Public Service Commission Proposes Revisions to Uniform Business Practices

(See Part 1: NY PSC Pushes Storage as Critical Component to Utility Planning Process)

The New York Public Service Commission (“PSC” or “Commission”) issued a Notice Seeking Comments on Revisions to the Uniform Business Practices (“UBP Revisions”or “Notice"), which is the Commission’s latest effort to amend the Energy Service Company (“ESCO”) marketing requirements. In response to a seemingly minor 2017 statutory amendment to the NYS General Business Law protecting deceased accountholders from termination fees, and a narrowly drawn petition filed by Green Mountain Energy Company to eliminate the requirement that marketers provide their full first and last name on their employee badges for safety and privacy reasons, the Commission took the opportunity to propose sweeping new regulations to the retail energy market. The Notice described these as “housekeeping items.” Some of these items include expansion of the Third Party Verification (“TPV”) requirements, longer document retention periods, a requirement that ESCOs offer residential customers voluntary budget billing or levelized payment plans, a requirement that marketers advise customers to check their utility bill as a comparison to ESCO prices, and enhanced abilities of the Commission to revoke ESCO eligibility status.

The most significant new requirements relate to the TPV process. The UBP Revisions would require TPVs for the following types of sales: door-to-door, telemarketing, scheduled appointments, direct mail and electronic enrollment. Those TPV recordings, along with other documents pertaining to authorization of enrollment, must be kept for as long as the customer remains with the ESCO, plus an additional two years thereafter. For door-to-door sales and sales made by a scheduled appointment, the TPV must be conducted at least 30 minutes after the sales representative leaves the customer’s premises. The UBP Revisions also modify the substance of what questions are included in the TPV process by requiring the TPV agent to: (1) ask the customer if they participate in their utility’s low-income assistance program, and (2) verify that the marketer advised the customer to check their utility bill for the utility’s rates as a comparison to the price the ESCO is offering. Further, the TPV must be terminated, and the sale canceled, if a customer asks “any questions with respect to the agreement” during the verification process.

The UBP Revisions also, for the first time, provide authorization for sales obtained through an e-mailed contract. (Previously, the UBP only contemplated written agreements by original document or fax). At the same time, the changes appear to require TPV for all forms of written agreements, whether received by e-mail, fax or mail.

The UBP Revisions also address ESCO compliance with the Clean Energy Standard (“CES”). Just as the Commission’s February 22, 2017 Order Directing Tariff Amendments requires the utilities to recover the costs of purchasing Renewable Energy Credits (“RECs”) and Zero-Emissions Credits (“ZECs”) through existing supply mechanisms and bill lines—as opposed to a separate line item to show customers the true cost of these programs—the UBP Revisions require ESCOs to imbed their ZEC cost recovery (but not RECs) into commodity charges on customers’ bills. Meanwhile, neither the UBP Revisions, nor the recent Order Approving Phase 1 Implementation Plan, address the outstanding issue that some ESCOs face with regard to the disparity between the Commission’s estimated ZEC obligations imposed on each ESCO—which is based on sales data from the 2015-2016 period—versus actual obligations based on changes in load since that period. Some ESCOs have indicated that as a result of this disparity, they may be required to overpay for their ZEC obligations by millions of dollars, which will accrue non-refundable interest until those overpayments are trued up.

The proposed UBP Revisions are far from mere “housekeeping items,” and could create significant compliance challenges for ESCOs. ESCOs should carefully consider these proposed requirements in light of their business operations. Comments on the changes are required by May 8, 2017.