Dive Brief:
- A New York state Supreme Court judge has placed a hold on new restrictions on energy service companies (ESCO), following several hours of hearings last week where they argued new rules would put many companies out of business, the Albany Times Union reports.
- New York Gov. Andrew Cuomo (D) proposed new rules on ESCOs last month, including requiring the energy providers to either guarantee savings or require a portion of the energy to come from clean sources.
- The Public Service Commission is conducting an audit of the companies, and a spokesman for the PUC stressed the judge's decision was both preliminary and procedural. The commission has "the absolute authority to regulate the industry," he said.
Dive Insight:
ESCOs operating in New York won a delay in new rules last week, but it is clear that some form of revamping is coming to the state's current set of regulations.
"This preliminary ruling is merely procedural; it does not address the merits of the PSC's order," spokesman James Denn told the Albany Times Union. "The PSC has the absolute authority to regulate the industry and root out deceptive business practices. We are confident we will prevail in our effort to safeguard consumers against unscrupulous consumer practices, which have cost consumers millions of dollars in overcharges."
About 20% of New York's residential customers get their energy from an independent company, and the state announced last month that many ESCOs were overcharging. Regulators are putting a hold on new contracts unless they meet certain restrictions, and are auditing the system and developing new rules. They are strengthening the process for revoking ESCO eligibility to do business in New York, and instituted a "do not knock" rule to protect customers, similar to "do not call" provisions.
The changes follow a PSC review of the system which found significant overcharging in some spots. Four companies in the Hudson Valley, for instance, charged more than double what Central Hudson charged for electricity, and another charged triple the utility rate for natural gas. A New York City company charged more than triple Con Edison's rate for electricity and several companies were charging more than double the utility rate for natural gas.
The retail suppliers' trade group has indicated they are ready to work with regulators on new rules.
"The Retail Energy Supply Association is gratified that the court has ordered a temporary stay of New York Public Service Commission rules that effectively eliminated the right of residential and small commercial customers in New York to choose among competitive energy offerings," Bryan Lee, a spokesman for the Retail Energy Supply Association, told the Albany Times Union. "This is great news for consumers as it protects their right to freely decide for themselves what energy products offer value. However, ongoing legal review of the PSC's order will continue."
The next court date is scheduled for April 14.
