1 Bringing ESCOs a Step Closer to Real Regulation? -- The NYS PSC’s Feb. 23, 2016 “Reset Order” Richard Berkley, Esq. Executive Director Public Utility Law Project of NY, Inc. 90 South Swan St., Suite 401 Albany, NY Phone: Toll Free: Fax: June 6, 2016

2 Public Utility Law Project of NY, Inc.    twitter.com/UtilityProject twitter.com/UtilityProject   Phone: (877) – Toll Free  Mail: 90 S. Swan St. – Suite 401 Albany, New York 12210

3 We Will Talk About...  The Energy Service Company (ESCO) marketplace before the Feb. 23 Reset Order  Regulation? Or the lack thereof?  The harm inflicted upon NY “retail choice” consumers, & particularly upon low-income households and other targets of predation  PULP’s strategy to drive change  The PSCNY’s ORDER RESETTING RETAIL ENERGY MARKETS AND ESTABLISHING FURTHER PROCESS (Issued and Effective February 23, 2016) [the ”Reset Order”]

NY’s Retail Energy Market is Not Workably Competitive  In excess of 200 ESCOs apparently doing business in NYS, or maybe not?  The vast majority of ESCOs serving ”mass market” (i.e. residential and small comm’l) customers provide commodity- only service  Experience shows that, for mass market customers, ESCOs cannot effectively compete with commodity prices offered by utilities 4

Continued  The NYS PSC’s Conclusion in its Feb. 25, 2014 Order (“Partial Reform Order”): ”[R]etail energy markets are not providing sufficient competition or innovation to properly serve mass market consumers.”  Also, “Staff reviewed ESCO eligibility requirements in other states with restructured energy markets and found that several states have more stringent eligibility criteria for ESCOs than New York.” 5

A paucity of regulation  Art 1 of the PSL (general jurisdiction over sale of electric and gas)  Art 2 of the PSL (HEFPA; only tangentially effects ESCOs)  Opinion 97-5 creating minimal eligibility requirements  Nov Order requiring ESCOs to adhere to UBPs and utilities to adopt UBPs into tariffs; no enforcement 6

7 The PSCNY’s Conclusion in the Reset Order (see, p. 10)  Based upon the Reset Order record in the underlying proceedings, the Commission finds that additional restructuring is necessary to further protect consumers from high-pressure sales situations, deceptive marketing, slamming, and lack of expected savings. Comments received by parties demonstrate a public desire and need to further strengthen regulatory oversight to enhance consumer protections.

8 The Harms Visited Upon the Utility Consuming Public  Between 2012 and 2014, there were 3,360 complaints vs ESCOs in NYC alone; fraud was 21.5%, overcharging was 44%, with slamming, excessive termination fees and inability to switch back representing roughly 46%  In 2015, the total number of initial complaints received by the DPS vs ESCOs statewide was 5,044.  In 2012, PULP found that consumers in Nat’l Grid’s Upstate service area were overcharged an average of $20 per month in excess of the utility’s rate  In the current Nat’l Grid-NY rate case PULP found that 99.7% of all ESCO customers were overcharged by a net amount of $3,406, % of Low- and Fixed-Income customers were overcharged in that period.

9 Cont’d: Harm inflicted by ESCOs

10 Cont’d: Harm inflicted by ESCOs

11 Cont’d: Harm inflicted by ESCOs

12 Cont’d: Harm inflicted by ESCOs

13 Cont’d: Harm inflicted by ESCOs  In the current Nat’l Grid-LI rate case, PULP found that 99.8% of all ESCO customers were overcharged by a net amount of $1, , and an average overcharge of $39 per customer  Tellingly, in the May 31, 2016 technical conference on 3 ESCO whitepapers, the DPS’ ESCO enforcement staff stated that ESCOs had overcharged customers approximately $195,000,000 to date in 2016 (PULP has no way of objectively verifying that number)

14 PULP’s Strategy to Drive ESCO Regulatory Reform After more than 15 years of fighting ESCOs, a new strategy seemed appropriate  Use multiple simultaneous planes of action to increase pressure on the PSC, industry and Executive  Continue normal administrative advocacy but sharpen/harden positions  Meet with 30% of NYC Council and 10% of State Legislature (including all key committee chairs); request help pressuring PSC and Gov on ESCO problem

15 Continued: PULP’s ESCO Strategy  Organize key consumer protection organizations to file jointly in proceedings and use same talk points with press  Concentrate on partnering with media to write powerfully about ESCO predations, PSC “collaboration” with ESCOs, etc.

16 Media Response to PULP’s Strategy Village Voice: Why Is Albany Letting These Energy Companies Scam Thousands of New Yorkers?Why Is Albany Letting These Energy Companies Scam Thousands of New Yorkers? Village Voice: After Voice Investigation, Major Reforms Announced in Retail Energy IndustryAfter Voice Investigation, Major Reforms Announced in Retail Energy Industry Albany Times Union: Energy sales company say Cuomo swayed by Village Voice expose - Court filing cites expose by alternative weekly in agency actEnergy sales company say Cuomo swayed by Village Voice expose - Court filing cites expose by alternative weekly in agency act

Legislative Response to PULP’s Strategy  A.9032/S The purpose of this bill is to protect consumers from unknown price increases to their energy bills.  Two other important bills - A9593 would repeal ESCOs’ sales tax exemption on the delivery of electricity and natural gas. A9652 would add language to the current state statutes in order to limit the sale of electricity or natural gas by ESCOs to non-residential customers only.A9593A

18 So, Where is the Reset Order Now?  The ESCOs immediately sued and got a TRO restraining enforcement of three important Ordering paragraphs  Paragraph 1 restricts ESCOs to offering either a price guaranteed to match or beat the utility price or offer 30% renewable product

19 Continued: So, Where is the Reset Order Now?  Paragraph 2 requires ESCOs to receive affirmative consent from a mass market customer prior to renewing that customer from a fixed rate or guaranteed savings contract into a new contract  Paragraph 3 requires the CEO or equivalent to certify compliance with the Order (“baby Sarbanes-Oxley”)

20 Continued: So, Where is the Reset Order Now?  The PSC and ESCOs (and NYS-AG and AARP as amici) are still in court  The parties & stakeholders are undergoing process on 3 separate rulemakings arising from the TRO’s halt of the Ordering paragraphs  PULP is working with the media to keep the pressure on, filing Comments on June 6, in coordination with the NYS-AG and DOS- UIU, and keeping the Legislators involved…

PULP’s Upcoming Issues  More ESCO bad behavior?  “REV”, CES, ZECs and ???  Con Edison’s “Kangaroo Courts”?Kangaroo Courts  NYC Marshals, Meter Replevins & HEFPA Violations? (the 3 rd leg of the stool driving low-income arrears higher?)  Statewide investigations of DPAs and Utility Treatment of Serious Medical Conditions violating HEFPA? 21

22 Public Utility Law Project of NY, Inc.  For More Information  Contact Richard Berkley at (917)  to:  Toll Free: (877)  Mail: 90 S. Swan St. – Suite 401, Albany, New York 12210