New York Adopts Cap On Termination Fees, Other Consumer Protections for Distributed Energy Resources

The New York State Public Service Commission said in a news release that it has, "strengthened the consumer protection standards for the State’s rapidly expanding distributed energy resource market."

Specifically, early termination fees for community distributed generation project members are capped, production guarantees will be required for on-site mass market solar projects and escalation clauses in contracts between customers and developers must be clearly disclosed, the PSC said

Termination fees for Community Distributed Generation projects will be capped at no more than $200. Additionally, termination fees must be waived where the customer provides appropriate notice and finds a replacement; companies are also encouraged to waive termination fees where a replacement customer is available on a wait-list.

The new rules require that a production guarantee must be included in the contract for any project where the customer pays a fixed amount regardless of actual generation, including purchase contracts and lease contracts with a fixed monthly fee. A production guarantee is the installer’s commitment that the project’s design is accurate. It ensures that all relevant factors are factored into the design process, and that all variables were accounted for. This guarantee is often backed up by monetary compensation if the target kWh is not met for one year of the system’s production, the PSC said

Finally, the new rules require clear disclosure of the escalation rate, methodology and or formula, including illustrative examples of the resulting rates. Escalation rates are a common feature of long-term distributed energy resources contracts.

"The Commission’s experience in regulating energy services companies (ESCOs) in the gas and electric supply market has demonstrated that oversight is needed to prevent false promises, exploitative and predatory pricing, and other deceptive or intentionally confusing behavior in marketing to residential customers and small businesses," the PSC said

These rules will be effective for new contracts signed after May 1, 2019. Today’s decision updates the UBP-DERS to reflect these new rules and directs the utilities to update their tariffs to include the new UBP-DERS.

A written order was not immediately available

Case 15-M-0180