PULP Challenges PSC’s ESCO Orders

On October 27th, the Commission released two Orders regarding competition in the electric and natural gas markets. The first Order added marketing standards to the PSC-promulgated Uniform Business Practices (“UBP”) for Energy Service Companies (ESCOs) to follow when soliciting new customers and the second Order Determining Future of Retail Access Programs addressed the broader retail access market and whether to continue utility ratepayer funded programs to promote ESCO competition. An active party in both proceedings, PULP has serious concerns with the resulting decisions. We filed motions for Reconsideration and Clarification today.

ESCO Marketing
PULP sought reconsideration of three major points in the UBP ESCO Order: enforcement, early termination fees, and customer complaint information.

First, we argued that the practice of placing the “rules” (the UBP) which govern ESCO activities in the tariffs of the distribution utilities must come to an end. Short of requiring ESCOs to file tariffs – as competitive telecom utilities in the state must do – PULP had argued that guidelines should be adopted which would be enforceable through a Commission order. This was accomplished twice on the telecom side, with Migration Guidelines and Mass Migration Guidelines crafted through industry collaboratives and approved by the Commission in separate Orders to which the Guidelines were attached. We questioned how the agency could enforce any provision in the UBP, much less the new marketing standards, if there are no provisions in the statute, rules, or a Commission order. While PULP raised this issue in its comments, it was not addressed by the Commission.

PULP also challenged the imposition of early termination fees (“ETF”) to ESCO customers who seek to end their contract early and switch back to the utility or to another ESCO. PULP argued that ETFs are an unlawful requirement for gas service and questioned why ESCOs should be the only type of utility regulated by the PSC to be able to charge ETFs. There is no record regarding the need for the ETFs, it was just presumed that they are necessary for ESCO survival. Also, ESCO contracts typically permit the ESCO to cancel the contract early, on short notice, without penalty, with no reciprocal provision for the customers. PULP called for an on-the-record review of the need for ETFs and for further Commission investigation of why so many customers are trying to terminate ESCO service contracts.

PULP also maintained that the ESCO information on the Commission’s web page must include each ESCO’s complaint rate. Knowing the number of complaints filed against an ESCO in a given month has very little value unless it is also known how many customers the ESCO has.

Ratepayer-Funded Retail Access Programs
PULP challenged the Commission’s Retail Access order on a single ground – price transparency.

PULP urged that the Commission require distribution utilities to include on their delivery service bills to ESCO customers a statement or shadow bill of what the charges would be for full bundled service, so ESCO customers could see whether they are saving or losing money. When combined with ETFs, not knowing the commodity prices unfairly results in customers being locked into long term contracts. The Commission has misinterpreted the fact that many distribution utility customers who switch to an ESCO stay for two years not because they are receiving the best service or price, but, rather, to avoid paying an onerous ETF. This is not the robust competitive market that the Commission believes to exist. Unless customers are aware of the actual price (and not just for the first two months under some introductory rates), true competition will never come to the energy markets.

Lou Manuta