The recent three-day weekend has not slowed the action regarding the New York State Public Service Commission’s (‘PSC’ or ‘Commission’) ‘Resetting Order,’ with several recent updates taking place on multiple fronts:

Directly with the Commission

The Resetting Order, issued February 23, 2016 as part of the ongoing Docket 15-M-0127, would limit ‘mass market’ energy products to guaranteed savings or 30% renewable energy. On February 23, the Commission also issued a ‘Notice Seeking Comments’, which solicited comments on a variety of questions regarding the future of the New York retail electricity and natural gas markets, including re-examining the role of third-party energy suppliers (or ‘ESCOs’).

On May 4, 2016 the Department of Public Service (DPS) Staff published three Whitepapers. On May 31, 2016, the Commission held a Technical Conference in Albany to discuss comments on the three proposals:

• Proposing an additional third product, which would be a 12-month fixed rate product that could not exceed a ‘benchmark’ price calculated and set using a proposed formula;

Technical Conference Takeaways: The first issue raised was that the six-week window for setting the monthly reference price, while meant to provide time for marketing of the reference price will leave little opportunity for ESCOs to hedge in a way that generates profit, given the volatile markets for energy pricing and hedging. Staff countered that the reference price is meant to prevent price gouging. However, attendees pointed out that, particularly for fixed rate products, there is enough competition amongst ESCOs to keep fixed rate offers competitive. It is variable rate products that are more likely to result in complaints. Participants also pointed out that the reference price model does not address the needs of particular small businesses, as their load profiles differ greatly from one another. Thirdly, participants stressed that the reference price needs to have a more specific mechanism for recovering costs. Staff did not disclose which factors were used to calculate the 2 cent adder, and participants pointed out that under this model, cost recovery would be subject to Commission scrutiny. Staff did suggested that a force majeure formula could be used to cover instances where prices are beyond benchmark, but the scope of Staff discretion in these matters is still unclear.

• Including an option to obtain ‘express consent’ for material changes by mailing three written notices to customers;

Technical Conference Takeaways: The Commission is continuing to explore revisions to the material change section of the UBP and invites comment on what should be considered “material change” for the purpose of obtaining express consent (Comments due June 6, 2016).

• Considering bonds or other financial requirements that should be required of third-party energy suppliers.

Technical Conference Takeaways: Purchase of Receivables (POR) has been suggested as a way to guarantee performance from ESCOs, but this idea has not gained much traction due to complications tracking these revenues. Rather than have security collected through POR, participants suggested that a bond or some other trackable method be used. National Fuel suggested that the utilities should hold performance guarantees if the utilities’ role is expanded to extend credit to customers. Staff invited written comment on what types of financial instruments should be used to guarantee performance.

In Albany Supreme Court

On March 3, 2016, three parties filed an Article 78 and a request for Temporary Restraining Order. It was granted, and has currently been extended until early June.

As Proposed Rulemaking

On May 4, 2016, the Public Service Commission published three rulemaking proposals in the New York State Register (no hearings are scheduled in relation to any of the above Notices, but comments for all three are due June 18, 2016):

1. I.D. No. PSC-18-16-00013-P / Amendments to the Uniform Business Practices of ESCOs

This propose several substantial revisions to the UBP re: ESCO Eligibility Requirements (including standard customer contracts, proof of experience, dispute resolution, etc.).

2. I.D. No. PSC-18-16-00014-P / Amendments to the Uniform Business Practices of ESCOs

The Commission also proposes that ESCOS should be required to post performance bonds or other forms of demonstrated financial capability.

3. I.D. No. PSC-18-16-00015-P / Petitions for Rehearing of the Order Resetting Retail Energy Markets and Establishing Further Process

This addresses a proposed ‘forward-looking reference price’ as an alternative to the guaranteed savings or 30% renewable products.