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New York ESCOs Seek Further Extension For Compliance With New Mass Market Pricing & Product Limits

Will Seek Technical Conference On Implementation, Including Remaining Questions On Defining Small Commercial Customers

April 8, 2021

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Copyright 2010-21
Reporting by Paul Ring •

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The New York Retail Choice Coalition (the 'Coalition' or 'NYRCC') requested from the New York PSC a ninety (90)-day extension of the Implementation Date of the PSC's retail market reset order, in order to, "allow adequate time for energy service companies ('ESCOs') to compliantly transition current customers to the specific products individual ESCOs are permitted to offer residential and small commercial customers under Revised Letters of Eligibility issued by Department of Public Service Staff ('DPS Staff') in recent weeks."

As previously reported, the PSC's Secretary previously granted an extension for compliance until on or about April 16.

"Recognizing that the retail market was not ready for implementation of changes under the Reset Order, the Secretary granted a sixty (60)-day extension on February 4, 2021. Issues related to market uncertainty and ESCO readiness continue, and therefore an extension is again warranted 'in order to promote the fair, orderly, and efficient conduct of this proceeding,'" NYRCC said

"Specifically, we are requesting a second extension to give ESCOs sufficient time to properly communicate permissible product offerings to customers and meet the requirements that they provide the customer with the new contract terms and obtain affirmative consent from customers. The Coalition estimates that this process will take anywhere from sixty (60) to ninety (90) days due to the volume of customers many of the ESCOs provide energy to. With many ESCOs only recently receiving a letter of eligibility permitting the maximum types of products available to mass market customers (such as guaranteed savings products) -- within the past few days, -- they have little time to operationally communicate the aforementioned items to their entire customer base," NYRCC said

"In addition, while ESCOs are going through this transition, there are still questions regarding which customers may qualify as large commercial, creating regulatory uncertainty in the industry. The Coalition believes that more clarification is needed for ESCOs to determine which commercial customers may qualify as large commercial customers and thus not be limited to the products permitted under the Reset Order," NYRCC said

"To clarify the Coalition’s concerns further, with little over a week before the Reset Order Implementation Date, ESCOs are still struggling to understand whether certain nonresidential customers may qualify for treatment as large commercial customers. Without sufficient guidance, ESCOs are forced into the undesirable position of having to take regulatory and business risks that could lead to allegations of noncompliance and/or lost business. Worse for the marketplace, without guidance, changes to the UBP will not be implemented consistently. While the Rehearing Order offered some clarification of factors determining whether a customer is subject to the product limitations of the Reset Order as a small commercial customer or rather may enjoy the freedom, flexibility, and competitive pricing typically afforded to larger commercial customers, many questions remain. The Coalition will submit a letter to DPS Staff by the end of this week (April 9, 2021) formally requesting that Staff hold a technical conference or provide guidance during this brief extension period to ensure that ESCOs have the necessary guidance to consistently implement the changes to the UBP adopted under the Reset Order. Coalition ESCO participants seek Staff’s guidance to fully understand what is required of them and want to comply with the spirit and letter of the changes under the UBP but are unable to do so without further guidance from Staff," NYRCC said

Proposed topics from NYRCC for the technical conference are discussed at the end of this story

"These concerns should not be read to be a criticism of DPS Staff. The Coalition commends DPS Staff’s tremendous effort in efficiently communicating requested revisions to customer agreements, marketing materials, and other RAAF components to ESCO Applicants," NYRCC said

"While significant progress has been made toward application reviews and issuances of Letters of Eligibility, numerous unsettled issues still mandate a further extension," NYRCC said. NYRCC further said that granting its request will serve the public interest for several reasons:

• "Additional time is necessary to ensure that the various products and services that ESCOs are permitted to provide to residential and small commercial customers are available to current ESCO customers at the time of customer renewal.

• "It will allow DPS Staff the additional time needed to complete its review of the application materials from ESCOs that seek to expand product offerings to include guaranteed savings products and home warranty products.

• "Without additional time, ESCOs that have already received authorization to offer customers a home warranty product, guaranteed savings product, or other offerings that require heightened scrutiny will have a significant market advantage over those ESCOs that are still awaiting approval from DPS Staff of their product offering requests.

• "It will assist LDUs by ensuring an efficient and orderly process for transitioning selected residential and small commercial customers back to full LDU service."

"Larger ESCOs typically have more employees and resources, giving them an advantage over smaller and mid-size companies during this time of transition. As a matter of public policy, it is critical that steps are taken to ensure a level playing field, such as this requested extension," NYRCC said

"In addition, the Coalition believes the request for a further extension should be granted to ensure that current ESCO customers receive the benefit of all value-add products and services approved by the Commission with minimal disruption, as contemplated by the Order Addressing ESCO Petitions Requesting Authorization to Provide Additional Products and Services issued by the Commission on January 25, 2021 ('January 25 Order'). Among other things, the January 25 Order authorizes ESCOs to offer a commodity product bundled with a home warranty product not subject to a price restriction. In order to offer this product, ESCOs are required to first obtain approval by DPS Staff. Specifically, to offer the home warranty product, ESCOs are required to file the proposed standard sales agreement(s) for review and approval by DPS Staff," NYRCC said

"Another reason the Coalition respectfully submits that an extension of time is necessary is to give ESCOs sufficient time to prepare documentation required by the January 25 Order and give DPS Staff adequate time to evaluate the documentation submitted by ESCOs seeking to offer either product and then issue revised Letters of Eligibility. Even after an ESCO is permitted to offer a home warranty product to residential and small commercial customers, it will likely take that ESCO ninety (90) days to contact the customer, transition that customer into a contract for service that includes a home warranty product, and then obtain affirmative consent from that customer (most likely with a third-party verification)," NYRCC said

"The Coalition understands that the overall review of the initial applications and pending further requests to serve additional products is a massive undertaking by DPS Staff and appreciates the time and effort DPS Staff is putting forth to make the new regulatory changes work. Still, to the extent certain ESCOs have received approval of home warranty products (or other products) more than sixty (60) days ago, while others have received Letters of Eligibility expanding the types of products they are permitted to offer residential and small commercial customers, an unfair advantage will exist for one group of companies over another (and in most cases this advantage will lie with larger companies that have significantly more resources than smaller and mid-size ESCOs)," NYRCC said

"Without an extension of the Reset Order Implementation Date, many ESCOs that have not yet received Eligibility Letters may have no choice but to return customers back to LDC service en masse, thus jeopardizing the already burdened LDCs’ ability to ensure compliance with Pandemic-related consumer protections as well as the Commission’s ability to comply with its current enhanced oversight obligations," NYRCC said

Proposed Technical Conference Topics

NYRCC proposed the following topics and questions for further clarification at its proposed technical conference

• Will the utilities or DPS Staff issue updated guidance to the 2016 documents that list which rate classes were considered residential and nonresidential and which rate classes indicate the presence of a demand meter?

• In the absence of updated guidance, how will ESCOs be able to identify residential versus nonresidential accounts or demand versus non-demand accounts?

• Will the utilities or DPS Staff keep this information updated when rate classes are changed?

• How should an ESCO respond if a business owner wants to include their home account on the company contract? Does the ESCO have to separate the home account from the business account, or can it aggregate the accounts per the customer’s request?

• The 2016 guidance allowed aggregation of all accounts sharing the same utility customer name. Can ESCOs assume that accounts sharing the same customer name may still be aggregated? Is there another proposed mechanism that ESCOs can use to group accounts?

• Will a new company or business started during the Pandemic with no historical usage be considered a mass-market account until full operations have started? Will ESCOs have to wait a year until the customer could be served as a non-mass-market customer?

• For fixed-rate products, if the price is capped based on the historic utility average price at the time of enrollment, what happens if the customer executes a contract based on the then-existing utility average price and the utility updates its average price before the customer’s enrollment is processed, resulting in a fixed-price product that is higher than the 5% cap?

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