ESCOs Appeal N.Y. Determination Requiring Public Disclosure of Historic Pricing Data

Retail suppliers have appealed a ruling from the New York PSC Records Access Officer (RAO) in which the RAO denied confidential treatment of residential historic pricing that ESCOs have been required to file with the PSC since early 2014.

In a February 2014 order, ESCOs were directed to file with the PSC certain historic pricing information for dissemination to the public consisting of quarterly reports including a separate average unit price for products with no energy-related value-added services for each of four groups of customers and by geographic area. A subsequent order stayed this requirement for non-residential service, so ESCOs have only been required to report the historic prices for residential service.

More specifically, the February 2014 order (as amended by the stay) provided that ESCOs file separate average unit prices for products with no energy-related value-added services for a: i) residential price fixed for a minimum 12 month period; and ii) residential variable price. The PSC had said that the averages should be weighted by the amount of commodity sold at each price within each category. ESCOs were also directed to file the number of customers purchasing products in those categories.

In the February 2014 order, the PSC explained how it would publicly post the ESCO pricing information as follows:

"We now confirm our intention ... to publish comparative pricing information for the categories identified above. We anticipate development of a list of the average price billed for each ESCO, separately for consumers in specific geographic areas of a utility service territory. We expect to sort the list based on average price, and organize ESCOs into quartiles, based on the average price charged to customers in the historical period. For the category of variable priced products with no energy-related value-added attributes, we anticipate that comparable information regarding utility charges will also be presented. The utility information will be adjusted to account for differences between how ESCOs and utilities charge for bill processing and other charges in order charges in order facilitate a direct comparison."

However, ESCOs sought confidential treatment when filing the historic pricing reports, and PSC Staff only in December 2015 announced its intention to begin publishing the pricing publicly as contemplated by the February 2014 order. The Records Access Officer also clarified that Staff was not seeking to publish individual ESCO customer counts, though ESCOs questioned how this would be achieved given the current form in which the prices are reported.

In response to Staff's statement of intent to begin publishing the historic pricing, ESCOs were given another opportunity to justify their requests for confidential treatment. The Records Access Officer (RAO) has denied these latest confidentiality requests.

In a February 1 determination, the RAO said, "None of the 11 [ESCO] submitters prove the existence of a trade secret."

"The ESCOs did not meet their burden here as mere conclusory allegations, without factual support, are insufficient to sustain non-disclosure," the RAO said

Click here for more details on the RAO's decision

The RAO's decision has been appealed by the Retail Energy Supply Association and National Energy Marketers Association

RESA said that the RAO's decision, "misapplies the standards that govern requests for confidential treatment under POL § 87 (2) (d) and 16 NYCRR § 6-1.3 (b), erroneously fails to follow the Secretary’s and RAO’s recent rationale in an analogous matter, and incorrectly disregards evidence submitted by RESA."

RESA said that its prior statement in support of the necessity for confidential treatment addresses each of the six factors that the RAO said was required to support a finding that the information should be afforded trade secret status

While the RAO has cited the failure of ESCOs to demonstrate substantial injury from release of the data, RESA said, "[a] showing of substantial injury is not required to demonstrate that the information is subject to trade secret protection."

Moreover, RESA noted that ESCOs are being treated disparately from competitive generators, who enjoy trade secret status for various commercial information.

RESA noted that the concerns which led the PSC to grant confidential treatment for generators' commercial data are similar to those raised by ESCOs with regard to their historic pricing

"Similar concerns led the RAO and Secretary to protect the trade secret and confidential commercial information of lightly-regulated generators in a recent separate matter. There, the RAO and Secretary concluded that disclosure of certain of the generators’ financial information in Commission-required annual reports would cause substantial harm to the marketplace because it would allow competitors and potential market entrants to forecast a generator’s marginal costs and pricing strategies. Once a competitor gained access to such information, it could use that knowledge to exploit the marketplace by charging prices aimed at driving disclosing companies out of the market, which ultimately would result in reduced competition and higher overall costs to customers," RESA noted

While the RAO offered cursory reasoning for disparate treatment of ESCOs and generators, RESA said that none of the reasons cited by the RAO for disparate treatment, "provide[] any analysis or justification as to how the information requested in the lightly-regulated generators matter differs from the information the ESCOs filed with the Commission in this proceeding."

"In fact, both situations deal with the disclosure of highly-sensitive financial data that would permit competitors to 'reverse engineer' a competing company’s pricing, hedging, and margin strategies," RESA said

NEM faulted the RAO's determination for finding that numerous statements of support filed by ESCOs to show economic harm from public disclosure of the data were insufficient, and that affidavits should have been filed by, "an economist or other expert."

NEM noted that such finding, "effectively decided that ESCOs are not expert in the conduct of their own business," and goes beyond what is required by law for a demonstration of the need for confidential treatment.

"[T]he record includes ESCO affidavits detailing the individualized impacts of the disclosure on respective ESCO businesses. In discounting those affidavits, the Determination effectively decided that ESCOs are not expert in the conduct of their own business and that only 'an economist or other expert' could meet the factual burden. This result is contrary to reason, and again, establishes a legal hurdle in excess of what is required by caselaw. There is no one more expert in the character of the information as trade secret as well as the extent of the competitive injury that will be realized by disclosure of the information than the competitive entities themselves," NEM said