Dive Brief:

• Acting State Supreme Court Justice Henry Zwack sent the state of New York back to the drawing board in its bid to curtail sales from independent energy marketing companies, finding the new rules proposed in February were "irrational, arbitrary and capricious."
• Six months ago, in response to reports of overcharging, New York Gov. Andrew Cuomo (D) proposed new rules on energy service companies (ESCOs), including requiring the energy providers to either guarantee savings or require a portion of the energy to come from clean sources.
• Marketers filed suit, however, arguing they were given insufficient time to respond to the new restrictions. Companies were given just 10 days notice before the rules went into effect.

Dive Insight:

It was a significant win for ESCOs in New York, turning a temporary stay into a rejection of Cuomo's new rules. But the court ordered the Public Service Commission to issue a new batch of rules, meaning the issue is certainly not over.

The industry group backing ESCOs said it was relieved to hear of the decision.

​"The Retail Energy Supply Association is gratified that the court vacated the New York Public Service Commission's February market-reset order," Retail Energy Supply Association spokesman Bryan Lee told the Times Union.

About 20% of New York's residential customers get their energy from an independent company, and amid reports of overcharging, the state moved to institute a slate of news rules including a "do not knock" rule to protect customers, similar to "do not call" provisions, and requirements that ESCOs guarantee savings.

The judge's order found the state failed to offer energy marketers "an opportunity to be heard in a meaningful manner and at a meaningful time."

A spokesman for the commission said the judge's order simply highlighted "procedural flaws" in Cuomo's bid to address ESCOs, and said some of the issued have already been addressed.

"Make no mistake, we are putting an end to deceptive ESCO practices that harm electric and gas customers," said PSC spokesman James Denn.

PSC Chairwoman Audrey Zibelman expressed disappointment in the ruling, saying in a statement to Utility Dive that "we are disappointed that a Judge delayed these protections for what were deemed to be procedural problems with our order. Unfortunately, as a result of the litigation, ESCO customers are still paying millions of dollars more every month than they should be paying for electric and gas services. But this injustice will be short-lived." 

The new rules came after a PSC review of the system 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.