The Commission adopted initial proposed competitive electric power supplier (CEPS) and aggregator rules at its November 21st Agenda meeting. The proposal rules were submitted to the Office of Legislative Budget Assistant for the preparation of a fiscal impact statement and will then be filed with the Office of Legislative Services. A public hearing and comment period will take place in 2017.

The proposed rules substantially revise the existing rule provisions. Changes include the following:

1) The definition of "aggregator" was revised to include a broker acting on behalf of a competitive electric supplier, and separate definitions of "aggregator granted agency authority" and "buyer's aggregator" were set forth;
2) The definition of "competitive electricity power provider" was revised to include service to net metering customers;
3) The definition of "small commercial electric customer" was revised as one with a normal maximum demand threshold of under 20 kilowatts;
4) The CEPS application process was revised to include a listing of the bases for denial of a CEPS application and denial of application renewal as well as changes in duration of registrations and renewals;
5) Acceptable financial instruments for posting would be expanded to include irrevocable letters of credit;
6) The circumstances under which financial security would be called on by the Commission were delineated, including customer complaint reparations, fines or sanctions for law or rule violations, ACPs and unpaid annual assessments;
7) Aggregator registration provisions were changed to include the grounds for denial of an application or renewal or an application;
8) Provision for a CEPS annual assessment of $10,000, and an aggregator assessment of $2,000, with an exemption for small entities;
9) Changes were incorporated in the written disclosure statement requirement including changing the rescission period such that residential and small commercial customers can rescind authorization within 5 business days of electronic receipt of terms of service or within 6 business days from the postmarked date of terms of service sent via mail;
10) With respect to variable price offers, that the CEPS website and terms of service include the pricing structure, the monthly average price a customer would have paid the CEPS over the preceding 12 months using either actual variable prices, or the currently offered variable price structure, and the applicable price index for the past 24 months as well as "the maximum and minimum monthly price, stated separately, that a similarly situated customer" would have paid the preceding 12 months;
11) CEPS would be required to participate in a shopping comparison website;
12) Customers would need to receive notice 30 days prior to the effective date of any projected increase in variable price of 10% or more or one cent per kilowatt hour, whichever is less;
13) Customers must receive notice within 45 to 60 days of the effective date of a change in terms or structure of a variable price;
14) Fixed price product disclosures must include the average monthly price at different usage levels;
15) No variable price contract with a CEPS shall bind, "a residential or small commercial customer for a period longer than a one-month billing cycle;"
16) Inclusion of environmental disclosure labeling requirements:
17) Provisions for acceptable methods for obtaining customer authorization to take CEPS service were revised, including "Unless requested by the potential customer no less than 24 hours in advance, no CEPS or aggregator, or its representative, shall solicit a potential residential customer in person at the customer's residence," but a CEPS or aggregator can contact such customer at a location other than the customer's residence for the purpose of selling a product or service;
18) The enforcement provisions in the regulations were changed to include a section on the provision of a notice of violation to a CEPS or aggregator and subsequent procedures as well as to permit the prospective suspension of a CEPS or aggregator marketing and sales activities for "sanctionable events;"
19) The enforcement provisions also include factors to be considered by the Commission in imposing sanctions.

The full text of the Proposed Revisions to the Competitive Electric Power Supplier and Aggregator Rules is available on the NEM Website.

The Commission issued a notice that it is initiating a two track process to evaluate whether ESCOs should be prohibited from serving mass market customers.

Specifically, the Commission will consider: “(a) whether ESCOs should be completely prohibited from serving their current products to mass-market customers; (b) whether the regulatory regime, rules and Uniform Business Practices (UBP) applicable to ESCOs need to be modified to implement such a prohibition, to provide sufficient additional guidance as to acceptable rates and practices of ESCOs, or to create enforcement mechanisms to deter customer abuses and overcharging, including whether the Commission decision not to subject ESCOs to Article 4 of the Public Service Law should be revisited; and (c) whether new ESCO rules and products can be developed that would provide sufficient real value to mass-market customers such that new products could be provided to them by ESCOs in the future in a manner that would ensure just and reasonable rates.”

The first track of the case will examine “a” and “b” listed above, through the submission of testimony and an evidentiary hearing. Track 1 Testimony is due April 7, 2017. Additional procedural steps will be set by the ALJ assigned to the matter.

The second track of the case will consider “c” through collaborative meetings, reports or proposals, and opportunity for comment.

The Commission identified the following topics for inclusion in testimony:
“1. Whether ESCOs should be prohibited in total or in part from serving their current products to mass-market customers, or whether ESCOs should be required to offer value-added energy efficiency and energy management services as a condition to offering commodity services.
2. Whether the regulatory regime of how the Commission applies the Public Service Law to ESCOs should be modified to ensure that customer abuses and overcharging by ESCOs is deterred. In particular, the Commission has not applied Article 4 to ESCOs, based on a construction that Public Service Law §66(1) only applies to utilities with plant in public streets. Is that construction justified today? Would it be appropriate to revisit that construction in light of subsequent events, such as the adoption of the 2002 amendments to the Home Energy Fair Practices Act? If the construction is revisited, would it be appropriate and beneficial to customers and in the public interest to apply the restrictions of Public Service Law §65 to ESCOs?
3. Whether the regulatory regime of how the Commission applies the Public Service Law to ESCOs should be modified to ensure adequate enforcement mechanisms, including penalties, to deter customer abuses and overcharging. In this regard, please comment on whether it is possible for the Commission to seek penalties against ESCOs under the current regime, pursuant to which they are only regarded as “gas” and/or “electric” corporations under PSL Article 1, or if it is necessary to also regulate ESCOs under Article 4 to seek penalties against ESCOs? If Article 4 regulation is deemed necessary, then what burdens would such regulation impose? For instance, would it be possible for ESCOs to obtain “incidental” regulation under Public Service Law §66(13) and would such “incidental” regulation serve the public interest? Would ESCOs also be subject to undue burdens if they needed to obtain approval for stock issuances under Public Service Law §69 or the transfer of stocks, plant or franchises under Public Service Law §70? Should ESCOs be further regulated as to credit worthiness?
4. Whether the regulatory regime of how the Commission applies the Public Service Law to ESCOs should be modified to guide ESCOs toward acceptable rates and practices and deter customer abuses and overcharging. In particular, if the Commission decides that Public Service Law Article 4 applies to ESCOs, should the Commission use the discretionary authority of Public Service Law §66(12)(a) to require filing of tariffs by ESCOs in order to ensure that ESCO bills be no greater than utility bills? If so, should the Commission require filing of tariffs by all ESCOs, just ESCOs offering commodity-only service, or just ESCOs that have been determined to charge prices in excess of utility bills? Should the Commission take steps to void existing ESCO contracts if it tariffs ESCO services?
5. Whether the rules applicable to ESCOs should be modified to ensure that customer abuses and overcharging by ESCOs are deterred. If so, then should the authority be imposition of Public Service Law Article 4 and/or other requirements created by Public Service Law Article 6?
6. Whether the Uniform Business Practices (UBP) applicable to ESCOs should be modified to ensure that customer abuses and overcharging by ESCOs are deterred.
7. Whether door-to-door and outbound telemarketing practices of ESCOs to mass market customers should be prohibited, and whether other ESCO marketing practices should be prohibited?
8. Whether the purchases of receivables system regarding mass market customers should be modified in any way, including but not limited to imposing "purchase with recourse" provisions or tiered discount rates so that ESCOs with abusive practices bear more financial risk from such practices?
9. The prices for retail gas and/or electric service charged to and paid by mass-market customers of ESCOs in the recent past, including, at a minimum, calendar years 2014 and 2015 and as much of 2016 as may be available, and the prices those customers would have paid for comparable utility service. If different products are offered (e.g., fixed vs. variable), the prices by product offering. In addition to annual data, seasonal (summer and winter) and monthly data should be provided where possible and relevant. Data for residential and small commercial customers should be provided separately. Data for electric and natural gas products should be provided separately. Where an ESCO product has been offered for more than five years, the last five years of historical data should be provided. Parties providing significant quantities of data should consult with Staff as to providing the data in a useful electronic format.
10. Data setting forth the number of customers served by ESCOs, by ESCO, for 2014, 2015, and so much of 2016 as is available.
11. Data setting forth the volume of sales in total dollars and in kWh, by ESCO, for 2014, 2015, and so much of 2016 as is available.
12. Evidence that an ESCO has, in fact, in recent years offered or is currently offering lower prices on an annual basis compared to the incumbent utility consistently, including number of customers served and total volume of sales in both dollars and kWh. Such evidence should also include an analysis of whether that price offering has been profitable or resulted in a loss to the ESCO.
13. Whether, given the current retail market structure, it is possible for an ESCO to profitably offer lower prices on an annual basis compared to the incumbent utility consistently and, if possible, how it can be done.
14. The number and nature of customer complaints regarding i) retail prices and bills and ii) sales and marketing practices from a) customers directly to ESCOs, b) from customers to utilities about ESCOs, by ESCO, and c) customers to the Commission about ESCOs, by ESCO during calendar years 2014 and 2015 and as much of 2016 as it is available.
15. ESCO marketing and sales practices, including printed materials, customer contracts, scripts for telephone or door-to-door solicitations, and other training materials for ESCO sales people for practices in effect during calendar years 2014, 2015, and 2016. Such evidence should include all efforts by ESCOs to ensure that they and their personnel comply with the Uniform Business Practices (UBP) and that they otherwise avoid any deceptive marketing practices.
16. The ability of mass-market customers to obtain information about relative prices and offerings of ESCOs and regulated utilities and to understand such information, including evidence regarding the transparency of the retail market for mass-market customers and the level of knowledge in that market.
17. Tools that are available in the public domain that customers can use to do comparison shopping.
18. Specific customer surveys that shed light on customers’ understanding about retail choices available and how to make informed choices.
19. Actions by state agencies or consumer advocacy groups to protect customers, to monitor the state of the retail market customers, to provide information, or to lodge complaints or impose discipline in the case of improper ESCO practices, including specific concrete steps the group has taken and any results obtained from those actions.
20. Actions that have been taken or that could be taken to strengthen the retail market or otherwise to provide consumer protections sufficient to protect mass-market customers from overcharges or deceptive marketing practices. For instance, if the Commission decided to subject ESCOs to Article 4 of the Public Service Law would it be appropriate to require ESCOs to obtain Certificates of Public Convenience and Necessity under Public Service Law §68 in order to provide commodity service?”

The full text of the Notice is available on the NEM Website.