On March 4, the New York State Supreme Court issued a temporary restraining order against recently released rules by the NY Public Service Commission (PSC) that sought to impose various limits on retail energy suppliers.
As I discussed last month, the NY PSC issued an order on February 23 that, among other things, requires retail energy suppliers (or ESCOs) serving mass markets to guarantee savings to customers, compared to the default utility price. The rule was set to go in effect just 10 days after being issued. On March 2, the PSC issued implementation guidance for these new rules, set to be effective after March 4.
The state Supreme Court stay is a procedural measure, intended to provide relief until the court can hear the merits of the case. Hearings on the merits are scheduled for April 14.
Consumer advocates lauded the NY PSC February rules, maintaining long standing abuses by ESCOs serving mass markets, including deceptive marketing practices and high prices. However, ESCOs claim they were surprised by the new requirements, the schedule for compliance with the new rules is too fast, and the price requirements would force many companies to sell product at a loss resulting in many ESCOs leaving the state.
Some of the issues the April hearings will explore include whether the PSC: exceeded its authority in issuing the rules, issued the rules in violation of lawful procedure, abused its discretion, and developed rules that violate legal rights of the ESCOs.
The outcome of this case could have major implications for New York’s plan on reforming the energy vision (NY REV) initiative. In order to realize the NY REV vision, the PSC needs ESCOs to not only continue to operate in NY, but expand service offerings at competitive prices. As such, NY PSC will have to continually balance maintaining a value proposition to attract the private sector with making sure consumers don’t get hosed.
It seems the PSC was late on addressing ESCO abuses in the mass markets (the NY Comptroller’s Office is auditing the PSC’s handling of consumer complaints), and now, the private sector’s reactions to the PSC’s latest rules suggest they might not stick around to serve the state. Relatively untested by the courts, the PSC struggles to find balance. While outcomes are unknown, it is possible the April hearings may serve to remove some tools from the PSC’s belt.