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 firstname.lastname@example.org. This proceeding is under NYPSC Case Number: 12-M-0476.