Breaking: NY Adopts "Moratorium" on ESCO Service To Low-Income Customers

The New York PSC has adopted a "moratorium" on ESCO service to low-income electric and natural gas customers

A written order was not immediately available.

As previously reported, a February 2014 PSC order had ordered that for an ESCO to serve a low-income Assistance Program Participants (APP) customer, the ESCO, "must guarantee that the customer will pay no more, on an annual basis, than the customer would have paid as a full service customer of the utility, or the ESCO must provide Assistance Program Participants with energy-related value-added products or services."

At that time, the PSC had broadly stated that, "energy-related value-added products or services," will be defined to include certain fixed price offers, but details on qualifying fixed price offers were left to a collaborative.

However, a collaborative report did not offer any consensus proposals on allowing ESCOs to offer fixed rates to APP customers. The consensus of the collaborative was that few, if any, ESCOs intend to offer a product which guarantees that the customer will pay no more than would have been paid had energy been purchased from the utility. ESCOs cited several reasons for this result, including the practical difficulties of providing a price guarantee while commodity prices offered by the utility are unknown in advance and are subject to out-of-period adjustments, the desire for ESCOs to recover marketing and other costs that utilities do not incur, and the utilities’ ability to purchase energy in volumes that many ESCOs cannot

During a PSC meeting today, Staff said that ESCO prices charged to low-income customers have been in excess of the default supply rate.

Staff said during today's meeting that, since ESCOs were not willing to provide guaranteed savings programs, and that no energy-related value-added products or services have been identified that are appropriate for low-income customers, the only appropriate action is to adopt a moratorium on ESCO service to low-income customers

The PSC's discussion today did not explicitly address whether the moratorium applies only to new enrollments, or to all customers, including those customers already on ESCO service (and, if the latter, how soon must ESCOs cease serving such customers).

Staff did describe the order adopted by the PSC as providing that low-income customers, "would not be eligible to be served," by ESCOs (suggesting ESCOs could not serve any low-income customers, including current shoppers), though Staff's language in such discussion may not have been precise with respect to existing ESCO customers.

PSC Chair Audrey Zibelman said during today's meeting that the state can no longer be in the situation where low-income customers pay more for energy service

Zibelman did stress that the moratorium would be revisited after the PSC adjudicates issues in its broader retail market "reset" proceeding

The PSC in its discussion did not specifically define low-income customers, or if the instant moratorium adopts the definition of Assistance Program Participants (APP) customers used in the February 2014 order, which defined such customers as those receiving assistance under utility administered low income discount programs and the Home Energy Assistance Program (HEAP)

The PSC said that its action represented one of the first such actions in the nation. However, certain retail choice programs have always prohibited customers in arrears or customers on assistance programs (PIPP in Ohio) from shopping.

More details will follow as announced by the PSC or issued in written order