Hess Appeals Denial of Confidential Protection for New York Contract

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December 30, 2010

Hess Corporation has appealed a New York PSC records access officer's determination that standard form contracts submitted by ESCOs to show compliance with the Uniform Business Practices are not eligible for confidential protection.

As only reported by Matters (12/8), Halifax-American Energy, a unit of Freedom Energy Logistics which acts as an agent for South Jersey Energy Co., sought disclosure of standard form variable rate contracts filed by several ESCOs.  The records officer denied confidential protection on the grounds that Hess had not shown that it would suffer substantial economic injury from disclosure (12/28).

In its appeal, Hess noted that, "case law makes clear that an exception from disclosure will be granted where there is a showing of the likelihood of substantial competitive injury."

While the records access officer (RAO) found that Hess had only offered the potential for some damage from disclosure, Hess argued that, "[t]here is no requirement as erroneously alleged in the Determination that the proponents of the exception must demonstrate actual competitive injury."

Furthermore, Hess rebutted the records access officer's conclusion that substantial injury will not result from disclosure because the contracts are not agreements with specific customers, but rather standard forms submitted for compliance.

Hess explained that the records access officer, "misapprehends the nature of the agreements submitted by Hess in response to the UBP."

"Although the RAO focuses on such descriptive language as 'standard' and 'sample', these agreements are far more detailed and revelatory of the ESCO's operating practices than apparently mistakenly envisioned by the RAO.  The sales agreements submitted to the Commission incorporate all of the 'terms and conditions' applicable to the provision of service to the individual customer.  Thus pursuant to UBP Section 5.B.3, the Sales Agreement for each class that is submitted by an ESCO pursuant to the UBP must set forth the terms and conditions 'applicable to the business relationship between the ESCO and the customer ...'" Hess said.  

"The totality of such terms and conditions can differ markedly from ESCO to ESCO, represent the key elements of the individualized agreement with each customer, and will go beyond specific regulatory requirements.  This is not a broad 'sample' or 'form' exposition, but in fact reflects the terms and conditions by which each individual ESCO will conduct its individualized contractual relationship with the customer.  And many of these terms and conditions are not even specifically addressed in the UBP," Hess noted.

"[T]he claim by the RAO that the 'individual agreements ..... are not at issue here', is confusing and mistaken. In response to the UBP requirement, an ESCO does not submit to the Commission each contract it enters into with every customer.  Instead, it submits for review the contract it will use for each individual customer, leaving open the data related to the particular customer (i.e., name, address, account number, etc.).  Thus, at issue in this matter are the specific individual agreement formats that an ESCO will use for each customer," Hess said.

Hess stressed that the terms of each contract represent specific market determinations made by ESCOs, as opposed to simply adopting boilerplate UBP language.  For example, under UBP Section 5.B.3.a.2, the sales agreement must include the, "placeholder for the price or how the price is determined."

"Obviously the manner by which price will be determined can differ markedly by ESCO.  Thus one ESCO may use a daily gas price tied to a specific published data source; another ESCO may use an entirely different pricing mechanism.  What is clear is that the information provided in the sales agreement reveals important pricing and other competitive information governing the ESCO's relationship with an individual customer," Hess said.

"These documents provide distinct individual information concerning each ESCO's approach to critical issues such as price, term, termination, guarantees and many others. It is thus beyond argument that these sales agreements contain important and valuable competitive information which if disclosed would engender substantial competitive injury," Hess argued.

Hess reiterated that pursuant to the provisions of 16A NYCRR Section 6- 1.3(a)(2)(iii) and the holding in Matter of Ashland Management, Inc. v Janien, 82 N.Y. 2d 395 (1993) , in reviewing a claim for disclosure protection, an important factor to be considered by the public agency is the "worth or value of the information to the person and the person's competitors."

 

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