Direct Energy Says Offshore Wind Obligation In New York Should Be Tied To Delivery Service, Not LSEs

In comments to the New York PSC, Direct Energy Services, LLC recommended that a proposed purchase of offshore wind renewable energy credits ("ORECs") should be fully managed by each electric distribution company ("EDC") in New York and passed through to the customer through a non-bypassable charge on the delivery, rather than a purchase obligation being imposed on each LSE including ESCOs

Addressing an April request for comments from the PSC, Direct Energy said, "The Staff proposal bases the OREC requirement on the load that each Load Serving Entity ('LSE') serves in New York. Since this requirement is calculated based on load, each and every electric customer in the state will have to utilize energy from ORECs. The program would be more easily executed if it was handled directly between NYSERDA and the EDCs, thus removing ESCOs from the mix. ESCOs like Direct Energy serve many customers through fixed-rate contracts. Any time a new program is adopted by the Commission, costs are unexpectedly increased and ESCOs are forced to either pass-through the increase to existing customers (or take a loss until the customer's existing rate expires). This creates confusion and dissatisfaction of customers. In addition, it is much more efficient for NYSERDA to deal directly with the EDCs instead of having to execute contracts with potentially 175 separate ESCOs in the state. Customers will pay for these ORECs either way, why not lower the program implementation costs by making the requirement as easy as possible for all parties involved."

To the extent the OREC obligation is imposed on LSEs, and the OREC obligation becomes effective in the near future, Direct Energy said that existing ESCO fixed rate contracts should be grandfathered.

"Direct Energy respectfully requests that if this requirement is applicable to all LSEs (including ESCOs) that ample time be given to unwind existing fixed-price contracts. If ample time is not provided, existing fixed-rate contracts should be grandfathered so that this increase does not apply until these fixed-rate contracts expire. The previous implementation of the Zero Emissions Credits (ZECs) program caused customer confusion and dissatisfaction as many of their rates had to be increased mid-term. This can easily be avoided by either removing ESCOs from the OREC process completely or providing enough time before this program is implemented," Direct Energy said

Direct Energy also said that LSEs need the ability to trade ORECs. "Load may change due to customer movement (new customers may be added; existing customers may leave). Flexibility is needed in order to meet the needs of ever-changing load. ORECs need to be tradeable not only with NYSERDA directly but between other LSEs," Direct Energy said