New York PSC Affirms Order Requiring ESCO To Drop Customers To Default Service

August 18, 2023

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Copyright 2010-23 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

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The New York PSC issued an order on rehearing concerning the ESCO eligibility of SunSea Energy, LLC, in which the PSC affirmed its prior order that SunSea's re-application for ESCO eligibility is denied and SunSea's customers must be returned to default service. The PSC did grant limited rehearing on a discrete issue concerning interpretation of a question on the retail access application form, but such limited rehearing did not affect the PSC's overall determination denying eligibility

See background on the proceeding here. While the PSC's initial order addressed the re-application of Sunsea as an existing ESCO in the market for mass market eligibility under the PSC's reset order, in an earlier and separate proceeding, the PSC had revoked SunSea's prior (pre-reset) eligibility, and thus the rehearing order addresses whether Sunsea is eligible to be an ESCO at all. The deadline under the PSC's prior order denying mass market eligibility and ordering the drop of customers to default service had been extended until SunSea's rehearing request was resolved.

On rehearing, the PSC largely affirmed its prior conclusions

"SunSea’s second and third arguments [on rehearing] share a common premise – that the Commission cannot base the Denial Order on complaints, whether in New York or otherwise, when those complaints have not been established as violations of the applicable rules and regulations. First, the Commission has previously found that SunSea is the subject of a material pattern of complaints in violation of the UBP in a related enforcement action which resulted in the revocation of SunSea’s eligibility to operate in New York. That determination has been upheld by the Supreme Court after an Article 78 proceeding. That the Commission has already revoked SunSea’s eligibility to operate in New York weighs against granting eligibility here," the PSC said

"In addition, the UBP provides that the Commission may impose consequences upon an ESCO, including exclusion from the state, if 'a material pattern of consumer complaints on matters within the ESCO’s control' is identified. That the UBP only mentions a material pattern of 'complaints' as opposed to 'violations' permits the Commission to consider complaints, whether in New York or otherwise. Reinforcing this reading of the UBP, when the Commission Order adopted the 'material pattern of consumer complaints' standard it defined a 'material pattern of complaints' as 'a continuing volume of the same category of complaints, such as slamming or deceptive marketing.' This language was intended to provide the Commission with 'broad discretion to determine when the volume and pattern of complaints requires action. . . . ,'" the PSC said

With respect to the RAAF question on which rehearing was granted, the question, at the relevant time period, asked ESCO applicants whether, "any criminal or regulatory sanctions have been imposed against any senior officer of the ESCO applicant or any entity holding ownership interests of 10% or more in the ESCO' in the previous 36 months."

The PSC in its initial order found that SunSea did not disclose a regulatory sanction imposed by the Maryland PSC, and found that such failure amounted to a knowingly false statement in violation of the UBP

On reconsideration, the PSC granted rehearing on this issue, finding that the omission of the Maryland sanction was not a false statement, because the question did not ask if the ESCO applicant itself was subject to such sanction -- rather, the question asked about, "any senior officer of the ESCO applicant or any entity holding ownership interests of 10% or more in the ESCO."

"The Commission grants rehearing as to the portion of the Denial Order that interpreted RAAF question 1.C and found that SunSea had violated UBP §2.B.3 when it omitted the First Maryland PSC Order from its response to RAAF question 1.C. RAAF question 1.C asks ESCO applicants whether 'any criminal or regulatory sanctions [have] been imposed against any senior officer of the ESCO applicant or any entity holding ownership interests of 10% or more in the ESCO' in the previous 36 months," the PSC said

"Upon further review, the wording of RAAF question 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," the PSC said

The PSC stressed, however, that its narrow conclusion on this issue does not mean that the Commission cannot consider an applicant's compliance history in other states in determining eligibility.

In conclusion, the PSC said, "For the various reasons discussed in today’s order as well as in the earlier Denial Order, the Commission has determined that SunSea is unlikely to comply with the UBP should its application for eligibility be approved. It has engaged in activities that have prompted complaints from consumers in New York for several years, even after representing to Staff that it would mend its ways. It has a history of failing to comply with regulations in Maryland and is the subject of numerous complaints in other jurisdictions. Consequently, the Commission is not satisfied that SunSea’s future eligibility to operate in New York would serve the best interests of consumers in New York or promote the public interest. Accordingly, consistent with this Order, the Commission confirms the denial of SunSea’s application for eligibility."

The PSC ordered that SunSea Energy, LLC shall return its customers to distribution utility service within 60 days of the effective date of the PSC's order, with transfers occurring on the customers’ regularly scheduled meter reading dates

Case 15-M-0127, et al.

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