The New York State Public Service Commission on Oct. 19 enacted the first consumer protection standards for the state’s distributed energy resources market.
New York’s "Reforming the Energy Vision," or REV, undertaking, which was launched in the spring of 2014, entails a shift away from the traditional utility model of centralized generation, toward a more decentralized electric grid that relies increasingly on energy efficiency, demand resources and DERs.
For companies providing residential rooftop solar systems, on-site generating systems for small business, large community-solar projects or other community distributed generation, the PSC’s Oct. 19 order will establish registration requirements, a standard disclosure statement, detailed marketing requirements, rules for handling customer inquiries and complaints, and penalties for any violations.
For other types of DER systems and services, other new requirements will give the state the authority to address fraudulent business practices “without imposing costly and burdensome regulations that might stifle innovation,” the PSC noted in a news release.
The order includes a manual of uniform business practices for DER providers that the PSC said “will provide clear and robust guidance on appropriate marketing and contracting practices.” The new manual “will help create a level playing field for DER suppliers and support fair competition between suppliers of various DER options,” it said.
Requirements part of broader framework
The commission said the requirements are part of a framework of regulation and contractual agreements, including interconnection agreements and tariffs, which will govern the integration of DERs into New York’s electric system, along with a clear understanding of the rights and responsibilities of DER suppliers.
“As DER markets continue to evolve, these requirements will receive ongoing review and possible modifications by the commission to ensure that customers are appropriately protected and that DER markets are able to thrive, the order said.
Depending on the severity of a violation, penalties can range from a warning up to a complete ban from future participation in programs or markets authorized by the commission or operated by the state or private utility. If individual customers are harmed, the PSC said it will consider whether a DER supplier should offer refunds or provide corrective pricing before that supplier can resume sales in New York.
Among the new requirements for large community solar projects and other community distributed generation projects, DER providers will need to provide information on request regarding customer complaints, as well as particular transactions and information related to a DER supplier’s business operations and financials. Staff of the New York Department of Public Service may conduct audits or other reviews of DER suppliers, and must have access to the books, accounts, contracts, records, and documents of the DER supplier as necessary.
Also, an application must disclose any criminal or regulatory sanctions against a DER supplier, senior officers or any entities holding ownership interests of 10 percent or more in the DER supplier.
If a DER provider offers to cut a customer’s energy bills, the company must provide customers with a price forecast using a three-year average of actual, historical utility prices or some similar forecasting model.
In addition, the new requirements state that contracts must be written in plain language and be provided in the same language that the provider has used to market to the customer.
Among the new requirements for contracts and customer disclosure statements, residential customers will be given the right to cancel the contract within three business days after its receipt without charge or penalty and that the contract include essential terms including pricing, cancellation rules, information on tax incentives, and details of the product or service provided.
PSC cites experience with energy services companies
The PSC said its experience in regulating energy services companies in the gas and electric supply market has shown that “oversight is needed to prevent false promises, exploitative pricing, and other deceptive or intentionally confusing behavior in marketing to residential customers and small businesses.”
In December 2016, the PSC launched proceedings to review the state's retail energy markets serving mass-market customers after determining that those markets were not providing sufficient competition or innovation to properly serve consumers.
"Despite efforts to realign the retail market, customer abuses and overcharging persist, and there has been little innovation, particularly in the provision of energy efficiency and energy management services," the commission said at the time.