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New York DPS Staff Propose Price Cap For Municipal Aggregations

DPS Staff Proposes Allowing CCAs To Enroll Opt-in Customers Without Verification Required Of ESCOs Under UBP

To Address CCA Pricing Challenges, Staff Seeks Proposals To Allow CCAs To Offer Green Energy In Manner That May Not Be Compliant With Environmental Disclosure Program Standards

Staff Reports "Inaccurate" Info In Some CCA Opt-out Letters, "Misinformation" In Other CCA Materials

April 28, 2021

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Copyright 2010-21
Reporting by Paul Ring •

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Staff of the New York Department of Public Service recently filed a whitepaper on proposed changes to provisions governing municipal aggregations (community choice aggregations or CCAs), which, among other things, includes a proposed price cap for commodity supply CCAs

"Due to changes in supply markets and the need for CCA Administrators to provide a competitive price that protects CCA participants from paying a higher supply rate when compared to the utility rate, Staff recommends adopting a 5% cap on commodity product offerings," Staff said

For CCAs, Staff said that fixed-rate products should be limited to a price no greater than the trailing 12-month average utility supply rate plus a premium of no more than 5%. The price cap should apply to all commodity fixed-rate products.

Additionally, Staff sought stakeholder input regarding the application of additional price restrictions on CCA product offerings.

With respect to price comparisons to utility supply rates, Staff said, "The ability to provide clear and accurate price comparisons between the utility and the ESCO is an integral part of the retail access and CCA market."

"Without an established standard, CCA Administrators and utilities calculate the price to compare differently. This has led to inconsistent price to compare reporting between what the utility is publishing and what the CCA Administrator is providing to the municipality and its residents. One such instance of this created confusion for a significant number of consumers in a municipality that was beginning its opt-out period and required Staff involvement to address the issue. This type of inconsistency leads to consumer confusion and, subsequently, consumers choosing to not participate in CCA programs based on confusion or uncertainty rather than as an informed choice," Staff said

Staff noted that, in its Retail Access Change Order, stressing the importance of empowering customers to make informed choices with easily accessible and accurate price comparisons, the Commission directed Staff to collaborate with the utilities and develop a timely and cost-effective Joint Billing Plan. The plan will include individualized utility plans for implementation of a clear price comparison as well as establishing itemized billing of ESCO charges on the customer utility bill.

For CCAs, Staff recommends defining the price to compare for the CCA market (to be used by utilities and CCA programs) as the utility rate + Merchant Function Charge (MFC) + any other defined adder that applies to utility supply customers but not ESCO customers.

"The price to compare should be a consistent calculation across all CCA programs and utilities and should be clearly posted on utility and CCA program websites. Additionally, as the utility billing changes are made, and the ability to include an ESCO price to compare is provided on the bill, Staff recommends that this information also be provided on CCA participant bills for the ESCO that is supplying the CCA program," Staff said

Staff also proposes to not require CCAs (and their ESCOs) to verify CCA opt-in customer enrollments (such as those after an opt-out period) as ESCOs must do for non-CCA enrollments

"The UBP requirements for customer enrollment were developed to protect customers from any fraudulent enrollments. There is an inherent difference between a customer initiating contact to opt-in to a CCA program, thereby enrolling with the CCA ESCO, versus an enrollment request coming from an ESCO that may, or may not, have been initiated by the customer. Staff recommends suspending the customer authorization verification requirement of the UPB Section 5(B)(1) for CCA opt-in purposes only, while retaining the ability to reinstitute these requirements if an issue with unauthorized enrollment develops in the CCA market," Staff said

Further concerning opt-ins, Staff proposed that opt-in customers shall receive the same rate as the initial rate provided to opt-out customers (not a unique rate for customers subsequently opting in)

"When a customer joins the CCA after the initial opt-out period, in some instances, they are being charged a higher rate compared to the CCA advertised rate and contracted price. Information regarding the higher rate is not found on program websites or disclosed in any CCA Administrator filings or reporting, including potential participant opt-out letters," Staff said

"Staff believes that this practice is detrimental to CCA programs and expects that it may cause customer confusion and dissatisfaction. Additionally, it leads to misinformation being provided, albeit unintentionally, to potential participants when they research the CCA rate before opting-in. Moreover, this practice creates issues with price reporting requirements," Staff said

"Staff recommends requiring CCA programs to enroll all program participants in the same rate class under the same rate, regardless of when they joined the CCA, unless they voluntarily choose a different option such as a green opt-up," Staff said

Staff also cited instances of inaccurate information in CCA informational materials provided to customers, including opt-out letters

"The information being conveyed to CCA participants also varies by CCA Administrator, such as, the calculation of utility pricing for comparison, Commission action information, and overall savings calculations. All CCA program participants should be receiving clear, concise, and accurate information regardless of what CCA program they are enrolled with," Staff said

Staff recommends the creation of standardized templates and specific guidelines for meeting program requirements, all of which would be available on the DPS's CCA webpage. While Staff provides various templates designed to provide such clarity and uniformity, Staff is not asking the Commission to adopt specific templates or forms. Instead, Staff proposes that the Commission approve the use of standardized templates, allowing Staff the flexibility to modify templates as experience with CCA programs develops. Under this proposal, Commission action would not be required every time a change to such a form is necessary, thus allowing Staff to be efficient with its resources as well as dynamic in its oversight of CCA programs and administrators.

Staff said that CCA opt-out letters, "on occasion," miss information that is required by the Commission, do not clearly identify additional program offerings as opt-in products, and, at times, include inconsistent or inaccurate information.

Staff recommends the Commission require use of standardized outreach and education templates and guidelines for what can be included in consumer communications

Staff sought to make it clearer to customers on utility bills that they are part of a CCA

"A customer who is enrolled with an ESCO, outside of a CCA program, will see the name of that ESCO under the supplier information section of their bill. With CCA program participants being served by an ESCO as well, they, in most instances, see the same information – the name of the ESCO. However, the inability of some customers to identify the supply charges, and the serving ESCO, as being part of the CCA program they chose to participate in, has led to significant customer confusion and increased the number of customers opting out of the CCA program. Many of these customers, upon being educated that the ESCO is serving the CCA, have had to go through the challenges of the CCA opt-in process to re-enroll and receive the benefits of participating in a CCA program. While some utilities have tried to address this by providing a supplier name that either identifies the CCA program or includes the CCA program name, this has not been consistent across utility territories, primarily due to differences in utility IT system capabilities," Staff said

"To ensure that customers understand that the supply charges relate to their participation in a CCA program and are not due to being enrolled with an ESCO without their authorization, thereby reducing the number of CCA program drops due to customer confusion, Staff recommends each utility be required to include the CCA program name where the ESCO supplier name is currently provided on the customer’s utility bill. Additionally, the ESCO contact information section should be consistent with the approved MIP [Master Implementation Plan] for each program and confirmed with the CCA Administrator prior to customers receiving billing for the CCA program," Staff said

Staff noted that CCA programs have seen customer enrollment errors where customers should have been enrolled and weren’t, as well as where customers who shouldn’t have been enrolled were. These issues typically arise due to incorrect data being provided to the CCA Administrator by the utility, who is responsible for providing eligible customer data for the facilitation of CCA programs.

Staff noted that the CCA Framework Order recognized the customer’s right to choose and excluded those who had already done so, by choosing ESCO service for example, from being opt-out eligible.

With renewals of CCA supply contracts becoming more frequent as the initial contracts expire, Staff said that customers should not need to opt-out a second time if they have already chosen to opt out

"To ensure CCA programs are not interfering with customer choice, Staff recommends that customers who have opted-out in the past have that choice recognized for the life of the CCA program," Staff said

Staff recommended eliminating the utility data access fees associated with CCA programs

Staff sought comment on ways for CCAs to procure more competitively priced renewable energy that meets Environmental Disclosure Program (EDP) standards, noting that rising renewable costs have challenged the continuation of CCAs as some programs do not wish to offer a rate in excess of the utility rate

"CCA Administrators have notified Staff of the recent rise in Renewable Energy Certificates (REC) market prices which has caused a significant issue for CCAs to be able to offer their participants a green supply product or renew an existing green supply contract. Staff is seeking input on ways for CCAs to more easily procure RECs in order to offer their CCA participants EDP compliant renewable supply. With many CCA program contracts currently going through contract renewal periods, Staff has been advised that due to the inability to obtain affordable EDP compliant RECs for a compliant renewable supply product and the currently low standard supply pricing from the utilities, municipalities are choosing to leave the CCA program. Many of the participating municipalities would rather leave the CCA program than choose a standard product that might not be less than the utility supply rate. When EDP compliant requirements were adopted for use in CCA program renewable product offerings it was not foreseen that current utility supply pricing would be so low or that EDP compliant RECs would be difficult to obtain for a reasonable price. Recognizing this has the potential to significantly impact CCA program participation, Staff is seeking input on alternative product structures that, while potentially not EDP compliant, would still allow a municipality the ability to choose an environmentally beneficial product offering on an opt-out basis for its constituents," Staff said

Staff reported that there are 14 CCA program/aggregation groups statewide that include approximately 100 municipalities in various stages of joining or implementing a CCA program.

By the end of December 2019, there were 153,206 CCA participants statewide.

While Sustainable Westchester has an initial opt-out rate of only 6%, the other CCA programs had initial opt-out rates from 16% to 23%, though Staff attributed the higher opt-out rates to discrete issues related to certain optional rate customer classes included in the CCA, and confusion over a CCA's utility price comparison

The PSC invited stakeholders to submit initial comments on the Staff whitepaper by July 6, 2021, and reply comments by July 20, 2021.

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