support revocation of Polaris's eligibility
The PSC also said that the revocation order accurately presents the facts and provides justification for revocation, and that the order complied with applicable law and the New York and Federal Constitutions
Regarding Polaris's allegation that the revocation order was impermissibly based on "new issues", and thus allegedly deprived the ESCO of due process, the PSC said: "The 'New Issues' Polaris Power raises appear to only consist of the Commission’s conclusion that, given the Company’s established violations of the December 2019 Order and UBP, Polaris Power had a 'pattern' of non-compliance. The Revocation Order does not allege any new violations of the December 2019 Order, UBP, or any other law, rule, or regulation to which Polaris Power would be unable to respond. These 'New Issues' simply summarize concerns the Commission addressed earlier in the Revocation Order."
As it had ordered in the prior revocation order, the PSC again directed that Polaris Power Services shall drop its New York customers to default service within 60 days
Case 24-M-0482
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PSC's Reading Provides Narrower Exemption From Mass Market Rules For Mixed Meters vs ESCO's Interpretation
December 24, 2025
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Copyright 2025 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com
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