Featured post

NYPSC Order Requires Revisions to NY Retail Marketer Practices

On February 6, 2015, the NYPSC issued revisions to retail market rules regarding both third party verification and service to low-income customers. These rule changes are likely to drive up the cost of doing business for energy marketers (“Energy Service Companies” or “ESCOs”) in New York State. Moreover, ESCOs must begin to implement procedures in order to comply with these new requirements on time.

The history of these changes dates back to February 25, 2014, in the NYPSC Order Taking Actions to Improve the Residential and Small Non-residential Retail Access Markets (“February Order”). The February Order revised the Uniform Business Practices (“UBP”), which set forth the NY rules on ESCO eligibility, customer enrollment, marketing standards, consumer protections, and other compliance requirements for ESCOs and utilities. Following the February Order, numerous parties requested changes and, on April 24, 2014 the NYPSC hit the pause button – delaying implementation of numerous controversial rule changes – until now.

Rule Changes Addressed in the February 6, 2015 Order

While several rule changes are still under review, two of the issues addressed in the February 6, 2015 include:

  • Third Party Verification Rules Revamped.  Going forward,third party verification (TPV) will be required for all telephonic and door-to-door sales, as well as some electronic enrollments that involve direct customer contact by the ESCO. ESCOs may use an Independent Third Party calling service or an Integrated Voice Response (“IVR”) system, which must be recorded without the ESCO marketer’s presence. The use of an IVR system was a subject of controversy in the proceeding. However, the NYPSC ultimately found that IVR can adequately protect consumer interests just as well as a live independent TPV. This new requirement also extends to “network” marketing (where a customer can become a representative and enroll others). The TPV script consists of numerous questions that customers must respond to in order to verify their identity, authorize information release, and confirm key terms of what they signed up for. ESCOs must comply with the revised TPV requirements, including the use of the revised TPV script outline, within 90 days of the issuance of the February 6, 2015 Order, or May 7, 2015.
  • Changes to Terms of Service to Lower Income Customers. If an ESCO chooses to serve low income Assistance Program Participants (which ESCOs are not required to do), the ESCO must satisfy at least one of two conditions. The ESCO must guarantee that the customer will pay no more on an annual basis than the customer would have paid as a full service customer of the utility. Alternatively, the ESCO must provide Assistance Program Participants with energy-related value-added products or services. PSC Staff is going to hold a collaborative meeting before April 7, 2015 to determine what exactly is meant by “value-added products,” as well as determine the details of a mechanism that will allow ESCOs to quickly confirm whether a customer is an Assistance Program Participant. This Staff-led collaborative is required to submit a report of its proposals for PSC consideration within 180 days.

Rule Changes To Be Addressed In The Future

The following potential revisions remain stayed from April 24, 2014 and were not addressed in the February 6, 2015 order. These matters will be addressed in forthcoming orders by the PSC:

  • In the event of termination for nonpayment where the customer owes more for service through an ESCO than what the customer would have owed for utility service, the option for the customer to pay the lesser amount to avoid having their service shut off.
  • Requiring ESCOs to file quarterly historic prices for small non-residential customers with the PSC. (Currently, ESCOs must file these reports for all residential customers)
  • Requiring ESCOs to post prices for small non-residential customers on the Power to Choose website every month, with a guarantee that these small non-residential customers will never be charged more than what was posted on the website when they signed up. (Currently, ESCOs must report these monthly prices for all residential customers)
  • The requirement that utilities calculate and establish ESCO-specific Purchase of Receivables (POR) discount rates. This would require modifications to utilities’ customer information and billing systems and to utility billing services agreements.

Contact the attorneys at Feller Energy Law Group, PLLC if you have any questions at info@fellerenergylaw.com. This proceeding is under NYPSC Case Number: 12-M-0476.

NYPSC Approves First Community Choice Aggregation Pilot Program

On February 26, the New York Public Service Commission (“NYPSC”) approved Sustainable Westchester Inc.’s petition to implement a demonstration community choice aggregation (CCA) project in Westchester County, the first such project in New York State. For energy service companies (“ESCOs”), CCA programs have the potential to secure a large number of customers at relatively low marketing costs. This in turn could create the scale to accelerate deployment of value-added services such as home energy management.

Sustainable Westchester, Inc. (“SW”) is a not-for-profit organization comprised of several municipalities in Westchester County. The NYPSC did not address all of the requests made in SW’s December 23, 2014 petition, but did order the creation of a demonstration CCA, and waiver of certain provisions of the Uniform Business Practices (“UBP”). The SW pilot program will now allow municipalities in the county of Westchester more control over energy costs by permitting municipalities to negotiate with energy service companies (“ESCOs”) on behalf of its residents. Any resident not enrolled with an ESCO at the start of the program will be automatically included in the CCA, unless the customer “opts-out.”

About Community Choice Aggregation

In a CCA program, a local government (or group of local governments) passes an ordinance establishing plans to aggregate the energy supply needs of its residents, and if approved, negotiates terms for energy service with ESCOs. Typically, every individual in the municipality is automatically enrolled in the CCA. In what is known as an “opt-out,” individual customers would be free to not participate in the CCA offerings by choosing utility service or an ESCO.

CCA programs can serve as an opportunity to introduce large numbers of customers to retail competition without the risks posed by the current retail choice model. Aggregation of large numbers of customers creates negotiating power, allowing municipalities to find better prices for customers, as most CCA programs in other states offer fixed prices. Due to the scale and reduced marketing costs provided by aggregation, retail customers may also be provided with the lower supply costs usually obtained by commercial and large industrial customers. Additionally, customers enrolled in the CCA have all the same protections as other ESCO customers. For the municipality, CCA allows local governments the flexibility to set their own energy goals based on local input, and to develop distributed energy resources.

How the Sustainable Westchester CCA Will Work

Similar to other CCA programs, the SW CCA will enroll customers on an opt-out basis. Customers already enrolled with an ESCO will not be included in the program, and those customers that opt-out or are not currently served by an ESCO receive default utility service. Large commercial and industrial customers will not be enrolled with the CCA. However, residential and small commercial customers will be enrolled at rates municipalities have negotiated in order to save money, are at a fixed rate, or are contracts for a green product.

Now that the NYPSC has issued an Order approving SW’s demonstration project, each municipality that has approved use of CCA, including the County of Westchester, the Cities of Peekskill and Yonkers, the Towns of Bedford, Lewisboro, North Castle, North Salem, Ossining, and Somers, and the Village of Pleasantville, will issue a request for proposals (“RFP”) to ESCOs. After a contract has been awarded, the municipalities will notify residents and small businesses of their option to opt-out within 20 days. At that point, the utility would have to provide customer usage data, account numbers, and service addresses to the selected ESCOs.

Information and Data Exchange

Central to the success of the CCA is information and data exchange between the municipality, ESCO, and the utility. Current UBP procedures require affirmative consent from customers in order for there to be information exchanges between the utilities and ESCOs, for customer enrollment into a supply program, and for switching between service providers. However, in order to enroll a municipality’s worth of customers, individual affirmative consent is impractical and costly. Utilities are in possession of customer usage data that the municipality would need to provide to ESCOs both during contract negotiations and once an ESCO has been chosen. SW asked that the NYPSC require Consolidated Edison Company and New York State Electric & Gas Corporation to provide certain customer information in order to facilitate the enrollment of customers. SW also requested that the NYPSC be granted a waiver of certain UBP requirements restricting this information transmittal.

The NYPSC granted both of SW’s requests, waiving those provisions of the UBP that would prevent such information from being exchanged, and ordering the utilities to release customer data. In order to protect customer data, the utilities will only provide aggregated usage and capacity tag data to the municipality after the NYPSC has received and reviewed a letter attesting to the municipality’s authority to implement a CCA. It will be the municipality’s responsibility to notify its residents and commercial customers of the implementation of the CCA, customer opt-out options, and links to the information about the CCA.

Renewable Energy and Energy Efficiency

One of the advantages to CCA is that municipal governments can collaborate with ESCOs, DER providers, and utilities to engage in energy planning. SW requested the establishment of an energy efficiency tariff, along with the “Open Underwriting Resource Service” energy fund to finance demand response and micro-grid development. The NYPSC declined to make a determination on these items, citing a lack of detail in SW’s petition about the implementation of these programs. NYPSC did state that CCA participants will continue to contribute to state-mandated energy efficiency and clean energy funds through distribution charges. This would not preclude an order implementing such energy initiatives in the future, however.


The Commission has indicated that CCA can help achieve the Commission’s longstanding goals, as outlined in the Renewing the Energy Vision (“REV”) initiative, of achieving wider deployment of distributed energy resources and of increasing the participation of, and benefits to, residential and small non-residential customers in retail energy markets. However, out of all of the proposals made in the SW petition, the NYPSC only ordered the implementation of the CCA program and necessary wavers of the UBP. The NYPSC declined to commit to the four year program, instead ordering a compliance filing due after 13 months outlining costs and customer participation.

The NYPSC continues to request input on a number of CCA topics pursuant to REV, including whether ESCOs and non-ESCO customers should be given the same opt-out options, if permanent changes need to be made to the Uniform Business Practices, or if the general structure of CCAs should be changed. Any orders made in this proceeding will affect the SW CCA unless contrary to the Order authorizing the demonstration project. The NYPSC has opened Case No. 14-M-0224 to examine these potential challenges, and will be accepting comments until April 1.

FERC Rulemaking Could Ease Retailers’ Disclosure Requirements And Compliance Costs

The filing deadline for FERC-566, the annual report of a public utility’s 20 largest customers, is due February 2, 2015.  This requirement applies to all retail suppliers that hold FERC market-based rate authorization. Much to the dismay of retail suppliers, this public filing includes a requirement to publish a list that discloses valuable customer information – any company, firm, or organization that is one of the 20 largest retail purchasers during any one of the three preceding calendar years. Each of these 20 largest purchasers must also be notified that it is on the list. On December 18, FERC proposed a rule change that, if adopted, would release several categories of public utilities from the requirement to file Form 566. FERC is also proposing to make changes that could lower the cost of compliance, and limit disclosure requirements. These proposed changes will benefit retail suppliers who hold FERC authorization. Continue reading

Will States Take Over Demand Response Markets?

How will demand response (“DR”) be compensated in wholesale energy markets under NY’s Reforming the Energy Vision (“REV”) initiative in the wake of the DC Circuit Court’s decision vacating Order 745, and how will the bulk system respond to cuts in peak demand with the growth of distributed energy generation (“DEG”)? How will FERC’s role change as regulation of DR migrates from federal to state jurisdiction? This article focuses on DR, and a follow up will be coming shortly on DEG in our ongoing series on REV. Continue reading

Power Marketing Industry A Target of FERC Enforcement Investigations in 2014

On November 20, FERC Enforcement announced the issuance of its annual report for fiscal year 2014. All market participants in the energy industry need to ensure that their ducks are in a row as FERC Enforcement is continuing its focus on fraud and market manipulation. Just over the last few months, FERC enforcement has been active in the power marketing industry. For example, on August 5, FERC’s issued a public notice of violations against Powhatan Energy Fund for allegedly manipulating PJM’s up-to congestion market. On August 25, FERC issued a notice of violation against City Power Marketing for allegedly manipulating PJM’s up-to congestion market. On September 29, FERC approved a settlement between DC Energy, LLC, Scylla Energy LLC and PJM regarding a dispute over the deviation charges applied to internal bilateral transactions. In addition, at the end of October FERC announced that it has opened three probes, one into the natural gas market and two generators that took advantage of uplift payments last winter.

Below are some highlights from FERC Enforcement’s annual report: Continue reading

This Week At FERC

Here Are Your 6 Top Stories This Week at FERC:

  1. FERC Revokes Market-Based Rate Authority for 26 Utilities
  2. PJM Updates Capacity Performance Proposal
  3. Proposal For Centralized Bilateral Natural Gas Market Exchange Gets Pushback
  4. NYPSC Takes FERC to Court Over New Capacity Zone
  5. FERC Launches Investigation into Market Manipulation
  6. ISO-NE Responds to NEPGA’s Winter Reliability Program Concerns

Continue reading

DC Circuit Issues A Stay On Vacating of Order 745 & The Market Reacts

On October 20, the Court of Appeals for the DC Circuit issued a stay on its ruling to vacate Order 745. The stay will be in effect until December 16, which will give the Solicitor General and FERC time to issue a writ of certiorari to the Supreme Court. If the case goes to the Supreme Court, then Order 745 will remain in effect until a final ruling is issued on the matter. For a refresher on Order 745, which lays out FERC’s demand response program to compensate end-users for reducing their consumption in wholesale organized markets, see our previous blog post here.

In FERC’s request to the DC Circuit for a stay of its decision on Order 745, FERC indicated that it may petition the Supreme Court for review. There is currently a great deal of uncertainty on the scope of FERC’s jurisdiction between wholesale and retail markets. While policy professionals are working to resolve this jurisdictional conundrum, stakeholders are wading in a bath of market uncertainty. Continue reading

1 2 3 4