NY Moratorium Becomes Prohibition: PSC Prohibits ESCO Service To Low-Income Customers

Update 2 (12/16): Additional Notes And Statements Made During PSC Meeting:

A written order on the ESCO low-income customer prohibition has still not yet been issued. During the PSC meeting, Staff said that the final order voted on and approved was identical to the SAPA notice. In such case, the definition for low-income customer will be identical to that used in the prior moratorium, defined as customers participating in utility low-income assistance programs (Assistance Program Participant, or APP). The number of such customers currently shopping was noted in an update yesterday (see below)

As part of the heated discussion noted yesterday, Commissioner Diane Burman said that the PSC has not had a focus on "robust" enforcement of its existing rules and removing bad actors from the market, which led her to conclude, "I am concerned that we are spending more time on regulating by press release than we are by actually looking to see what we can do to ensure that we are cleaning up the market as necessary without actually destroying the market."

Chair Audrey Zibelman took issue with such characterization. "I do not think we are regulating by headline," Zibelman said.

Zibelman claimed that ESCOs were given "every opportunity" to work with the PSC, but said, "they made a determination that they were going to sue us."

"To suggest that this Commission is doing anything but looking at how to execute its obligations to consumers is offensive to the rest us," Zibelman said

"Even though ESCOs continue to sue us, we're going to continue to pursue solutions for the benefits of consumers," Zibelman said

Burman objected to the idea that simply because a group of stakeholders were exercising their legal remedies, that they were somehow bad actors

Updated:

Low-income households represent about 30 percent of all electric and gas customers in New York State. It is estimated that there are about 173,000 low-income ESCO residential electric customers and about 108,000 low-income ESCO residential gas customers.

The ban is effective in 60 days after the order is issued.

Earlier:

The New York PSC adopted an order today transforming its "moratorium" on ESCO service to low-income customers into a "prohibition" on ESCO service to low-income customers

The prohibition is to continue indefinitely, although Staff said that the issue of ESCO service to low-income customers may potentially be reconsidered once the PSC concludes its broader evidentiary hearing process (see details) concerning ESCO service to mass market customers generally

The PSC said that the low-income prohibition was needed because the PSC said that low-income customers on ESCO service are paying more than default service customers (see details), and to stop the dilution of assistance benefits that results.

Staff said that the order voted on by the Commission does allow an ESCO to petition the PSC for a waiver of the low-income prohibition for a product which provides guaranteed savings to the customer

Specifics on how a guaranteed savings product may qualify for the waiver were not immediately available.

A written order has not yet been issued

In a heated exchange, Commissioner Diane Burman expressed frustration with the PSC's process regarding its recent ESCO orders, and questioned whether the PSC could adopt the prohibition without violating a temporary restraining order that has been issued by a court against the PSC's prior moratorium. Staff responded that the court did not and can not stay the future action of the PSC.

Burman disclosed that she only learned of the PSC's recently instituted evidentiary hearing process (see details) concerning ESCO service to mass market customers generally upon reading of the process in the press.

Chair Audrey Zibelman took exception to Burman's comments, calling it "offensive" to suggest that the PSC is doing anything other than ensuring that it is fulfilling its obligation to protect consumers.

In regard to the mass market evidentiary hearing process, Burman noted that the notice was devoid of any discussion of default service pricing or related issues.

As the PSC discusses ESCOs' allegedly charging in excess of default service rates, it's worth noting that the PSC also today voted on a petition from KeySpan New York to defer approximately $43 million of gas default service supply costs during calendar year 2017, due to a reconciliation of an under-collection (in other words, default service rates were below cost in 2016, and KEDNY sought to keep default service rates below cost for an additional period of time for rate mitigation purposes)

See more details on KEDNY's request here

Although the PSC did not grant KEDNY's specifically sought relief, a draft order presented by PSC Staff is to allow a "phase-in" of the reconciliation at KEDNY to "mitigate" the otherwise required default service rate increase. Further details were not available at this time; a written order has not yet been issued on the KEDNY reconciliation.