A push by state regulators to prevent energy marketers from signing up new customers unless they will charge less than the local utility or offer renewable energy has been blocked by a state Supreme Court judge in Albany.
State Supreme Court Justice Henry Zwack overturned the order issued in February by the state Public Service Commission that required energy services companies, known as ESCOs, guarantee that their residential and small commercial customers will save money. If not, the order required the marketers to offer electricity from renewable sources.
But Zwack said the order was “arbitrary and irrational” because it imposed radical changes on the state’s competitive energy market with little or no advance warning and little discussion among the affected parties, who were given 10 days to comply with the new policy.
The order “is arbitrary and irrational in that it imposes the unexplained and harsh 10 day implementation period for the order, which amounts to a major restructuring of the retail energy market – or even its collapse,” Zwack wrote in his ruling.
But Zwack’s order does not end the PSC’s efforts to crack down on energy marketers, which the commission contends have been consistently charging consumers across New York more than their local utility charges for natural gas or electricity.
The ruling sent the issue back to the PSC and cleared the way for the commission to hold additional proceedings on the issue – something state regulators said they planned to do.
“Make no mistake, we are putting an end to deceptive ESCO practices that harm electric and gas customers,” said James Denn, a PSC spokesman.
Bryan Lee, a spokesman for the Retail Energy Supply Association, which joined with several energy marketers to challenge the PSC’s order in court, said the group was gratified by the ruling.
The battle over energy marketers has broad implications for consumers in the Buffalo Niagara region. Roughly one in every five Western New York households – nearly 96,000 in all – currently purchase their energy from a marketer.
State regulators opened New York’s electric and natural gas markets to competition nearly two decades ago, hoping that ending the utility monopoly over serving residential and commercial customers would lead to lower costs to consumers.
While marketers say competition has pushed energy costs lower since the policy was put in place, consumers, in recent years, often have been paying more if they buy their electricity or natural gas from an independent supplier, and thousands of those customers have complained about deceptive practices by the energy marketers.
The commission last week ordered that independent energy suppliers stop signing up low-income consumers and return the low-income customers that they already have to the local utility. That order was not affected by the court ruling.
“This injustice will be short-lived,” PSC Chairwoman Audrey Zibelman said in a statement Tuesday.
“We are disappointed that a judge delayed these protections for what were deemed to be procedural problems with our order,” she said. “The commission will easily address the procedural concerns raised by the court and will continue our work to ensure that all electric and gas consumers in New York have the protections they need and deserve.”