New York DPS Staff Propose UBP Changes To Implement New Law Banning ESCO Rate Changes Without Express Consent

Propose Which Utility Rate Should Be Used For Newly Required Comparison Mandated On Renewal Notices

March 26, 2024

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

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Staff of the New York Department of Public Service have filed proposed changes to the Uniform Business Practices to implement General Business Law (GBL) §349-d, which, among other things, generally prohibits ESCOs from changing the rate charged to a customer (with customer having the meaning as defined by law) without the affirmative consent of the customer

See background on the new law here

Staff noted that under General Business Law (GBL) §349-d, which became effective March 18, 2024, energy services companies (ESCOs) are prohibited from making any change to a contract price, or from changing to or from fixed or variable pricing, without the express consent of the customer

Among other things, Staff proposes that, to implement the new law, the UBP require ESCOs to use an updated standard contract renewal notice and obtain express customer consent any time a material change occurs.

Staff stressed that, "Nothing in this Staff proposal shall be construed as waiving or postponing ESCOs’ obligations to comply with the provisions of GBL §349-d by the effective date of the law."

More specifically, the amended GBL §349-d provisions include additional details on what is defined as a material change and the required disclosures that must be made within customer contract renewal notices. The preexisting provisions of GBL §349-d(6) require "express consent of the customer" for any "material change ... made in the terms or duration of any contract for the provision of energy services by an ESCO."

The law, as amended, additionally provides that "[a] change in price or a change to or from fixed or variable pricing shall be deemed to be material."

Staff said that, while the law does not, "restrict an ESCO from renewing a contract by clearly informing the customer in writing, not less than thirty days nor more than sixty days prior to the renewal date, of the renewal terms and of his or her option not to accept the renewal offer," the amendments place limits on ESCOs charging fees where express consent to certain changes has not been obtained.

In particular, ESCOs are prohibited from charging fees for the termination or early cancellation of a contract, as authorized in GBL §349-d(5), where the customers’, "express consent has not been obtained to any change in material terms and conditions."

Further, amendments to GBL §349-d(7) list new specific disclosures that ESCOs must include in customer contract renewal notices.

These required disclosures include: (i) the price charged for energy services; (ii) the price the ESCO proposes to charge upon renewal; (iii) the price that is charged by the customer’s distribution utility; and (iv) information notifying the customer how they may compare past bills with what they would have been charged had they received energy services from the respective distribution utility, including the internet address of any bill calculator offered by such customer’s distribution utility’s website.

Staff proposes to include two new definitions to the UBP in conformity with the amendments to subdivisions 6 and 7 of GBL §349-d.

First, Staff proposes to define a "Material Change" as: "Any change that affects the rates, terms, and conditions of service contained in the customer agreement. For example, this could include but not be limited to, the commodity rate, product term, or product type.

Second, Staff proposes that "Express Customer Consent" be defined as: "Consent given directly and knowingly by the customer, either verbally, electronically or in writing, that shall be maintained by the ESCO in a verifiable format."

The amended GBL §349-d(6) indicates that a change in price, or a change to or from fixed or variable pricing, shall be deemed to be material changes.

Staff proposes amending UBP §5.B.5.d to include this more precise language and to remove language that specifically excludes guaranteed savings products from requiring express customer consent.

The new language would provide that any material changes, including a change to a guaranteed savings product, requires express customer consent.

Staff also proposes to add a provision requiring the ESCO to maintain records of express customer consent for a minimum of two years or for the length of the sales/renewal agreement, whichever is longer.

Staff further proposes to amend UBP §5.B.5.d. to include the specific notice disclosures regarding the transparency of pricing that must be included in customer contract renewal notices. Specifically, these amendments would require that the renewal notices include: (i) the price charged for energy services; (ii) the price the ESCO proposes to charge upon renewal; (iii) the price that is charged by the customer’s distribution utility; and (iv) information notifying the customer how they may compare past bills with what they would have been charged had they received energy services from the respective distribution utility, including the internet address of any bill calculator offered by such customer’s distribution utility’s website.

To implement the amendments to subdivisions 6 and 7 of GBL §349-d, Staff recommends that the definition of what constitutes a material change be amended to include a change in price as a material change. This new requirement in GBL §349-d(6) would require an ESCO to obtain a customer’s express consent for any change in price, including a price change pursuant to a variable rate agreement or any changes in the terms used to determine such price. Absent the customer’s express consent to the price change, the ESCO would not be permitted to change the price the customers pay pursuant to their agreement with the ESCO.

Moreover, the amended language of GBL §349-d(7) regarding contract renewals would apply to all month-to-month agreements, which expire and are renewed each month, Staff said.

As a result, the ESCO would be required to provide monthly notices that include all required notice disclosures in order to continue service to a customer on a month-to-month agreement in a compliant manner.

Additionally, if the renewal includes a material change, including a change in the price the customer pays, express consent would be required for that change, Staff said

Staff proposes modifying the standardized renewal notice required to be used by ESCOs to reflect the renewal notice disclosures included in the amendments to subdivisions 6 and 7 of GBL §349-d. Staff included a proposed modified standardized renewal notice as part of its proposal.

ESCOs would be required to provide a sample renewal notice to Staff as part of their respective initial ESCO registration application package. Existing ESCOs would provide these samples at the time of their next annual or triennial compliance filing, whichever comes first.

In addition to the proposed UBP modifications, Staff makes the following proposals regarding implementation of the amended language of GBL §349-d.

First, regarding the requirement of GBL §349-d(6) to obtain express customer consent for any material change made to the terms and conditions of an ESCO contract, Staff proposes that such consent must be obtained and recorded in a verifiable format and that verifiable proof of customer consent be furnished to Staff upon request

Second, with respect to the information that must be included in renewal notices pursuant to GBL §349-d(7), specifically the price that is charged by the customer’s distribution utility, Staff proposes to allow ESCOs to utilize the 12-month trailing average posted by distribution utilities quarterly to satisfy this requirement.

Case 98-M-1343

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