On Rehearing, New York PSC Reverses Finding That ESCO Knowingly Provided False Statement In Application (Prior Finding Served As Basis For Ordering Return Of Customers To Utility) -- EnergyChoiceMatters.com

On Rehearing, New York PSC Reverses Finding That ESCO Knowingly Provided False Statement In Application (Prior Finding Served As Basis For Ordering Return Of Customers To Utility)

PSC Remands ESCO's Eligibility To Staff For Further Consideration

July 15, 2022

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Reporting by Paul Ring • ring@energychoicematters.com

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The New York PSC reversed its prior finding in a March 2022 order that SmartEnergy Holdings, LLC (SmartEnergy) had knowingly made a false statement in its retail access application form (RAAF).

While the March 2022 order had denied SmartEnergy's mass market eligibility and ordered the return of the ESCO's customers to default service, with the PSC's reversal of its finding noted above, the PSC has now remanded the matter of SmartEnergy's eligibility to Staff for further consideration

The PSC previously granted an extension of the requirement for SmartEnergy to return its customers to default service while the company's rehearing request was pending

At issue is RAAF 1.C., which at the relevant time asked, "During the previous 36 months, have any criminal or regulatory sanctions been imposed against any senior officer of the ESCO applicant or any entity holding ownership interests of 10% or more in the ESCO?"

In its rehearing request, SmartEnergy said, "The question posed in Section 1.C of the RAAF above asks the applicant to identify any criminal or regulatory actions imposed against any senior officer or owner of the applicant. It does not, however, ask this same question with respect to the applicant itself."

Based on such language, SmartEnergy initially did not report in its answer to the question regulatory sanctions against it in Illinois, Ohio, and Maryland. SmartEnergy later took, "active measures to supplement the RAAF responses once the Department staff disclosed their interpretation of the language on the RAAF form notwithstanding the plain and unambiguous English language meaning printed on the RAAF document itself."

In reversing its original finding, the PSC stated, "The Denial Order found that SmartEnergy’s failure to disclose regulatory sanctions against it in Illinois, Ohio, and Maryland in response to RAAF 1.C constituted a knowing false statement in violation of UBP 2.B.3. Upon review, this was an error. RAAF 1.C does not require disclosure of regulatory or criminal sanctions against the ESCO applicant itself and the failure to disclose such information in that section of the RAAF cannot, therefore, constitute a knowingly false statement within the meaning of UBP 2.B.3. Accordingly, those portions of the Denial Order that were premised upon SmartEnergy’s alleged violation of UBP 2.B.3 are reversed."

"Having reconsidered the rationale of the Denial Order, the Commission remands this matter to Staff and directs Staff to determine whether SmartEnergy’s application for eligibility demonstrates a likelihood that SmartEnergy will comply with the UBP," the PSC said in remanding the application to Staff

The PSC confirmed that Staff may consider regulatory actions against SmartEnergy in other states in reconsidering the company's ESCO eligibility application, as well as New York complaint data

Staff was ordered to render a determination on the eligibility application within 60 days

Cases 12-M-0476, 15-M-0127, 98-M-1343

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