By: Meghan Boland, Esq.

On July 14, 2016, the New York Public Service Commission approved the Order Regarding the Provision of Service to Low-Income Customers by Energy Service Companies (Case 12-M-0476 et al.) (“the Order”) establishing a moratorium on energy service company (“ESCO”) enrollments and renewals of assistance program participants (“APPs”). Note- the moratorium does not apply to Community Choice Aggregation.

The Order passed 3-1 with Commissioner Diane Burman dissenting. In reaching this decision, the Commission relied on a collaborative (“Collaborative”), established under the February 6, 2015 Order Granting and Denying Petitions for Rehearing in Part (“February 2015 Order”).[1] The Collaborative met several times from March to October 2015 and issued “A Report of the Low-Income Collaborative on November 5, 2015 (“Collaborative Report”).[2] The Collaborative was unable to reach a resolution of the issues identified in the February 2015 Order. The consensus of the Collaborative was that few, if any, ESCOs intend to offer a product which guarantees that the customer will pay no more than they would have paid as a full service utility customer.[3] Staff also placed great weight on Direct Energy’s comments which state in part that “there is no evidence in the record . . . that any ESCO will offer the price guarantee that is one of the two available pathways for an ESCO to serve APP customers going forward. . . Moreover, it is increasingly likely that the ‘value-added’ option for complying with the Commission’s Order will be difficult or impossible to execute.”[4]

The perceived “inability to address the fundamental concern that APPs are experiencing a diminution in their assistance dollars, funded by all ratepayers and taxpayers, led the Commission to issue a moratorium on ESCO enrollments and renewals of APPs.”[5]

Given the Collaborative’ s inability to resolve these issues, combined with the continuing harms to APPs by non-compliant ESCO products, the Commission suspended the Collaborative and ordered a moratorium on APP enrollments and renewals, effective 60 days after the effective date of this Order, which shall remain in effect until lifted by the Commission. Staff assert that the moratorium “is necessary to ensure that the financial benefits provided to APPs through utility low-income assistance programs are not absorbed by ESCOs, who in turn, provide gas and electricity at comparatively higher prices, without any corresponding value to the APP.” [6]

Commissioner Burman found the Order problematic as she felt it mischaracterizes the comments of Direct Energy, over broadly asserts that ESCOs provide no value to low-income customers, and that bolstering enforcement would be a wiser course of action. Chairwoman Audrey Zibelman responded by justifying the Commission’s decision to err on the side of caution when it comes to “protecting the most vulnerable” customers in New York State. Commissioner Zibelman also noted that, although the moratorium has no set end-date, should the various interest groups be able to reach a workable alternative, the moratorium could be lifted and that discussion on how ESCOs may better serve APPs and low-income customers should continue.

Customer Privacy Concerns:

• ESCOs will not be provided with customers’ APP status. Instead, the utility shall place a block on all APP accounts preventing future enrollment with an ESCO. For existing APPs served by an ESCO, including customers who were not APP at the time of enrollment but subsequently become APP, the utility will inform the ESCO that a block has been placed on the account, that the ESCO is no longer eligible to serve the account, and that the customer must be de-enrolled at the expiration of the existing agreement.

New Enrollment of APPs:

• The moratorium on the enrollment of new customers will be implemented through a rejection by the utility, through an electronic data interchange (EDI) transaction, of an enrollment of an APP. Beginning 60 days after the effective date of the Order, utilities will be required to place a block on all APP accounts. The ESCO can elect, at the POS, to ask the prospective customer if he or she is enrolled in a utility income assistance program. If the prospective customer indicates that he or she is, the ESCO should cease marketing to the customer. If the prospective customer claims that he or she is not enrolled in a utility low-income program when in fact they are, and the ESCO enrolls the customer, the enrollment will be rejected by the utility. This rejection will not reveal the customer’s APP status to the ESCO because customers can have blocks placed on their account at any time, for multiple reasons, or no reason at all. When the enrollment is rejected, the ESCO is not provided with a reason for the rejection, other than that there is a block on the account.
• While the ESCO will have incurred costs to market to the customer, no viable alternatives have been identified.
• Finally, in the event that an APP is enrolled with an ESCO at any time after the moratorium is in effect, that enrollment shall be void. In such a situation, the enrollment was wrongfully processed and the customer shall be returned to full utility service immediately after the error is discovered.

Existing APP ESCO Customers:

• Within 60 days of the effective date of this Order, the utilities will communicate to the ESCO which accounts the ESCO is no longer eligible to serve. The ESCO will not be informed that the customer is an APP, but instead will only be informed that a block has been placed on the account. This situation would be similar to one in which an ESCO customer contacts the utility and wishes to have a block placed on their account and to be returned to utility service.
• At or around the same time, but no later than 14 days after the utility contacts the ESCO regarding the accounts the ESCO is no longer eligible to serve, the utility will also send a letter to the ESCO customer, informing the customer: (1) that they are enrolled in the utility’s low-income program; (2) of the moratorium directed in this Order; (3) the reason for and protections provided under the moratorium; and, (4) that they will be returned to utility service at the expiration of their existing ESCO agreement. Utilities are required to file drafts of these letters with the Secretary for Staff review within 30 days of the effective date of this Order.
• After receiving the communication from the utility, the ESCO shall then de-enroll the identified accounts at the expiration of the existing agreement. With respect to customers on variable rate, month-to-month contracts, the expiration of the agreement is at the end of the current billing period.

Customers who Subsequently become APPs:

• When a utility enrolls a new customer in its low-income program, at a date more than 60 days after the effective date of the Order, it shall immediately place a block on the account. It shall also, consistent with the discussion above, inform any ESCO serving that customer that the ESCO is no longer eligible to serve that account. After receiving the communication from the utility, the ESCO shall then de-enroll the accounts at the expiration of the existing agreement, which for variable rate, month-to-month contracts, is the end of the current billing period.
• The utility shall also send a letter to the customer at or around the same time it contacts the ESCO regarding the accounts the ESCO is no longer eligible to serve, but no later than 14 days after enrollment as an APP.

A number of larger ESCOs have expressed frustration and outrage at yesterday’s Order and have indicated they intend to file Requests for Rehearing and possibly civil action. Requests for Rehearing and Reconsideration are due 30 days after issuance.

[1] CASE 12-M-0476 et al., Order Granting and Denying Petitions for Rehearing in Part, (Issued and Effective Feb. 6, 2015) at 7.

[2] CASE 12-M-0476 et al., Report of the Collaborative Regarding Protections for Low Income Customers of Energy Services Companies (Nov. 5, 2015) [hereinafter Collaborative Report].

[3] Collaborative Report, at 32.

[4]  CASE 12-M-0476 et al., Order Regarding the Provision of Service to Low-Income Customers By Energy Service Companies (Issued and Effective July 15, 2016), at 17.

[5] Id, at 2.

[6] Id., at 6.