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STATE OF NEW YORKPUBLI C SERVI CE COMMI SSI ON

At a sessi on of t he Publ i c Ser vi ceCommi ssi on hel d i n t he Ci t y of

Al bany on Febr uar y 20, 2014

COMMI SSI ONERS PRESENT:

Audr ey Zi bel man, Chai rPat r i ci a L. Acampor aGar r y A. Br ownGr egg C. Sayr eDi ane X. Burman

CASE 12- M- 0476 - Pr oceedi ng on Mot i on of t he Commi ssi on t o AssessCer t ai n Aspect s of t he Resi dent i al and Smal l

Non- r esi dent i al Ret ai l Ener gy Mar ket s i n NewYork Stat e.

CASE 98- M- 1343 I n t he Mat t er of Ret ai l Access Busi ness Rul es.

CASE 06- M- 0647 I n t he Mat t er of Energy Servi ce Company Pr i ceReport i ng Requi r ement s.

CASE 98- M- 0667 - I n t he Mat t er of El ect r oni c Dat a I nt er change.

ORDER TAKI NG ACTI ONS TO I MPROVE THE RESI DENTI AL AND SMALL NON-RESI DENTI AL RETAI L ACCESS MARKETS

( I ssued and Ef f ect i ve Febr uar y 25, 2014)

BY THE COMMI SSI ON:

I NTRODUCTI ON

I n thi s Or der , t hi s Commi ssi on di r ect s i mpr ovement s t o

New Yor k St at e s r et ai l ener gy mar ket s ser vi ng t he St at e s t wo

l ar gest gr oups of cust omer s, r esi dent i al and smal l non-r esi dent i al cust omer s. 1 The act i ons t aken her e t ar get i ssues

1 For t he pur poses of t hi s Or der , a smal l non- r esi dent i alcust omer means an el ect r i ci t y cust omer i n a ut i l i t y ser vi cecl assi f i cat i on t hat does not have a demand r at e el ement ,and/ or a nat ur al gas cust omer i n a ser vi ce cl assi f i cat i on t hatpr ovi des f i r m ser vi ce.


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r ai sed by pr el i mi nar y i nvest i gat i ons by t he Depar t ment of Publ i c

Ser vi ce St af f ( St af f ) and conf i r med by addi t i onal i nf or mat i on

pr ovi ded t o St af f t hr ough comment s submi t t ed i n t he cour se of

t he compr ehensi ve market r evi ew pr evi ousl y ordered by t he

Commi ss i on i n t hi s proceedi ng. 2

The i nf or mat i on gather ed by Staf f i n t hi s proceedi ng

i ndi cat es t hat compet i t i ve r et ai l ener gy mar ket s ar e f unct i oni ng

wel l f or l ar ge commer ci al and i ndust r i al cust omer s, i ncl udi ng

pr ovi di ng t hese cust omer s wi t h a wi de range of ener gy- r el at ed

val ue- added servi ces. 3 Conver sel y, t he i nvest i gat i on r eveal s

t hat wi t h f ew except i ons, t he r et ai l ener gy mar ket s servi ng

r esi dent i al and smal l non- r esi dent i al cust omer s have f ai l ed t o

pr ovi de si mi l ar ener gy- r el at ed val ue- added pr oduct s or servi ces

2 Case 12- M- 0476 et al . , Or der I nst i t ut i ng Pr oceedi ng andSeeki ng Comment s Regardi ng t he Operat i on of t he Retai l EnergyMarket s i n New Yor k St ate ( i ssued Oct ober 19, 2012) ( Oct ober2012 Or der) .

3 Out si de t he def i ni t i on r ecogni zed wi t hi n t he f i el d ofeconomi cs, val ue- added general l y r ef ers t o somethi ng moret han t he st andard; somethi ng t hat exceeds t he expectat i onsassoci at ed wi t h pr ovi si on of what i s other wi se an

undi f f erent i ated commodi t y. We make no f ur t her at t empt t odef i ne the t erms val ue- added or val ue beyond t hei r commonusage except t o not e t hat whet her a par t i cul ar of f er i ng f al l swi t hi n t he def i ni t i on of val ue- added may depend on a case-by- case qual i t at i ve assessment . Such case- by- case assessment shave been empl oyed i n ot her areas where br i ght l i nedi st i nct i ons cannot easi l y be dr awn. See, Leegi n Cr eat i veLeat her Prods. V. PSKS, I nc. , 551 U. S. 877, 899 ( 2007) ( whet hera par t i cul ar acti on const i t ut es a r est r ai nt of t r ade) .


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t o t hese mass market cust omers. 4 Si gni f i cant l y, t he

r esi dent i al and smal l non- r esi dent i al mar ket s have al so

gener at ed a number of compl ai nts concer ni ng ESCO market i ng

pr act i ces. 5

I n l i ght of t he appar ent scar ci t y of ener gy- r el at ed

val ue- added pr oduct s and ser vi ces avai l abl e i n t he r esi dent i al

and smal l non- r esi dent i al mar ket s; t he hi gh compl ai nt r at es; and

what appear s t o be a l arge number of act i ve ESCOs generat i ng

r evenues by of f er i ng consumer s l i t t l e mor e t han hi gher pr i ces,

i t i s appar ent t hat t hese mar ket s ar e not pr ovi di ng suf f i ci ent

compet i t i on or i nnovat i on to pr oper l y ser ve consumer s.

As r ecent l y st at ed, t he Commi ssi on r ecogni zes t hat

r et ai l mar ket s have been and wi l l be an i nt egr al par t of t he

r egul at or y f r amewor k. I n t he f ut ur e, t hese mar ket s shoul d

f ost er t he i nnovat i on and economi c i nvest ment r equi r ed t o

cont i nue to moderni ze New Yor k s power syst em desi gn and

oper at i on. 6 The devel opment of market compet i t i on wi t hi n

r egul at ed i ndust r i es i s an ongoi ng pr ocess. The ul t i mat e goal

4 Her e, t he t er m mass mar ket s i ncl udes mar ket s avai l abl e t or esi dent i al and smal l non- r esi dent i al cust omer s ( col l ect i vel ymass market cust omers) and i s used t o repr esent t he l argenumber of cust omer s i n t hese gr oups. I t i s not meant t o i mpl yany par t i cul ar l evel of uni f or mi t y regar di ng i ndi vi dualcust omer s needs or desi r es f or a pr oduct or ser vi ce. Rat heri t i s expect ed t hat t he mar ket wi l l pr ovi de a wi de r ange ofpr oduct s t o these ver y l ar ge but var i ed mar ket s.

5 At t hi s t i me, admi ni st r at i ve compl ai nt r at es rel at ed t or egul at ed cor por at i ons are not onl y an i ndi cat i on of cor por at e

per f or mance but r epr esent mor e publ i c cost s i ncur r ed bygover nment ent i t i es i n or der t o f i el d and pr oper l y addr esssuch compl ai nt s. Mechani sms coul d be est abl i shed t o shi f t atl east some of t he cost of f i el di ng compl ai nt s and pr oper l yaddr essi ng ESCO/ cust omer di sput es.

6 Case 07- M- 0548, Pr oceedi ng on Mot i on of t he Commi ssi onRegar di ng an Ener gy Ef f i ci ency Por t f ol i o St andar d, Or derAppr ovi ng EEPS Pr ogr am Changes ( i ssued December 23,2013) ( December Or der ) .


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of t hi s wor k i s t he devel opment of a compet i t i ve mar ket

st r uct ur e whi ch l eads t o i nnovat i on and other consumer and

soci et al benef i t s. Thi s Commi ssi on must al so ensur e t hat t he

f unct i on of t hese mar ket s i s pr oper l y al i gned wi t h ot her aspect s

of t he regul at or y f r amewor k i ncl udi ng t he rol es and

r esponsi bi l i t i es of r egul at ed ut i l i t i es and r at epayer suppor t ed

cl ean energy pr ogr ams.

I n suppor t of t hi s Commi ssi on s r eal i gnment of t he

r egul atory f r amework, t hi s Or der addr esses maj or weaknesses i n

t he r esi dent i al and smal l non- r esi dent i al r et ai l ener gy mar ket s

due t o t he l ack of accur at e, t r anspar ent and usef ul i nf or mat i on

and mar ket i ng behavi or t hat cr eat es and t oo of t en r el i es on

cust omer conf usi on. The Commi ssi on al so di r ect s St af f t o

cont i nue i t s i nvest i gat i on i nt o t he St at e s r et ai l mar ket s i n

conj unct i on wi t h t he upcomi ng pr oceedi ng r egardi ng moderni zat i on

of t he Commi ssi on s r egul at or y par adi gm i ncl udi ng cl ean ener gy

pr ogr ams and retai l and whol esal e market desi gns. 7

BACKGROUND

The Commi ssi on r ecogni zed t he i mpor t ance of devel opi ng

compet i t i ve r et ai l ener gy mar ket s i n New Yor k St ate over t wo

decades ago. 8 Si nce t hen, as exper i ence wi t h t hese market s has

been gai ned, t he Commi ssi on has adj ust ed i t s r ul es and pol i ci es

t o bot h encourage and accommodat e compet i t i on wi t hi n t he

market s. I nt eract i ons between ESCOs and cust omers ar e pr i mar i l y

gover ned by t he Uni f or m Busi ness Pr act i ces ( UBP) , f i r st adopt ed

i n 1999. 9 The UBP i s desi gned t o ensure a consi st ent set of

7 I d. at p. 43.8 93- M- 0229, Proceedi ng on Compet i t i ve Oppor t uni t i es, Or der

I nst i t ut i ng Pr oceedi ng ( i ssued Mar ch 19, 1993) .9 Case 98- M- 1343, I n t he Mat t er of Ret ai l Access Busi ness Rul es,

Or der Adopt i ng Uni f or m Busi ness Pract i ces and Requi r i ng Tar i f fAmendment s ( i ssued J anuary 22, 1999) .


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oper at i ng pr act i ces f or r et ai l compet i t i on and t o af f or d

cust omer s wi t h appr opr i at e pr ot ect i ons i n t hei r deal i ngs wi t h

ESCOs. Consi st ent underst andi ng and enf orcement of t he UBP i s

obt ai ned t hr ough i t s expl i ci t i ncor por at i on i nt o ut i l i t y

t ar i f f s. We have made per i odi c updates t o t he UPB, most

r ecent l y i n 2010. 10

Cur r ent l y, t her e ar e 214 ESCOs deemed el i gi bl e t o

pr ovi de el ect r i ci t y i n New Yor k St ate and 221 ESCOs ar e deemed

el i gi bl e t o pr ovi de nat ur al gas. Appr oxi mat el y 24 and 20

per cent of r esi dent i al el ect r i ci t y and nat ur al gas cust omer s,

r espect i vel y, pur chase energy commodi t y f r oman ESCO. 11

Si mi l ar l y, 35 and 33 per cent of smal l commer ci al el ect r i ci t y and

natur al gas cust omers, r espect i vel y, pur chase energy commodi t y

f r om an ESCO. I n cont r ast , appr oxi mat el y 72 and 58 per cent of

l ar ge non- r esi dent i al el ect r i ci t y and nat ur al gas cust omer s,

r espect i vel y, pur chase energy commodi t y f r oman ESCO.

St af f began i t s cur r ent r evi ew of t he per f or mance of

t he r et ai l el ect r i ci t y and nat ur al gas mar ket s i n 2012. St af f s

r evi ew i dent i f i ed a number of concer ns r el at ed t o t he r et ai l

mar ket s servi ng r esi dent i al and smal l non- r esi dent i al cust omer s

and t he Commi ssi on commenced t hi s pr oceedi ng i n or der t o addr ess

t hose i ssues. 12 I n t hi s r evi ew, St af f was pr ovi ded wi t h a l ar ge

amount of i nf ormat i on by comment i ng part i es. St af f al so met

wi t h many ESCOs, r epr esent at i ves f r om ESCO and ot her energy

10 I n 2010, t he Legi sl atur e cr eat ed an Energy Servi ces CompanyConsumer s Bi l l of Ri ght s whi ch i s al so r ef l ect ed i n t he UBP.

See Gen. Bus. Law 349- d and Case 98- M- 1343, supr a, Or derI mpl ement i ng Chapt er 416 of t he Laws of 2010 ( i ssuedDecember 17, 2010) .

11 Per cent ages ar e based on Apr i l 2012 gas mi gr at i on data andJ une 2013 el ect r i c mi grat i on dat a.

12 The Oct ober 2012 Or der and rel at ed not i ce sought comment on anumber of speci f i c quest i ons r el at ed t o t he i ssues i ndent i f i edt hr ough St af f s mar ket r evi ew.


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t r ade associ at i ons, empl oyees f r om t he l ar ge r egul at ed ener gy

ut i l i t i es and var i ous ot her st akehol der s and i nt er est ed par t i es.

St af f al so or gani zed consumer meet i ngs t hat i ncl uded l ocal

communi t y groups, advocat es of l ow- i ncome consumers, and l arge

number s of consumer s. Fur t her , St af f devel oped an on- l i ne

sur vey sol i ci t i ng i nf or mat i on f r om consumer s r egar di ng t hei r

r eal - l i f e exper i ences wi t h t he r et ai l ener gy mar ket .

St af f al so per f ormed an ext ensi ve r evi ew of ESCO-

r el at ed consumer compl ai nt s r ecei ved by t he Depar t ment . St af f

anal yzed ut i l i t y bi l l i ng dat a r egar di ng pr i ces char ged and/ or

dol l ar amount s bi l l ed by ESCOs i n t hei r ser vi ce t er r i t or i es, and

devel oped ut i l i t y/ ESCO bi l l compar i sons. Fi nal l y, St af f

r evi ewed ESCO websi t es and ot her market i ng mater i al s t o gauge

t he types and f r equency of val ue- added ser vi ces of f ered by ESCOs

t o mass market cust omers.

NOTI CE OF PROPOSED RULEMAKI NG

On Oct ober 19, 2012, t he Of f i ce of t he Secr et ar y

i ssued a not i ce sol i ci t i ng r esponses t o a l i st of 15 quest i ons

r el at ed t o t he r esi dent i al and smal l non- r esi dent i al r et ai l

energy markets i n New Yor k St ate (Oct ober 2012 Not i ce) . 13 I n

accor dance wi t h t he St at e Admi ni st r at i ve Procedur e Act ( SAPA)

202( 1) , not i ce of t he Oct ober 2012 Not i ce was publ i shed i n t he

St ate Regi st er on November 7, 2012. The SAPA 202( 1) ( a) per i od

f or submi t t i ng comment s i n response t o t he not i ces expi r ed on

December 24, 2012.

13 Or i gi nal l y, i ni t i al comment s wer e t o be submi t t ed byDecember 27, 2012 and r epl y comments wer e t o be submi t t ed byJ anuar y 10, 2013. Mul t i pl e ext ensi ons of t hese deadl i nes wer eaut hor i zed, r esul t i ng i n i ni t i al and r epl y comment s bei ngf i l ed by Febr uar y 1, 2013 and Mar ch 15, 2013, r espect i vel y.


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SUMMARY OF COMMENTS

Numerous par t i es submi t t ed i ni t i al comment s14 and r epl y

comment s. 15 I n addi t i on, appr oxi mat el y 50 comment s f r om t he

14 The f ol l owi ng par t i es submi t t ed i ni t i al comment s: t heBusi ness Counci l of New Yor k (Busi ness Counci l ) , Cent r alHudson Gas & El ect r i c Cor por at i on ( Cent r al Hudson) ,Const el l at i on New Ener gy ( Const el l at i on) , Choose Ener gy( Choose) , Compet e Coal i t i on ( Compet e) , j oi nt l y by Consol i dat edEdi son Company of New York, I nc. and Or ange & Rockl andUt i l i t i es, I nc. ( Con Edi son/ O&R) , Consol i dat ed Edi sonSol ut i ons, I nc. ( CES) , Consumer Power Advocat es ( CPA) , Di r ectEner gy Ser vi ces, LLC ( Di r ect ) , Feder al Tr ade Commi ssi on ( FTC) ,Gr eat East er n Ener gy ( GEE) , I DT Ener gy, I nc. ( I DT) ,

I ndependent Power Pr oducer s of New Yor k, I nc. ( I PPNY) , J oi ntUt i l i t i es ( Cent r al Hudson, KeySpan Gas East Cor p. d/ b/ aNat i onal Gr i d( KEDLI ) , Nat i onal Fuel Gas Di st r i but i onCor por at i on( NFG) , New Yor k St at e El ect r i c & GasCorporat i on( NYSEG) , Ni agara Mohawk Power Corporat i on d/ b/ aNat i onal Gr i d ( NMPC) , Rochest er Gas and El ect r i cCorporat i on( RGE) , and the Br ookl yn Uni on Gas Company d/ b/ aNat i onal Gr i d NY(KEDNY) ) , Nat i onal Ener gy Mar ket er sAssoci at i on ( NEM) , NFG, j oi nt l y by KEDLI , NMPC and KEDNY, NewYork Ci t y Depar t ment of Consumer Af f ai r s ( DCA) , New Yor k Stat eOf f i ce of t he At t or ney Gener al ( OAG) , New Yor k St at e

Depar t ment of St at e- Ut i l i t y I nt er vent i on Uni t ( UI U) , j oi nt l yby NYSEG and RGE (NYSEG/ RGE) , New York St at e Ener gy Mar ket er sCoal i t i on ( NYEMC) , NRG Ret ai l Af f i l i at es ( Ener gy Pl us Hol di ngsLLC, Gr een Mount ai n Energy Company, Rel i ant Energy Nor t heastLLC) ( NRG) , j oi nt l y by Pace Energy and Cl i mate Cent er and t heAl l i ance f or Cl ean Ener gy New Yor k, I nc. ( PACE/ ACE) , j oi nt l y byPubl i c Ut i l i t y Law Proj ect and AARP of New Yor k ( PULP/ AARP) ,Ret ai l Ener gy Suppl y Associ at i on ( RESA) , Smal l Cust omerMar ket er Coal i t i on ( SCMC) , and, US Ener gy Par t ner s,LLC. ( USEP) . The New Yor k St at e Of f i ce of Gener al Ser vi ces( OGS) f i l ed a l et t er on November 15, 2012, whi ch we ar e

t r eat i ng as i ni t i al comment s.15 Repl y comment s wer e submi t t ed by Con Edi son/ O&R,

Constel l at i on, Di r ect , J oi nt Ut i l i t i es, J oi nt Ener gy Ser vi ceCompani es ( Agway Energy Servi ces, LLC, Chi ef Energy Power ,LLC, Di r ect , Domi ni on Ret ai l , I nc. t / a Domi ni on Ret ai l Ener gy,GEE, I DT. , I nf i ni t e Ener gy I nc. dba I nt el l i gent Ener gy,I nt egr ys Ener gy Ser vi ces, I nc. , I nt er st at e Gas Suppl y, I nc.dba I GS Energy, Nor t h Amer i can Power & Gas, LLC, NRG Ret ai lNor t heast , and US Gas & El ect r i c, I nc. ) ( J oi nt ESCOs) ,


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publ i c wer e f i l ed. 16 The par t i es comment s have been t hor oughl y

consi dered and summar i es of t he comment s are i ncl uded i n

At t achment A. I n addi t i on, comment s di r ect l y r el at ed t o t he

act i ons we t ake t oday ar e addr essed i n t he body of t hi s Or der .

DI SCUSSI ON

I n our December Or der i n t he Ener gy Ef f i ci ency

Por t f ol i o St andard ( EEPS) pr oceedi ng, we announced our upcomi ng

i ni t i at i ve t o consi der a br oad r est r uctur i ng of di st r i but i on

ut i l i t y r egul at i on i n or der t o bet t er al i gn t he r esponsi bi l i t i es

and mot i vat i ons of t he ut i l i t i es wi t h t he i nt er est s of t he

St ate s energy consumers. 17 As not ed i n t he December Or der , we

bel i eve t hat r et ai l mar ket s pl ay an essent i al r ol e i n

Mul t i pl e I nt er venor s ( MI ) , Nat i onal Fuel Resour ces ( NFR) ,NEMA, NRG, t he Publ i c Advocat e f or New Yor k Ci t y ( NYCPA) .PULP/ AARP, RESA, SCMC, and UI U. Suppl emental comments wer ef i l ed by NYSEMC, RESA and SCMC.

16 Ei ght een comment ers proposed t hat door - t o- door andt el emar ket i ng of el ect r i ci t y and nat ur al gas shoul d ei t her be

pr ohi bi t ed or subj ect ed t o st r i ct er r equi r ement s; t wel ver ecommended t hat ESCOs be requi r ed t o post hi st or i c andcur r ent pr i ci ng dat a on t hei r websi t es; el even comment ed t hatt he savi ngs pr omi sed by ESCOs have not mat er i al i zed and ESCOr epr esent at i ves pr ovi de mi sl eadi ng i nf or mat i on; el even st at edt hat ESCOs shoul d di scl ose addi t i onal i nf or mat i on on cont r act sr egar di ng rat e changes and ot her i ssues; and, ei ght consumer sst at ed t hat t hey woul d benef i t f r om addi t i onal i nf or mat i onr egar di ng t hei r ener gy choi ces i ncl udi ng compar i son of cur r entand hi st or i cal pr i ci ng. Addi t i onal l y, t wo comment s wer er ecei ved on each of t he f ol l owi ng i ssues: whet her cust omer s

i n ut i l i t y- sponsored pr ogr ams t hat enr ol l cust omer s wi t h ESCOsshoul d be pr ovi ded addi t i onal i nf or mat i on about t he pr i cest hat ar e appl i cabl e af t er t he i nt r oduct or y per i od; whet herESCOs shoul d conduct mar ket i ng by di r ect mai l i nst ead of ot herappr oaches whi ch ar e percei ved as aggr essi ve; whetheraddi t i onal consumer saf eguar ds ar e requi r ed; and, whet herr est r uct ur i ng of t he ener gy mar ket has pr ovi ded benef i t s t oconsumers.

17 December Or der , pp. 1- 3.


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st i mul at i ng needed i nnovat i on and encour agi ng economi c

i nvest ment i n energy syst ems.

The cor e pol i cy outcomes est abl i shed i n t he December

Or der i ncl ude a st r ong emphasi s on demand- si de resour ces and

market ani mat i on18 t hat wi l l i n al l l i kel i hood resul t i n great l y

i ncr eased oppor t uni t i es i n t he r et ai l ener gy mar ket s servi ng

r esi dent i al and smal l non- r esi dent i al cust omer s. Our goal i s

compet i t i ve r etai l energy market s i n whi ch ESCOs and other

vendor s of f er a wi de r ange of i nnovat i ve pr oduct s and servi ces

t o enabl e mass market cust omer s t o more ef f ect i vel y manage and

cont r ol t hei r ener gy bi l l s .

To gui de r egul at or y pol i cy, we use t he concept of

wor kabl e, or ef f ect i ve, compet i t i on. Compet i t i on i s consi der ed

t o be wor kabl e when t he under l yi ng condi t i ons r equi r ed f or

per f ect compet i t i on19 have not been met , but t he pr i ce and out put

of a mar ket ar e ver y si mi l ar t o t hat whi ch woul d have r esul t ed

f r om a per f ect l y compet i t i ve mar ket . An al t er nat i ve def i ni t i on

18 I d. , pp. 21- 23. The f i ve cor e pol i cy out comes i dent i f i ed i n

t he Or der ar e ( i ) t he devel opment of wi del y avai l abl e andaccur at e i nf or mat i on and t ool s t o permi t cust omer s t oef f ect i vel y manage t hei r bi l l s; ( i i ) ani mat i on of mar ket s wi t hchar act er i st i cs t hat wi l l suppor t i nnovat i on and encour agepr i vat e i nvest ment i n ener gy ef f i ci ency and cl ean ener gyt echnol ogy and f aci l i t i es; ( i i i ) i mpr oved syst em wi deef f i ci ency r esul t i ng i n r educti ons i n cost and pol l ut i on; ( i v)f uel and r esour ce di ver si t y i ncl udi ng demand- si de, cust omer -si t ed f aci l i t i es and ot her di st r i but ed ener gy r esour ces; and( v) cont i nual l y i mpr ovi ng r el i abi l i t y and r esi l i ence.

19 Per f ect compet i t i on assumes numerous buyer s and sel l ers, each

wi t h smal l mar ket shar e, so t hat i ndi vi dual mar ketpar t i ci pant s cannot i nf l uence t he pr i ce. Text book def i ni t i onsof per f ect compet i t i on al so requi r e, among ot her t hi ngs, t hatal l buyer s and sel l er s have per f ect and compl et e i nf or mat i onon pr esent and f ut ur e mar ket condi t i ons, and t hat al l marketpar t i ci pant s can f r eel y ent er and l eave t he mar ket . Thesest r i ct condi t i ons ar e unl i kel y t o exi st i n actual mar ket s.Never t hel ess, vi gor ous compet i t i on can exi st even when t her ear e subst ant i al depar t ur es f r om t hese condi t i ons.


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commodi t y ser vi ces wi t h no val ue- added at t r i but es, a r esul t t hat

i s i nconsi st ent wi t h a wor kabl y compet i t i ve mar ket . Despi t e t he

l arge number of ESCOs, t here seems t o be al most no compet i t i ve

pr essur e t o i nnovat e and pr ovi de val ue- added servi ces or

pr oduct s t o r esi dent i al and smal l non- r esi dent i al cust omer s.

St af f s i nvest i gat i on al so showed t hat , wi t h t he

except i on of el ect r i ci t y f r om r enewabl e sour ces, ener gy- r el at ed

val ue- added pr oduct s or servi ces wer e gener al l y ver y l i mi t ed.

Sever al ESCOs of f er l oyal t y r ewar ds, such as a cash rebat e f or

cust omer s who pur chase servi ce f or a f ul l year . Ot her ESCOs

of f er pr oduct s wi t h a pr i ce f i xed f or mor e t han 12 mont hs, whi ch

may pr ovi de i mport ant cust omer benef i t s. Very f ew ESCOs of f ered

energy- r el ated val ue- added ser vi ces t o mass market cust omers

such as demand management programs or t ool s, vol unt ar y dynami c

pr i ci ng pr ogr ams or t ool s, or ener gy ef f i ci ency measur es.

We f ul l y expect t hat , under t he pr oper r egul at or y

condi t i ons, mar ket compet i t i on wi l l st i mul at e i nnovat i on and

pr omot e t he economi c i nvest ment t hat wi l l be requi r ed to

st r engt hen New Yor k St ate s energy syst ems as t hey evol ve t o

become more consumer or i ent ed. To advance t hi s goal , we di r ect

i mmedi ate i mpr ovement s t o t he r esi dent i al and smal l non-

r esi dent i al r et ai l mar ket s as expl ai ned bel ow. These

i mpr ovement s ar e descr i bed i n Par t I bel ow and are i nt ended t o

addr ess a number of i ssues t o hel p ensur e the devel opment of

wor kabl y compet i t i ve r et ai l ener gy mar ket s by i ncr easi ng and

i mpr ovi ng t he i nf or mat i on avai l abl e t o cust omer s. I n Par t I I , we

st r engt hen r ul es and pr ocedur es appl i cabl e t o ESCO market i ng and

cust omer enr ol l ment and descr i be other housekeepi ng changes t o

t he UBP.

Fur t her , t o hel p ensur e t hat r et ai l mar ket s of f er

i nnovat i ve new ener gy- r el at ed pr oduct s and servi ces, we al so

di r ect f ur t her i nvest i gat i on i nt o t he r et ai l ener gy mass


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mar ket s, i nt ended t o i ndent i f y how we f aci l i t at e t he devel opment

of ener gy- r el at ed val ue- added pr oduct and ser vi ce of f er i ngs f or

mass mar ket ener gy consumer s. Our di r ect i ves f or f ur t her

anal ysi s ar e det ai l ed i n Par t I I I .

PART I

MARKET TRANSPARENCY I MPROVI NG AND I NCREASI NG AVAI LABLE

I NFORMATI ON

Workabl e compet i t i on r equi r es t hat consumers possess

suf f i ci ent mar ket knowl edge t o make i nf or med deci si ons r egar di ng

what and how much t o consume and whi ch f i r ms can provi de t he

best val ue t o cust omer s. Cur r ent l y, i t i s ext r emel y di f f i cul t

f or mass mar ket r et ai l ener gy cust omer s t o access pr i ci ng

i nf or mat i on r el evant t o thei r deci si on t o commence, cont i nue or

t ermi nate ser vi ce t hr ough an ESCO. ESCOs do not pr ovi de

st andar di zed pr oduct s or pr i ci ng and pr i mar i l y pr ovi de

pr ospect i ve cust omer s i nf or mat i on on pr i ces cur r ent l y avai l abl e,

whi l e onl y hi st or i cal dat a r el at ed t o r egul at ed ut i l i t y pr i ces

i s wi del y avai l abl e. Fur t her , many ESCO sal es agr eement s r ar el y

i ncl ude a set pr i ce and many si mpl y st at e t hat t he ESCO wi l l

det er mi ne f ut ur e pr i ces.

We bel i eve t hat r et ai l cust omer s shoul d have r eady

access t o compar at i ve pr i ci ng and/ or bi l l i ng i nf or mat i on t o

empower t hem t o make more i nf ormed deci si ons r egar di ng commodi t y

pr i ces avai l abl e i n t he r et ai l mar ket . Consumer access to

bet t er pr i ce i nf or mat i on wi l l i ncr ease t he compet i t i ve pr essur e

on ESCOs t o pr ovi de l ower pr i ces and/ or ot her f or ms of i ncr eased

val ue t o consumers.

The Oct ober 2012 Not i ce sol i ci t ed r esponses t o a

number of speci f i c quest i ons r el at ed t o i ncr easi ng t he qual i t y

and quant i t y of hi st or i c ESCO pr i ci ng or bi l l i ng i nf or mat i on

avai l abl e t o r esi dent i al and smal l non- r esi dent i al ener gy


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consumer s. The i nqui r i es i ncl uded speci f i cs r el at ed t o met hods

f or del i ver i ng/ pr esent i ng t he i nf or mat i on ( on- bi l l or on- l i ne) ;

whet her par t i cul ar cust omer s shoul d be pr ovi ded wi t h di f f er ent

or addi t i onal i nf or mat i on; whet her t he Commi ssi on shoul d col l ect

and make avai l abl e ESCO pr i ce dat a t hr ough the Commi ss i on s

websi t e; and, whether ESCOs shoul d be bound by t he pr i ces post ed

t o t he Power t o Choose websi t e.

Comment ers were di vi ded r egardi ng t he speci f i c

i nf or mat i on t hat shoul d be pr ovi ded, wi t h many expr essi ng

concer ns t hat adj ust ment s t o t he r epor t ed pr i ces and/ or det ai l ed

expl anat i ons woul d be requi r ed t o ensure pr i ce compar i sons ar e

appl es- t o- appl es. 20 Many comment er s st at ed t hat t ot al bi l l

compar i sons ar e more usef ul t han commodi t y pr i ce compar i sons

because t hey i ncl ude al l t he char ges i ncur r ed by t he cust omer

and l i mi t pot ent i al conf usi on r el at ed t o t he i mpact of commodi t y

char ges ver sus del i ver y and ot her char ges on a ut i l i t y bi l l .

Vi ews al so di ver ged on t he best - del i ver y met hod f or t he

i nf or mat i on.

I t i s i mpor t ant t hat cust omer s who obt ai n t hei r

commodi t y f r oman ESCO, as wel l as t hose who obt ai n t hei r

commodi t y f r om t he ut i l i t y, have addi t i onal , easy- t o- under st and

i nf or mat i on t o assi st t hem i n maki ng i nf or med deci si ons

concer ni ng t hei r ener gy suppl i er . Such i nf or mat i on wi l l enhance

pr i ce t r anspar ency and shar pen compet i t i on f or t he benef i t of

20A number of ESCO comment ers quest i oned whether ut i l i t y bi l l sare cor r ect l y unbundl ed. Such quest i ons ar e beyond t he scope

of t hese pr oceedi ngs. Unbundl ed r at es f or i ndi vi dualut i l i t i es ar e appr oved i n i ndi vi dual r at e cases and ar e basedon det ai l ed anal yses whi ch conf or m t o t he pr ovi si ons set f or t hi n Case 00- M- 0504 - Proceedi ng on Mot i on of t he Commi ss i onRegar di ng Pr ovi der of Last Resor t Responsi bi l i t i es, t he Rol eof Ut i l i t i es i n Compet i t i ve Ener gy Mar ket s, and Fost er i ng t heDevel opment of Ret ai l Compet i t i ve Oppor t uni t i es. Changes t ot he unbundl i ng met hodol ogy or speci f i c r at es shoul d beconsi der ed i n i ndi vi dual r at e cases.


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ener gy consumer s. At t hi s j unct ur e, we concl ude t hat a

r easonabl e met hod f or maki ng t hi s i nf or mat i on r eadi l y avai l abl e

i s t o pr ovi de a hi stor i c bi l l cal cul at or t hr ough t he ut i l i t i es

websi t es.

A. Hi st or i c Bi l l Compar i son

Cent r al Hudson and NFG al r eady provi de web- based

hi st or i c bi l l cal cul at or s f or r esi dent i al and smal l non-

r esi dent i al cust omer s, devel oped i n col l abor at i on wi t h St af f .

NMPC r ecent l y i mpl ement ed a si mi l ar t ool f or r esi dent i al

cust omers. 21 The hi st or i c bi l l cal cul at or s al l ow exi st i ng ESCO

cust omer s22 r ecei vi ng a consol i dat ed ut i l i t y bi l l , 23 t o compare

t he tot al amount char ged, i ncl udi ng ut i l i t y del i ver y ser vi ce and

ESCO suppl y charges, wi t h the t otal t he cust omers woul d have

been pai d i f pur chasi ng commodi t y ser vi ce f r om t he ut i l i t y f or

t hat per i od. Thus, t hese cal cul at or s pr ovi de cust omer s wi t h a

di r ect compar i son of t he amount t hey wer e bi l l ed, i ncl udi ng ESCO

char ges, i n each mont h f or up t o 12 mont hs, wi t h what t he

cust omer woul d have pai d i f commodi t y ser vi ce had been obt ai ned

f r om t he ut i l i t y f or t hat same per i od.

The hi st or i c bi l l cal cul at or s ar e power f ul t ool s.

Ther ef or e, we di r ect Con Edi son, O&R, KEDLI , KEDNY, NYSEG and

RG&E t o devel op and make avai l abl e on t hei r websi t es si mi l ar

hi stor i c bi l l cal cul at or s, i n consul t at i on wi t h St af f , wi t hi n

21 Cases 12- E- 0201 and 12- G- 0202, NMPC El ect r i c and Gas Rates,Or der Appr ovi ng El ect r i c and Gas Rat e Pl ans i n Accor d wi t hJ oi nt Pr oposal ( i ssued Mar ch 15, 2013) .

22 Ut i l i t y onl y cust omer s are unabl e to t ake advant age of ahi st or i c bi l l compar i son because t hey do not have an ESCObi l l i ng hi story.

23 A consol i dat ed ut i l i t y bi l l ref l ect s the ut i l i t y del i ver ycharges as wel l as t he ESCO s commodi t y servi ce charges.


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180 days of t he i ssuance of t hi s Or der . 24 Fur t her NMPC s

cal cul at or shal l be expanded t o pr ovi de thi s compar at i ve

i nf or mat i on f or smal l non- r esi dent i al cust omer s. The

cal cul at or s shal l have t he capabi l i t y to compar e at l east 12

mont hs of r el evant bi l l i ng dat a, and must al so pr ovi de avai l abl e

bi l l compar i sons t o cust omer s wi t h l ess t han 12 mont hs of

bi l l i ng hi story.

We al so r equi r e i ncl usi on of cl ear di scl osur e

st at ement s t o i nf or m cust omer s t hat : ( 1) t he hi st or i c bi l l

cal cul at or i s most usef ul i f t he cust omer has been served by an

ESCO f or at l east t wel ve mont hs; ( 2) t he i nf or mat i on pr esent ed

i s hi st or i c and i s not necessar i l y i ndi cat i ve of f ut ur e pr i ces

f or ei t her ut i l i t y or ESCO ser vi ce; ( 3) t he pr i ce compar i son

does not account f or any val ue- added ser vi ce( s) such as gr een

ener gy; and ( 4) t he pr i ce compar i son does not r ef l ect any

af f i ni t y rewards progr ams or r ebates t hat may be pr ovi ded by the

cust omer s ESCO separ at el y f r om t he cust omer s ut i l i t y bi l l .

Pr i or t o i mpl ement at i on, t he cal cul at or must be made

avai l abl e t o t he ESCOs and t hei r t r ade associ at i ons f or t est i ng

not l ess t han t en days pr i or t o i mpl ement at i on and each ut i l i t y

shal l submi t a l et t er t o t he Secr et ar y t o t he Commi ssi on

af f i r mi ng t hat i t s hi st or i c bi l l cal cul at or was t est ed and i s

accur at e. I n addi t i on, St af f must conf i r m t hat t he di scl osur e

l anguage i s consi st ent wi t h t he l anguage above.

24 Par t i es i n r at e cases f or Con Edi son' s el ect r i c, gas and st eamoper at i ons, Cases 13- E- 0030, 12- G- 0031 and 13- S- 0032, f i l ed aJ oi nt Pr oposal on December 31, 2013. That J oi nt Pr oposalcal l s f or Con Edi son t o devel op and i mpl ement an on- l i nehi st or i c bi l l cal cul at or "as soon as pr act i cabl e but no l at ert han December 31, 2014. " Whi l e we do not modi f y that deadl i nei n t hi s Or der , we encour age Con Edi son t o i mpl ement an on- l i nehi st or i c bi l l cal cul at or wi t hi n 180 days of t he dat e of t hi sOr der .


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CASE 12- M- 0476 et al .

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At t hi s t i me, we wi l l not r equi r e t he addi t i on of a

hi st or i c bi l l cal cul at or t o t he Depar t ment s websi t e. Because

bi l l compar i son cal cul at or s must i ncor por at e dat a speci f i c t o a

cust omer s account , i ncl udi ng si mi l ar f unct i onal i t y on t he

Depar t ment s websi t e woul d r equi r e extendi ng t he exi st i ng

secur i t y i nf r ast r uct ur e and pr ocedur es empl oyed by t he ut i l i t i es

t o the Depar t ment s websi t e.

We wi l l not di r ect , at t hi s t i me, t hat consol i dat ed

ut i l i t y bi l l s i ncl ude a di r ect compar i son of what t he cust omer

woul d have pai d i f t he cust omer had pur chased suppl y f r omt he

di st r i but i on ut i l i t y. However , we wi l l r equi r e t hat a br i ef

message be i ncl uded on each consol i dat ed ut i l i t y bi l l f or mass

mar ket cust omer s t hat adver t i ses t he avai l abi l i t y and l ocat i on

of t he hi s tor i c bi l l cal cul at or .

B. Hi st or i c ESCO Pr i ci ng Dat a

To f ur t her our i nt er est i n est abl i shi ng wor kabl y

compet i t i ve mar ket s f or r et ai l ener gy commodi t y ser vi ces f or

mass mar ket cust omer s, we di r ect ESCOs t o f i l e cer t ai n hi st or i c

pr i ci ng i nf or mat i on f or di ssemi nat i on t o t he publ i c.

We rej ect t he ar gument by some par t i es t hat hi st or i c

pr i ci ng i nf or mat i on woul d pr ovi de l i t t l e val ue. Bet t er and mor e

usabl e i nf or mat i on i s l i kel y t o hel p cust omer s make i nf or med

pur chase deci si ons. We r ecogni ze, however , t hat i t coul d be

conf usi ng and count erpr oduct i ve to aggr egate an ESCO s charges

f or wi del y var yi ng ser vi ces, such as var i abl e pr i ce, f i xed pr i ce

and ener gy- r el at ed val ue- added ser vi ces. Thus, we wi l l col l ect

hi st or i c dat a f r om ESCOs i n cat egor i es of si mi l ar pr oduct s, t o

al l ow act ual and pr ospect i ve cust omer s t o compar e the pr i ces of

si mi l ar ser vi ces t hat have been charged by each ESCO of f er i ng

t hat t ype of ser vi ce.

We r equi r e ESCOs t o begi n r epor t i ng hi st or i c pr i ci ng

dat a. Unt i l and unl ess t he Power - t o- Choose websi t e i s modi f i ed


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t o i ncl ude t he i nf or mat i on we i dent i f y her e, we di r ect ESCOs t o

f i l e wi t h t he Secret ar y, a separ at e aver age uni t pr i ce f or

pr oduct s wi t h no ener gy- r el at ed val ue- added servi ces f or each of

f our gr oups of cust omers and by geogr aphi c area: 25 i ) res i dent i al

pr i ce f i xed f or a mi ni mum 12 mont h per i od; i i ) r esi dent i al

var i abl e pr i ce; i i i ) smal l non- r esi dent i al pr i ce f i xed f or a

mi ni mum 12 mont h per i od; and i v) smal l non- r esi dent i al var i abl e

pr i ce. The averages shoul d be wei ght ed by t he amount of

commodi t y sol d at each pr i ce wi t hi n each category. ESCOs shal l

al so f i l e t he number of cust omer s pur chasi ng pr oduct s i n t hose

cat egor i es. ESCOs shal l f i l e t he r equi r ed i nf or mat i on

quar t er l y, r ef l ect i ng dat a over t he pr evi ous per i od, wi t hi n 30

days of t he end of each cal endar quar t er ( i . e. , dat a must be

pr ovi ded no l at er t han Apr i l 30t h, J ul y 30t h, Oct ober 30t h and

J anuar y 30t h of each year ) , begi nni ng wi t h t he dat a on pr i ces

charged i n t he second quart er of 2014.

We now conf i r m our i nt ent i on, i ndi cat ed i n t he Oct ober

2012 Or der and Not i ce, t o publ i sh compar at i ve pr i ci ng

i nf or mat i on f or t he cat egor i es i dent i f i ed above. We ant i ci pat e

devel opment of a l i st of t he aver age pr i ce bi l l ed f or each ESCO,

separ at el y f or consumer s i n speci f i c geogr aphi c ar eas of a

ut i l i t y ser vi ce t er r i t or y. We expect t o sor t t he l i st based on

aver age pr i ce, and or gani ze ESCOs i nt o quar t i l es, based on t he

aver age pr i ce char ged t o cust omer s i n t he hi st or i cal per i od.

For t he cat egor y of var i abl e pr i ced pr oduct s wi t h no ener gy-

r el at ed val ue- added at t r i but es, we ant i ci pat e t hat compar abl e

i nf or mat i on r egar di ng ut i l i t y char ges wi l l al so be pr esent ed.

The ut i l i t y i nf or mat i on wi l l be adj ust ed t o account f or

di f f er ences bet ween how ESCOs and ut i l i t i es char ge f or bi l l

25 For exampl e, wi t h r egar d t o Con Edi son s ser vi ce t er r i t or y,pr i ci ng woul d be repor t ed separ at el y f or New Yor k Ci t y andWest chest er Count y.


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pr ocessi ng and ot her char ges i n or der char ges i n or der

f aci l i t at e a di r ect compar i son. Publ i shi ng t hi s compar at i ve

hi st or i c bi l l i nf or mat i on wi l l assi st mass mar ket consumer s i n

assessi ng whet her t hei r cur r ent ener gy suppl i er meet s t hei r

needs.

St af f wi l l f ur t her devel op def i ni t i ons of t he pr oduct

cat egor i es and t he speci f i c f or mat ( s) f or r epor t i ng t he dat a i n

a manner consi st ent wi t h t he requi r ement s of t hi s Or der . I n

addi t i on, St af f wi l l expl or e whet her and how t hi s hi st or i c

pr i ci ng i nf ormat i on shoul d be post ed on t he expanded Power t o

Choose websi t e. These and ot her i mpl ement at i on i ssues wi l l be

addr essed at a t echni cal conf er ence t o be hel d wi t hi n 60 days of

t he dat e of t hi s Or der .

C. Expansi on/ I mpr ovement of t he Power t o Choose websi t e

Some i nf or mat i on r egar di ng ESCO pr i ci ng i s avai l abl e

on t he Depar t ment s Power t o Choose websi t e. However , t he

i nf or mat i on i s l i mi t ed t o r esi dent i al pr i ces. Al so, ESCOs ar e

r equi r ed t o i nput t hei r pr i ci ng i nf or mat i on t o t he Power t o

Choose websi t e at l east once ever y 30 days but are f r ee, at any

t i me, t o make of f er s t o consumer s at pr i ces ot her t han t hose

post ed on t hi s websi t e. Thus, t he pr i ces l i st ed on Power t o

Choose repr esent a snapshot t hat may not r ef l ect pr i ces t hat ar e

act ual l y avai l abl e t o new cust omer s at t hat t i me. 26

To i mprove t he accuracy and t r anspar ency of ESCO

pr i ci ng, we wi l l expand t he Power t o Choose websi t e t o i ncl ude

cur r ent pri ci ng f or smal l non- r esi dent i al cust omer s. As

r ecommended by most par t i es, we wi l l al so r equi r e ESCOs t o honor

al l r at es post ed on t he Power t o Choose websi t e r egar dl ess of

26 The Power t o Choose websi t e cont ai ns di scl ai mers whi ch st atet hat t he pr i ces ar e i l l ust r at i ve, t o al er t cust omer s t hat i ti s onl y the st ar t i ng poi nt f or pr i ce di scover y and t hat anact ual of f er t o pr ovi de ser vi ce must be obt ai ned di r ect l y f r oman ESCO.


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whether an ESCO chooses t o update i t s pr i ces onl y once ever y 30

days as requi r ed or more f r equent l y. The r equi r ement t o honor

pr i ces post ed on t he Power t o Choose websi t e wi l l i ncl ude

pr i ci ng f or smal l non- r esi dent i al cust omer s as t he websi t e s

f unct i onal i t y i s expanded.

Resi dent i al and smal l non- r esi dent i al cust omer s who

cont act t he ESCO t o t ake ser vi ce must be guarant eed to pay no

more t han t he pr i ce post ed on Power t o Choose at t hat t i me f or

t he pr oduct t he consumer chooses t o pur chase. 27 Thi s r equi r ement

wi l l gr eat l y i ncr ease the val ue of t he websi t e f or empower i ng

consumer s and i ncr easi ng compet i t i on wi t hi n the mar ket s.

D. Ot her I nf or mat i on Rel at ed I ssues

We wi l l not r equi r e addi t i onal i nf or mat i on be pr ovi ded

t o payment t r oubl ed cust omers or l ow i ncome cust omers. We wi l l

however , adopt t he recommendat i on by PULP/ AARP concerni ng t he

mi ni mumamount t hat ESCO cust omers must pay t o avoi d ser vi ce

t ermi nat i on. The Home Energy Fai r Pr act i ces Act ( HEFPA) 28 al l ows

a cust omer t o have hi s or her ut i l i t y servi ce r econnect ed

f ol l owi ng t er mi nat i on f or nonpayment by payi ng t he l esser of

t he combi ned ut i l i t y del i ver y and ESCO commodi t y charges or t he

27 The pr i ce must be guarant eed f or t he t erm st ated on Power t oChoose. For exampl e, i f t he pr oduct i s a var i abl e r at epr oduct wher e the pr i ce i s r ecal cul ated mont hl y, t hen t he ESCOmust guarant ee t hat t he cust omer wi l l pay no more than t hepr i ce st at ed on the websi t e at t he t i me t he cust omer r equest edser vi ce f or t he cust omer s f i r st mont h of ser vi ce f r om t heESCO.

28 Publ i c Ser vi ce Law ( PSL) 32( 5) ( d) r equi r es t he ut i l i t y t or econnect servi ce, af t er t er mi nat i on f or nonpayment , based oncol l ect i ng an amount t hat woul d not otherwi se exceed t heut i l i t y s commodi t y pr i ces. Cust omer s ar e not af f i r mat i vel yi nf or med of t hei r r i ght t o obt ai n r econnect i on by payi ng t hel esser amount . Fur t her mor e, ut i l i t i es seek paymentarr angement s on t he f ul l amount overdue and not t he l esseramount , i f appl i cabl e, when cust omer s cal l t o avoi dt ermi nat i on f or nonpayment .


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CASE 12- M- 0476 et al .

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bundl ed ut i l i t y commodi t y and del i ver y char ges. I n pr act i ce,

most ut i l i t i es i ssue a t er mi nat i on not i ce whi ch shows what t he

cust omer owes i n t ot al f or del i ver y and commodi t y, i ncl udi ng

ESCO char ges. I f t he cust omer doesn t pay t he amount owed or

negot i ate a def err ed payment agr eement , t he cust omer s servi ce

i s subj ect t o t er mi nat i on. Once t er mi nat ed, i n or der t o have

ser vi ce r econnected t he cust omer must pay t he l esser of t he

amount on t he t ermi nat i on not i ce or what t he cust omer woul d have

pai d f or ser vi ce i f t he di st r i but i on ut i l i t y pr ovi ded t he

cust omer s commodi t y. Some ut i l i t i es, however , al l ow t he

cust omer t o pay t he l esser amount t o mai nt ai n ser vi ce wi t hout

i nt er r upt i on.

PULP/ AARP r ecommends t hat t he ut i l i t y be pr ohi bi t ed

f r om t er mi nat i ng servi ce t o a cust omer i f t he cust omer s ESCO

charges ar e hi gher t han what t he cust omer woul d have been

char ged f or ut i l i t y bundl ed ser vi ce. We concl ude t hat , i n t he

event t he cust omer owes more f or servi ce t hrough an ESCO t han

what he or she woul d have owed f or bundl ed ut i l i t y ser vi ce, t he

cust omer can avoi d t er mi nat i on of servi ce by payi ng t he l esser

amount . Fur t her , i n such cases the di f f er ent i al wi l l be char ged

back t o t he ESCO. Ut i l i t y t er mi nat i on not i ces modi f i ed t o

r ef l ect t hi s opt i on must be f i l ed wi t h t he Secret ar y to t he

Commi ss i on wi t hi n 60 days of t he date of t hi s Or der and i n use

wi t hi n 90 days of t he dat e of t hi s Or der .

E. ESCO Ref er r al Pr ogr ams

Under ESCO r ef er r al pr ogr ams, a ut i l i t y of f er s cer t ai n

cust omer s cont act i ng i t f or non- emer gency reasons, t he

oppor t uni t y t o enr ol l wi t h ESCOs whi ch agr ee to of f er a 7%

di scount of f of t he pr i ce of ut i l i t y ener gy commodi t y ser vi ce

f or a t wo- mont h i nt r oduct or y per i od. Cust omer s t hat do not

r equest enr ol l ment wi t h a par t i cul ar par t i ci pat i ng ESCO can be

r andoml y assi gned t o an ESCO on a r otat i ng basi s. Con Edi son,


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O&R, Cent r al Hudson and NMPC cur r ent l y operat e such progr ams. 29

I n gener al , ESCOs bel i eve t hese pr ogr ams shoul d cont i nue.

Consumer advocat es bel i eve t hey shoul d be t ermi nat ed and

ut i l i t i es r ecommend t hat t hey be pr ovi ded at t he di scr et i on of

i ndi vi dual ut i l i t i es.

These progr ams f aci l i t at e cust omer enrol l ment by

al l owi ng ESCOs t o avoi d mar ket i ng, ver i f i cat i on and enr ol l ment

cost s. When t hese pr ogr ams were est abl i shed, t hey were

expl i ci t l y concei ved of as an i nt er i m, near - t er m st r at egy t o

expand t he market . The pr ogr ams appear t o have out l i ved t hei r

usef ul ness. I n t he ni ne years si nce t he pr ogr ams were appr oved

t hey have f aci l i t ated cust omer mi gr at i on t o ESCOs. However , we

have f ound t hat t he vast maj or i t y of mass market ESCO cust omers

exper i ence hi gher bi l l s t han t hey woul d have as f ul l ser vi ce

ut i l i t y cust omer s and t he pr ogr ams have pr ovi ded l i t t l e or no

compet i t i ve pr essure or ot her val ue- added benef i t s t o these

r et ai l mar ket s. Under t hese ci r cumst ances, we wi l l not cont i nue

t o endor se t hese ref er r al pr ogr ams, whi ch, as s t r uct ur ed, cr eat e

an expect at i on t hat t he cust omer wi l l save money i n compar i son

t o what t hey woul d have pai d t he ut i l i t y.

Accor di ngl y, ut i l i t i es shoul d cease t hei r ESCO

r ef er r al pr ogr ams wi t hi n 60 days of i ssuance of t hi s Or der . We

may reconsi der t he use of ESCO r ef er r al pr ogr ams i n t he f ut ur e,

i f new ci r cumst ances suggest such pr ogr ams wi l l br i ng benef i t s

t o consumers and t he market i n general . We may al so consi der

r e- desi gned r ef er r al pr ogr ams t o encour age t he avai l abi l i t y and

use of ener gy r el at ed val ue- added servi ces. However , i n or der

29 NYSEG/ RG&E, KEDLI and KEDNY have proposed ESCO Ref er r alProgr ams, but we have not t aken act i on on t hose pr oposal s.ESCOs have not r epor t ed any i nt er est i n a deci si on on t hesef i l i ngs. NFG had an ESCO Ref er r al Progr am unt i l 2008, butabandoned i t due t o report edl y hi gh i mpl ement at i on cost s andl ow par t i ci pat i on.


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t o mai nt ai n a r easonabl y l evel pl ayi ng f i el d, we concur wi t h UI U

and di r ect t hat t he ut i l i t i es cont i nue t o i nf or m new and movi ng

r esi dent i al and smal l busi ness cust omer s of t hei r opt i on t o

sel ect an ESCO and how t o obt ai n i nf ormat i on on ESCO pr oduct s.

F. Tr eat ment of Cust omer s Par t i ci pat i ng i n Ut i l i t y Low I ncome

Assi st ance Progr ams.

As di scussed ear l i er , r esi dent i al cust omer s ar e

general l y payi ng more f or commodi t y ser vi ce f r om an ESCO t han i f

t hey had pur chased t hei r ener gy f r om t he ut i l i t y. We expect

t hat t he i ncr ease i n i nf or mat i on and t r anspar ency i n t he r et ai l

mar ket s wi l l i ncr ease compet i t i ve pr essur e and si gni f i cant l y

shar pen compet i t i on. However , we must ensure t hat t he cur r ent

oper at i on of t he r esi dent i al r et ai l ener gy mar ket does not

negat i vel y i mpact ot her pol i cy goal s.

An i mpor t ant component of our st at ut ory pol i cy i s t he

cont i nued pr ovi si on of el ect r i c and nat ur al gas ser vi ce t o al l

r esi dent i al cust omer s. 30 To t hat end, we aut hor i ze more t han

$100 mi l l i on annual l y f or r at epayer - f unded ut i l i t y l ow i ncome

assi st ance pr ogr ams. These r atepayer f unds augment t axpayer

f unds t hat pr ovi de f i nanci al assi st ance t o ut i l i t y cust omer s

t hr ough t he Home Energy Ass i st ance Progr am( HEAP) .

As expl ai ned i n t he Oct ober 2012 Or der , i n at l east

one ut i l i t y ser vi ce t er r i t or y, cust omer s par t i ci pat i ng i n t he

ut i l i t y s l ow- i ncome assi st ance pr ogr am ar e mor e l i kel y t o

obt ai n t hei r energy commodi t y f r om an ESCO t han cust omers who do

not par t i ci pate i n t hese pr ogr ams. We are concerned about t he

use of r atepayer and t axpayer f unds i nt ended t o assi st l ow

30PSL 30 st at es t hat t he cont i nued pr ovi si on of el ect r i c andnat ur al gas ser vi ce t o al l r esi dent i al cust omer s i s necessar yf or t he pr eservat i on of t he heal t h and gener al wel f ar e and i si n t he publ i c i nt er est .


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i ncome cust omers i nst ead payi ng ESCOs f or hi gher pr i ced

commodi t y wi t hout cor r espondi ng val ue t o t he cust omer.

As a t hr eshol d mat t er , sever al par t i es poi nt out t hat

cust omer s who par t i ci pat e i n ut i l i t y l ow i ncome assi st ance

pr ogr ams and HEAP ar e benef i t t i ng, or coul d benef i t , f r om

obt ai ni ng ser vi ce f r oman ESCO. However , t he data we have

r evi ewed show t hat r esi dent i al ESCO cust omers i n New Yor k St ate,

as a gr oup, have not benef i t ed i n r ecent year s i n compar i son

wi t h what t hey woul d have pai d i f t hey wer e f ul l servi ce

cust omer s of t he ut i l i t y.

We not e t hat al l cust omer s, par t i cul ar l y t hose who

par t i ci pat e i n ut i l i t y l ow i ncome assi st ance pr ogr ams and HEAP

can benef i t f r om ener gy- r el at ed val ue- added servi ces such as

home ener gy management ser vi ces, demand response pr ograms and

t ool s, ener gy ef f i ci ency measur es, and ot her t angi bl e ser vi ces

as det er mi ned by St af f . By hel pi ng cust omer s reduce t hei r

ut i l i t y bi l l s, such ser vi ces make i t easi er f or cust omer s

par t i ci pat i ng i n ut i l i t y l ow i ncome assi st ance pr ogr ams or HEAP

t o pay t hei r ener gy bi l l s, and mai nt ai n t he val ue of exi st i ng

f i nanci al assi st ance pr ogr ams. However , at t hi s t i me t he scope

of val ue- added servi ces of f er ed by ESCOs t o r esi dent i al

cust omer s cont i nues t o be ver y l i mi t ed.

By chargi ng more f or energy suppl y wi t hout pr ovi di ng

energy- r el ated val ue- added benef i t s, ESCOs ser vi ng cust omers who

par t i ci pat e i n ut i l i t y l ow i ncome assi st ance pr ogr ams or r ecei ve

HEAP benef i t s di mi ni sh t he val ue of t hose pr ogr ams. Di mi ni shi ng

t he val ue of publ i c assi st ance i n r el at i on t o cust omer s bi l l s

wi l l make i t har der f or t hose consumer s t o pay t hei r ut i l i t y

bi l l s i n f ul l , whi ch may l ead t o i ncreased ar r ear s and ut i l i t y

shut - of f s, t o t he det r i ment of ut i l i t i es and t hei r cust omer s.

Fur t her , t he use of l i mi t ed ut i l i t y l ow i ncome assi st ance

pr ogr am and HEAP f unds t o pay ESCOs hi gher - t han- necessary energy


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pr i ces r educes t he avai l abi l i t y of t he f unds f or ot her

consumers.

Cont i nui ng t o al l ow par t i ci pant s i n ut i l i t y l ow i ncome

assi st ance progr ams and HEAP t o purchase ener gy commodi t y f r om

an ESCO, wi t hout a guarant ee of savi ngs i n compar i son wi t h what

t he cust omer woul d have pai d t he ut i l i t y, or wi t hout t angi bl e

energy- r el ated val ue- added ser vi ces t hat may r educe a cust omer s

over al l ener gy bi l l , i s not i n t he publ i c i nt er est . Doi ng so

di mi ni shes t he val ue of ut i l i t y l ow i ncome assi st ance pr ogr ams

and f eder al and st at e assi st ance pr ogr ams. I n addi t i on, i t may

al so i nt er f er e wi t h our i nt er est i n mi ni mi zi ng t he unnecessar y

t er mi nat i on of essent i al el ect r i ci t y and nat ur al gas ser vi ce t o

r esi dent i al cust omer s.

Ther ef or e, we agr ee, i n par t , wi t h t he r ecommendat i on

of ut i l i t i es, OAG and PULP/ AARP. Speci f i cal l y, we r equi r e t hat

ESCOs ser vi ng cust omer s par t i ci pat i ng i n ut i l i t y l ow i ncome

assi st ance pr ogr ams must do so wi t h pr oduct s t hat guarant ee

savi ngs over what t he cust omer woul d otherwi se pay t o the

ut i l i t y. To compl y wi t h t hi s guar ant ee, an ESCO must be abl e t o

compare act ual cust omer bi l l s t o what t he cust omer woul d have

been bi l l ed at t he ut i l i t y s r at es and, on at l east an annual

basi s, pr ovi de any requi r ed r ef und as a credi t on t he cust omer s

bi l l . Al t er nat i vel y, ESCOs may al so pr ovi de t hese cust omer s

ener gy- r el at ed val ue- added ser vi ces t hat ar e desi gned t o r educe

cust omer s over al l ener gy bi l l s as descr i bed above. 31 I f an ESCO

cannot or wi l l not compl y wi t h t hese condi t i ons, i t can choose

31We emphasi ze t hat i t i s not up t o t he ut i l i t i es t o enf or cet hi s pol i cy.


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not t o ser ve cust omer s par t i ci pat i ng i n ut i l i t y l ow i ncome

assi st ance progr ams or HEAP. 32

To accommodat e t hi s new pol i cy and t o ass i st ESCOs i n

det er mi ni ng whet her pr ospect i ve cust omer s qual i f y as l ow i ncome,

sever al admi ni st r at i ve changes ar e r equi r ed. Cur r ent l y, as par t

of t he pr ocess of enr ol l i ng a new cust omer, ESCOs must obt ai n

cust omer aut hor i zat i on f or t he ut i l i t y to r el ease cer t ai n

i nf or mat i on t o t he ESCO. The i nf or mat i on i s t r ansmi t t ed vi a

El ect r oni c dat a i nt er change ( EDI ) , but does not i ndi cat e whet her

a pot ent i al cust omer i s a par t i ci pant i n ei t her a ut i l i t y l ow

i ncome ass i st ance pr ogr am or HEAP. I n or der f or t he ESCO t o

obt ai n t hi s i nf or mat i on, t wo t hi ngs need t o happen. Fi r st , t he

ESCO must seek cust omer aut hor i zat i on t o obt ai n t hat

i nf or mat i on, whi ch r equi r es a modi f i cat i on t o t he cust omer

aut hor i zat i on r ul es i n t he UBP. Second, as di scussed above, EDI

st andar ds must be modi f i ed t o pr ovi de a f i el d f or i nf or mat i on on

t he cust omer s l ow i ncome pr ogr am enr ol l ment st at us.

ESCOs t hat i nt end t o serve cust omer s par t i ci pat i ng i n

l ow i ncome assi st ance pr ogr ams, but do not pr ovi de qual i f yi ng

val ue- added ser vi ces, must devel op a mechani sm t o i mpl ement t he

pr i ce guar ant ee. That mechani sm must enabl e t he ESCO t o compar e

t he act ual cust omer bi l l t o what t he cust omer woul d have been

bi l l ed i f ser ved by t he ut i l i t y and, on at l east an annual

32As expl ai ned i n pr i or Commi ss i on Or ders, ESCOs are notr equi r ed t o onl y char ge t ar i f f ed pr i ces appr oved by thi sCommi ss i on. See Case 06- M- 0647 et al . , supr a, Or der Adopt i ng

ESCO Pr i ce Repor t i ng Requi r ement s and Enf orcement Mechani sms( i ssued November 8, 2006) ( p. 11) . I n r equi r i ng t hat ESCOsguarant ee savi ngs compar ed to what t he cust omer woul d havepai d t o t he ut i l i t y f or cust omer s who par t i ci pat e i n ut i l i t yl ow i ncome assi st ance pr ogr ams and HEAP, we do not change t hi spol i cy. ESCOs remai n f r ee t o set pr i ces wi t hout seeki ngCommi ssi on approval . The ESCO must onl y show t hat i t canof f er t he cust omer val ue beyond what t he ut i l i t y woul dpr ovi de, ei t her t hr ough savi ngs or val ue- added ser vi ces.


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basi s, pr ovi de any r equi r ed cr edi t on t he consol i dat ed ut i l i t y

bi l l . Bi l l i ng changes may be necessary t o accommodate ESCO

cr edi t s and shoul d be i mpl ement ed wi t hi n 90 days.

Regar di ng cust omers who ar e par t i ci pant s i n t he

ut i l i t i es l ow i ncome assi st ance pr ogr ams and/ or HEAP, and who

ar e cur r ent l y served by ESCOs, we wi l l r equi r e t hat , wi t hi n 90

days of t he dat e of t hi s Or der , each ut i l i t y pr ovi de a not i ce,

t hr ough a bi l l i nser t or t ar get ed l et t er , t o such cust omer s.

The not i ce must i nf or m t he cust omer ( 1) t hat he or she may be

el i gi bl e f or a l ower r at e f r om t hei r ESCO, and ( 2) t hat t he

cust omer shoul d cont act hi s or her ESCO t o i nf or m i t t hat he or

she i s a par t i ci pant i n a ut i l i t y l ow i ncome assi st ance pr ogr am

and/ or HEAP.

For a l ow i ncome cust omer wi t h an ESCO cont r act

wi t hout an ear l y t er mi nat i on f ee who cont act s hi s or her ESCO,

t he ESCO may of f er one or mor e pl ans t hat compl y wi t h our

pol i cy, or t he ESCO shal l of f er t o swi t ch t he cust omer back t o

ut i l i t y def aul t ser vi ce wi t hout an ear l y t er mi nat i on f ee. For a

l ow i ncome cust omer wi t h an ESCO cont r act t hat i ncl udes an ear l y

t ermi nat i on f ee who cont act s hi s or her ESCO, t he ESCO must

i nf or m t he cust omer of hi s or her opt i ons t o cont i nue wi t h ESCO

servi ce f or a speci f i ed number of mont hs or pay t he speci f i ed

ear l y t ermi nat i on f ee. For a l ow i ncome cust omer who does

nothi ng i n r esponse t o t he not i ce, t he ESCO may keep t he

cust omer on hi s or her exi st i ng pl an f or t he remai nder of t he

pl an s t hen- cur r ent t er m, but shal l not r enew t he exi st i ng pl an

unl ess i t compl i es wi t h our pol i cy f or new l ow- i ncome cust omer

enr ol l ment s. I n such a si t uat i on, t he ESCO must ei t her swi t ch

t he cust omer back t o ut i l i t y def aul t ser vi ce at t he end of t he

cur r ent t er m and not i f y t he cust omer t hat i t i s doi ng so, or

obt ai n af f i r mat i ve cust omer agr eement t o a new pl an t hat

compl i es wi t h our pol i cy.


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Fur t her det ai l s r egar di ng t he i mpl ement at i on of t hi s

new pol i cy concerni ng ESCO of f er i ngs f or cust omers who

par t i ci pat e i n ut i l i t y l ow- i ncome assi st ance pr ogr ams and HEAP

are to be addr essed at t he techni cal conf erence t o be convened

wi t hi n 60 days of i ssuance of t hi s not i ce.

PART I I

I MPROVEMENTS TO MARKETI NG AND CUSTOMER ENROLLMENT

The UBP est abl i shes mar ket i ng st andar ds t hat ESCOs and

t hei r r epr esent at i ves must f ol l ow when mar ket i ng to consumer s,

i ncl udi ng thr ough i n- per son cont act , such as door - t o- door

market i ng. We have st r engt hened t hese r ul es on occasi on t o

address new devel opment s and concerns. However , appar ent abuses

cont i nue.

At t hi s t i me, we wi l l bui l d on r ecommendat i ons t o

est abl i sh more st r i ngent r equi r ement s r egardi ng ESCO market i ng

i n or der t o r ef l ect best pr act i ces. We i dent i f y new

r equi r ement s f or ESCO mar ket i ng i n a f ew ar eas of cr i t i cal

i mport ance, i ncorporate these new r equi r ement s i n t he UBP and,

as wi t h ot her UBP modi f i cat i ons, r equi r e t hat t hey be

i mpl ement ed by ESCOs wi t hi n 90 days of t he i ssuance of t hi s

Or der . 33

A. ESCO Cust omer Agr eement Ver i f i cat i on

Under our cur r ent r ul es, ver i f i cat i on of cust omer

agr eement t o t ake ser vi ce f r om an ESCO may be obt ai ned t hr ough a

si gnat ur e on a wr i t t en agr eement , t hr ough el ect r oni c

aut hor i zat i on, or t hr ough a r ecor ded t el ephoni c aut hor i zat i on.

ESCO r epr esent at i ves conduct i ng door - t o- door mar ket i ng ar e

33 Gener al Busi ness Law 349- d( 12) speci f i cal l y per mi t s t heCommi ssi on t o adopt addi t i onal r equi r ement s r el at i ng t o ESCOmar ket i ng pr act i ces t hat ar e not i nconsi st ent wi t h t hest at ut e. We f i nd t hat our new r equi r ement s ar e consi st entwi t h GBL 349- d.


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r equi r ed t o obt ai n cust omer aut hor i zat i on by havi ng t he cust omer

si gn a wr i t t en agr eement i n t he pr esence of t he sal es

r epr esent at i ve. I n pr act i ce, whi l e not cur r ent l y r equi r ed by

t he UBP, many ESCOs ver i f y t he door - t o- door agr eement s t hr ough a

r ecor ded t el ephoni c ver i f i cat i on pr ocess si mi l ar t o t he Thi r d

Par t y Ver i f i cat i on ( TPV) pr ocess f r equent l y used f or t he

ver i f i cat i on of a change of t el ecommuni cat i ons car r i er s.

However , unl i ke the r equi r ement s f or changes i n t el ephone

ser vi ce pr ovi ders, t he ESCO market i ng r epr esent at i ve may be

pr esent t o assi st or coach t he cust omer i n compl et i ng t he ESCO

enr ol l ment aut hor i zat i on.

Ut i l i t i es and r epr esent at i ves of consumer s gener al l y

expr ess st r ong concerns wi t h door - t o- door market i ng and ur ge

t hat i t be pr ohi bi t ed or t hat addi t i onal saf eguar ds be

i mpl ement ed t o hel p prot ect consumer s. The OAG r ecommends that

we adopt new r equi r ement s gover ni ng t hi s f orm of market i ng

i ncl udi ng r ecor di ng of t he ent i r e door - t o- door sal es

pr esent at i on and di scussi on wi t h t he cust omer. Even t wo ESCOs,

GEE and USEP, st ate t hat t hey do not support door - t o- door

market i ng. General l y, however , ESCOs support t he cont i nued

vi abi l i t y of door - t o- door mar ket i ng as a mar ket i ng pr act i ce.

To address our cont i nui ng concer ns wi t h door - t o- door

mar ket i ng, and r ef l ect i ng t he best pr act i ces of ESCOs oper at i ng

i n New Yor k, we r equi r e t hat sal es whi ch r esul t f r om mar ket i ng

t hat i n any way i ncl udes door - t o- door mar ket i ng be subj ect t o

i ndependent TPV af t er t he sal es agent has l ef t t he cust omer s

pr emi ses. Fur t her , because St af f r epor t s a number of mar ket i ng

compl ai nt s r el at ed t o t el ephoni c sal es, we r equi r e t hat

i ndependent TPV be requi r ed f or al l t el ephoni c enr ol l ment s as

wel l . The r equi r ement f or i ndependent TPV appl i es t o any sal es

t hat or i gi nat ed as, or i ncl uded, ei t her a door - t o- door or

t el ephoni c market i ng component . Because we r ecei ve f ew


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compl ai nt s about enr ol l ment s r esul t i ng f r om di r ect mai l

campai gns or el ect r oni c aut hor i zat i ons, we wi l l not extend a

r equi r ement f or i ndependent TPV t o t hose market i ng modes at t hi s

t i me. 34

We adopt sever al r equi r ement s devel oped by t he FCC t o

hel p ensur e t he i nt egr i t y of t he ver i f i cat i on pr ocess.

Speci f i cal l y, we r equi r e t hat TPV be conduct ed by an ent i t y

t hat : ( 1) i s not owned or cont r ol l ed by t he ESCO, i t s par ent ,

af f i l i at es or agent s; ( 2) whose compensat i on i s not r el at ed t o

whet her or not t he ESCO enr ol l ment i s conf i r med; and ( 3) i s i n a

l ocat i on t hat i s physi cal l y separ at e f r om t he ESCO, i t s par ent ,

af f i l i at es or agent s. I n addi t i on, t he TPV must be bet ween t he

i ndependent ver i f yi ng ent i t y and t he pot ent i al ESCO cust omer ,

wi t hout par t i ci pat i on by the ESCO or i t s mar ket i ng

r epr esent at i ve. I deal l y, t he TPV woul d be made sever al hour s

af t er t he mar ket i ng agent has l ef t t he r esi dence. The cal l must

al so be r ecor ded and t he r ecordi ng kept f or t he l onger of t wo

year s or t he dur at i on of t he sal es agr eement .

A cr i t i cal component of TPV i s t he quest i ons t hat t he

i ndependent ver i f yi ng ent i t y i s t o ask t he pr ospect i ve ESCO

cust omer. I n r ecogni t i on of t he numerous compl ai nt s of sl ammi ng

and mi sr epr esent at i on by i ndi vi dual s mar ket i ng on behal f of

ESCOs, we requi r e t hat TPV ent i t i es ask and r ecei ve an

af f i r mat i ve r esponse f r om t he cust omer , at a mi ni mum, t o t he

quest i ons cont ai ned i n t he r evi sed UBP Sect i on 5, At t achment 1.

The ESCO may enr ol l t he cust omer onl y i f t he answer s t o each of

t he quest i ons r equi r ed i n UPB Sect i on 5, At t achment 1

demonst r at e t hat t he market i ng was conduct ed i n accor d wi t h UBP

34However , i f a cust omer s agr eement i s vi a el ect r oni c means,f or exampl e, but t he cust omer was mar ket ed t o at l east i n par tt hr ough door - t o- door market i ng, t hen t hat cust omer s agr eementmust be conf i r med t hrough i ndependent TPV bef or e t he ESCO mayenr ol l t he cust omer .


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r equi r ement s, and t hat t he cust omer cor r ect l y under st ands t he

pr ovi si ons of t he cont r act . I f t he ESCO woul d l i ke t o

per sonal i ze t he TPV by, f or exampl e, aski ng addi t i onal quest i ons

speci f i c t o t he mar ket i ng cal l ( e. g. , was t he ESCO

r epr esent at i ve cour t eous) , i t may do so.

B. Mar ket er I dent i f i cat i on St at ement

The UPB al r eady r equi r es t hat ESCO r epresent at i ves

conduct i ng door - t o- door mar ket i ng pr oduce i dent i f i cat i on and

i dent i f y t he ESCO whi ch t hey repr esent , as soon as possi bl e and

pr i or t o descr i bi ng any pr oduct s or ser vi ces of f er ed by the

ESCO. To hel p addr ess cont i nui ng compl ai nt s of cust omer

conf usi on r egardi ng who ESCO market ers r epr esent , t he Oct ober

2012 Not i ce sought comment s on a pot ent i al change t o t he UBP

t hat woul d r equi r e t hat mar ket er s begi n an i n- per son i nt er act i on

wi t h a pot ent i al cust omer wi t h a speci f i c di scl osur e st at ement ,

such as: My name i s ____. I r epr esent [ ESCO name] . [ ESCO

name] can pr ovi de you wi t h your el ect r i ci t y and/ or nat ur al gas.

I do not wor k f or or r epr esent your ut i l i t y.

I n vi ew of our cont i nui ng concerns about ESCO

mar ket i ng pr act i ces, we wi l l r equi r e use of a br i ef di scl osur e

st at ement as i dent i f i ed i n t he Oct ober 2012 Not i ce. Thi s

di scl osure st at ement must be del i ver ed i mmedi at el y af t er any

i nt r oduct or y gr eet i ng. Thi s st at ement shal l be used by al l

ESCOs, ESCO r epr esent at i ves, and ESCO agent s, i n al l i n- per son

i nt er act i ons wi t h pot ent i al cust omer s at l ocat i ons ot her t han

t he ESCO s pl ace of busi ness, wher e t he i nt er act i on i s f or t he

pur pose of descr i bi ng, mar ket i ng or sel l i ng any pr oduct or

servi ce of f er ed by t he ESCO. The di scl osure st at ement must al so

be used i n al l t el ephoni c i nt er act i ons wi t h pot ent i al cust omer s.

C. Vi sual I dent i f i cat i on of Door - t o- Door Mar ket er s

To f aci l i t at e our abi l i t y t o enf or ce t he UBP, we

r equi r e t hat al l ESCOs and t hei r r epr esent at i ves conduct i ng


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door - t o- door mar ket i ng, of f er t o al l consumer s cont act ed t hr ough

door - t o- door mar ket i ng a busi ness car d or si mi l ar i nf or mat i on

whi ch i ncl udes: t he name of t he sal es agent ; t he ESCO

r epr esent ed; a cont act number at t he ESCO t hat t he consumer can

use f or i nqui r i es, ver i f i cat i on and t o r egi st er a compl ai nt

about t he sal es pr act i ces of t he agent ; and, t he dat e and t i me

of vi si t . 35 Si nce we al r eady r equi r e t hat ESCOs pr ovi de al l

pr ospect i ve cust omer s wi t h t he ESCO Consumer Bi l l of Ri ght s, t he

mar ket i ng agent s busi ness card can be at t ached t o t hat

document .

Si mi l ar l y, t o f aci l i t at e enf or cement of door - t o- door

pr ovi si ons of t he UBP, we requi r e t hat al l ESCOs mai nt ai n a

r ecor d of t he t er r i t or i es i n whi ch t hey and t hei r mar ket i ng

r epr esent at i ves conduct door - t o- door mar ket i ng. Const el l at i on

r epor t s t hat i t mai nt ai ns a l i st of t he ZI P Codes t o whi ch i t s

door - t o- door mar ket i ng f i r ms and t hei r agent s are assi gned, t o

f aci l i t at e compl i ance. We f i nd compi l at i on and mai nt enance of

such l i st s, t o be a best pr act i ce. Ther ef or e, we r equi r e each

ESCO t o mai nt ai n l i st s each day of t he ZI P Codes i n whi ch each

of i t s mar ket i ng r epr esent at i ves are conduct i ng door - t o- door

mar ket i ng. I n t he event of a compl ai nt , t hi s i nf or mat i on wi l l

hel p t he ESCOs i dent i f y whi ch mar ket i ng r epr esent at i ve i s t he

subj ect of t he al l egat i on. Fi nal l y, such i nf or mat i on shoul d be

i n a f or m t hat can be r epor t ed t o St af f upon r equest , and shoul d

be retai ned by t he ESCO f or a mi ni mum of si x mont hs.

The UBP al r eady r equi r es t hat ESCO mar ket i ng

r epr esent at i ves, who cont act consumer s i n per son, have

i dent i f i cat i on t hat i s vi s i bl e at al l t i mes. The i dent i f i cat i on

must di spl ay the agent s name and phot ogr aph, t he name and l ogo

35 The car d must be of f ered t o t he consumer whether or not t hecont act r esul t s i n a sal e.


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of t he ESCO, and t he t el ephone number of t he ESCO. The newl y

pr escr i bed i nt r oduct or y st at ement , t oget her wi t h the i ndependent

TPV i n whi ch prospect i ve ESCO cust omer s must conf i r m t hat t hey

under st and t hat t he ESCO i s not associ at ed wi t h t he ut i l i t y

bef ore the ESCO enr ol l ment can be compl eted, r educes t he need,

at t hi s t i me, f or addi t i onal speci f i c r equi r ement s concer ni ng

at t i r e of ESCO agent s.

We rei t er at e our cont i nui ng concer n wi t h door - t o- door

mar ket i ng of ener gy servi ces. We af f i r m t hat we have ampl e

st at ut or y aut hor i t y t o i mpose addi t i onal r equi r ement s upon

ent i t i es conduct i ng such mar ket i ng. We shal l not hesi t at e i n

i mposi ng addi t i onal r equi r ement s on ESCOs conduct i ng door - t o-

door market i ng, where warr ant ed.

D. Ot her Modes of Enr ol l ment

The UBP speci f i es r equi r ement s t o enr ol l cust omer s vi a

door - t o- door sal es, t el emar ket i ng and I nt er net . These

r equi r ement s have been updated and r evi sed i n r ecent years.

However , other modes of enr ol l ment not envi si oned by t he UBP ar e

possi bl e, such as enr ol l ment by e- mai l . I r r espect i ve of how t he

sal es t r ansact i on occur s, t he est abl i shed r equi r ement s f or

enr ol l i ng cust omers r emai n t he same.

E. ESCO Cont r act Renewal s

The UBP i ncl udes numer ous det ai l ed r equi r ement s f or

r ecei vi ng, pr ocessi ng and f ul f i l l i ng r equest s f or changi ng a

cust omer s ener gy pr ovi der . I n cont r ast , t he UBP cont ai ns ver y

f ew r equi r ement s concerni ng t he i nf ormat i on t hat must be

pr ovi ded t o cust omer s f or cont r act r enewal s, conver si ons of

cont r act s f r om f i xed t o var i abl e pr i ces, or changes i n t he r at e

dur i ng exi st i ng cont r act s. Regar di ng cont r act r enewal s, t he UBP

r equi r es expr ess consent f r om a cust omer except f or changes i n

r at es or f or cont r act s t hat r enew on a mont hl y basi s wher e the

r at e met hodol ogy i s speci f i ed.


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The absence of a r equi r ement t hat cust omer s provi de

expr ess consent t o cont r act r enewal s or r at e changes r ai ses

concer ns. Const el l at i on cor r ect l y poi nt s out t hat aut omat i c

cont r act r enewal i s a common pr act i ce f or cabl e and cel l phone

servi ce. However , unl i ke most ESCO servi ces, cabl e and cel l

phone pr ovi der s i nf or m t he cust omer of t he pr i ce t hat t he

cust omer wi l l pay goi ng f orward. For ESCO ser vi ce, enhanced

pr ot ect i ons are necessar y.

Sever al par t i es, i ncl udi ng J oi nt Ut i l i t i es and UI U,

suppor t r equi r i ng af f i r mat i ve cust omer consent on al l cont r act

r enewal s. We decl i ne at t hi s t i me, t o adopt such a r equi r ement

si nce i t may i nappr opr i at el y dr i ve ESCO cust omer s back t o

ut i l i t y commodi t y servi ce and r ai se ESCO oper at i onal cost s.

However , we requi r e ESCOs t o publ i sh, on al l cont r act r enewal

not i ces f or mass mar ket cust omer s f or servi ces wi t h no ener gy-

r el at ed val ue- added at t r i but es, a pr omi nent message st at i ng t hat

t ool s t o hel p t he cust omer compare hi st or i c and pr esent ESCO

pr i ces are avai l abl e on, or can be accessed f r om, t he

Depar t ment s websi t e. When i ssui ng r enewal not i ces, ESCOs must

use a st andar di zed f or mat . St af f wi l l devel op a st andar d

r enewal not i ce and make i t avai l abl e t o ESCOs on the

Depar t ment s websi t e. Fur t her , i n t he event of a f i xed r at e

cont r act t hat r enews at a f i xed r at e, t he ESCOs shal l pr ovi de

t he cust omer wi t h addi t i onal not i ce pr i or t o t he i ssuance of t he

f i r st bi l l under t he t er ms of t he cont r act as r enewed, but not

mor e t han t en days pr i or t o i ssuance of t hat bi l l . Thi s

addi t i onal not i ce shal l i ncl ude t he new r at e and i nf or m t he

cust omer t hat , consi st ent wi t h GBL 349- d( 6) and the UBP, he or

she cannot be char ged a t er mi nat i on f ee i f he or she obj ect s t o

t he r enewal wi t hi n t hr ee busi ness days of t he cust omer s next

bi l l .


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Fi nal l y, we ar e concerned t hat cust omers may not

r ecogni ze t he si gni f i cance of t he renewal not i ce when t hey

r ecei ve i t i n t he mai l . Accor di ngl y, we r equi r e t hat t he

r enewal not i ce be sent i n an envel ope whi ch st at es i n bol d

l et t er i ng: I MPORTANT: YOUR [ ESCO NAME] CONTRACT RENEWAL OFFER

I S ENCLOSED. THI S MAY AFFECT THE PRI CE YOU PAY FOR ENERGY

SUPPLY.

F. ESCO Cont r act s Var i abl e Pr i ce Met hodol ogy

The UBP al r eady r equi r es t hat t he cust omer di scl osur e

st at ement i dent i f y, among ot her t hi ngs, t he pr i ce, whet her t he

pr i ce i s f i xed or var i abl e and, i f var i abl e, how t he pr i ce i s

set . I n pr act i ce, t hese descr i pt i ons of how t he var i abl e pr i ce

i s est abl i shed may i ncl ude vague or compl i cat ed, yet non-

speci f i c, l anguage. Some par t i es r ecommend t hat t he di scl osure

st at ement be r equi r ed t o speci f y the met hodol ogy, i ndex, or

f ormul a used by the suppl i er and t hat t he f ormul a shoul d be

publ i cl y avai l abl e and ext er nal t o t he suppl i er s abi l i t y t o

change or i nt er pr et t he i ndex, f or mul a, or met hodol ogy.

We decl i ne t o r equi r e t hat ESCOs speci f y t hei r

var i abl e rate met hodol ogy and t i e i t t o publ i cl y avai l abl e

i nf or mat i on. Such a f or mul a i s unl i kel y t o pr ovi de meani ngf ul ,

act i onabl e i nf or mat i on f or mass mar ket cust omer s. I n addi t i on,

such an appr oach woul d pl ace undue wei ght on t he publ i shed r ate

met hodol ogy, i nst ead of on t he act ual at t r i but es of t he ser vi ce

val ued by cust omer s such as t he extent of ener gy- r el at ed val ue-

added ser vi ces and t he act ual pr i ce charged by t he ESCO.

Fur t her , as descr i bed i n t hi s Or der , we ar e t aki ng ot her

si gni f i cant act i on t o enhance t he t r anspar ency of pr i ces

act ual l y char ged by ESCOs, whi ch i s of f ar gr eat er benef i t t o

consumer s t han publ i cat i on of a var i abl e pr i ce f or mul a.

Moreover , i mposi ng a r equi r ement t o publ i sh a rate methodol ogy

woul d undul y const r ai n ESCOs and i nhi bi t t hei r abi l i t y t o


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r espond t o unant i ci pat ed mar ket f act or s, t her eby pot ent i al l y

i mpedi ng compet i t i on.

However , we encour age ESCOs t o pr ovi de meani ngf ul ,

underst andabl e i nf ormat i on t o cust omers about how var i abl e

pr i ces ar e det er mi ned, consi st ent wi t h t he UBP. Cl ear , pl ai n

l anguage descr i pt i ons wi l l assi st cust omer s i n under st andi ng

ESCO of f er i ngs and enhance consumer conf i dence i n retai l energy

mar ket s.

G. Enf orcement of Market i ng Rul es

Cur r ent l y, upon St af f i dent i f i cat i on of a pat t er n of

appar ent vi ol at i ons of our mar ket i ng r ul es, St af f i ni t i at es a

mul t i - st ep i nvest i gat i on and enf or cement pr ocess. Fi r st , t he

ESCO i s ser ved wi t h a Not i ce of I nvest i gat i on ( NOI ) i dent i f yi ng

apparent vi ol at i ons of t he UBP, t o whi ch t he ESCO must pr ovi de a

wr i t t en r esponse. Second, upon a f i ndi ng by St af f of a

cont i nui ng and si gni f i cant pat t er n of appar ent UBP vi ol at i ons,

t he ESCO r ecei ves a second not i ce, r ef er r ed t o as a Not i ce of

Fai l ur e ( NOF) , whi ch r equi r es t he ESCO t o f i l e wi t h t he

Depar t ment det ai l ed i nf or mat i on per t ai ni ng t o each compl ai nt t he

ESCO r ecei ves goi ng f orward. The NOF al so commences a cure

per i od, dur i ng whi ch t he ESCO i s provi ded an opport uni t y t o t ake

cor r ect i ve act i on. I f , f ol l owi ng t he NOF, St af f cont i nues t o

observe an appar ent pat t er n of cont i nui ng and subst ant i al

vi ol at i ons of t he UBP, t hi s Commi ssi on may i ssue an or der t o

show cause, whi ch pr ovi des t he ESCO an oppor t uni t y t o

demonst r at e why t he Commi ssi on shoul d not i mpose consequences,

such as suspendi ng the aut hor i t y of t he ESCO t o acqui r e new

cust omer s.

Based on t he recent exper i ence, we concl ude that t he

pr ocess of i nvest i gat i ng appar ent vi ol at i ons of t he UBP shoul d

be st r eaml i ned. Accordi ngl y, we modi f y t he pr ocess t o combi ne

t he Not i ce of I nvest i gat i on and Not i ce of Fai l ur e steps


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i dent i f i ed above. Upon i dent i f i cat i on of a pat t er n of appar ent

vi ol at i ons of t he UBP, t he ESCO wi l l be sent a si ngl e Not i ce of

Appar ent Fai l ur e, i n whi ch i t wi l l be i nvi t ed t o pr ovi de a

wr i t t en r esponse t o i dent i f i ed compl ai nt s, r equi r ed t o pr ovi de

det ai l ed i nf or mat i on f or each subsequent compl ai nt , and be

pr ovi ded a st andar di zed cur e per i od of 30 days. The pr ocedur al

st eps of a Commi ss i on- i ssued order t o show cause and a

Commi ssi on Or der i mposi ng consequences, r emai n unchanged. These

st r eaml i ned pr ocedur es wi l l f aci l i t at e pr ompt enf or cement act i on

wher e appr opr i at e, t her eby pr ot ect i ng consumer s, and ef f ect i vel y

uses r egul at or y resour ces whi l e al so pr eser vi ng t he abi l i t y of

ESCOs t o r espond t o al l egat i ons. We wi l l r espond f or cef ul l y t o

evi dence of si gni f i cant and cont i nui ng vi ol at i ons of t he

mar ket i ng pr ovi si ons of t he UBP.

H. Pur chase of Recei vabl es

Ut i l i t i es pr ovi de bi l l i ng and col l ecti on ser vi ces, by

use of consol i dat ed ut i l i t y bi l l i ng ( CUB) , f or t he vast maj or i t y

of ESCOs ser vi ng r esi dent i al cust omer s. Ut i l i t i es al so pur chase

account s r ecei vabl e f r om most of t he ESCOs pr ovi di ng servi ce i n

t hei r r espect i ve ser vi ce t er r i t or i es. We pr evi ousl y adopt ed t he

Pur chase of Recei vabl e ( POR) model t o, among other t hi ngs,

r educe ESCO cost s t hereby pr omot i ng r etai l access , and ensure

t hat cust omer s r ecei ve t he f ul l benef i t s of HEFPA.

Recei vabl es ar e pur chased ei t her wi t h r ecour se or

wi t hout r ecour se. When r ecei vabl es are pur chased wi t hout

r ecour se, t he val ue of t he r ecei vabl es bei ng pur chased i s

gener al l y di scount ed based on hi st or i cal net wr i t e of f

per cent ages ( POR di scount ) . The ut i l i t y t hen assumes f ul l

r esponsi bi l i t y f or col l ect i ons f r om cust omer s. The POR di scount

i s based on t he payment hi st ory of al l ESCO cust omer s, or al l

ESCO cust omer s i n a speci f i c servi ce cl ass. I t does not var y by

ESCO. I n cont r ast , wher e r ecei vabl es ar e pur chased wi t h


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r ecour se, i f t he cust omer does not pay hi s or her bi l l , t he

ut i l i t y char ges a por t i on of t he wr i t e of f t o t he ESCO and t he

ESCO assumes r esponsi bi l i t y f or t he col l ect i on of t hose amount s.

The amount char ged back t o t he ESCO i s t he di f f er ence bet ween

what t he cust omer owed t he ut i l i t y i ncl udi ng ESCO charges and

what t he cust omer woul d have owed t he ut i l i t y had he or she been

a f ul l ser vi ce cust omer of t he ut i l i t y.

I n gener al t he ut i l i t i es are opposed t o a r equi r ement

t o i mpl ement POR wi t h r ecour se st at i ng t hat t he exi st i ng POR

pr ogr ams wi t h CUB have been i nst r ument al i n i ncr easi ng cust omer

par t i ci pat i on i n t he r et ai l access mar ket . The ut i l i t i es

i ndi cat e t hat changi ng t o POR wi t h r ecour se woul d r equi r e syst em

pr ogr ammi ng and t est i ng at si gni f i cant cost s and woul d al so

r equi r e modi f i cat i ons t o ut i l i t y col l ecti on pr ocesses,

account i ng pr ocedur es, and i nt er nal cont r ol s.

We are concer ned t hat POR wi t hout r ecour se, i n whi ch

t he POR di scount i s uni f or m across al l ESCOs, may decr ease t he

i ncent i ve f or ESCOs t o char ge exi st i ng cust omer s r easonabl e

r at es. Mor eover , a si ngl e POR di scount appear s t o di sadvant age

ESCOs t hat enr ol l and ret ai n good- payi ng cust omer s at

compet i t i ve pr i ces. We t her ef or e di r ect t hat t he POR pr ogr ams

be modi f i ed so t hat POR di scount r at es ar e cal cul at ed and

est abl i shed f or i ndi vi dual ESCOs. We expect t hat t hi s appr oach

wi l l avoi d t he subst ant i al t i me and cost s of r equi r i ng POR wi t h

r ecour se, whi l e achi evi ng many of t he same benef i ci al r esul t s. 36

36As expl ai ned ab

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