Energy service companies win court battle, may lose war

 

Energy service companies won their court battle against the state’s effort to effectively put them out of business. But their victory is illusory.

A July 22 decision by Albany Supreme Court Justice Henry Zwack, linked here, said the Public Service Commission didn’t give energy service companies a fair hearing before it decided in February to largely shut them out of the residential gas and electricity market. The companies “were simply denied their procedural due process rights,” Zwack wrote. The PSC said its February ruling was built on a staff report and a case it was considering. But Zwack said the order “bears little rational relationship” to its previous decision-making.

Thus Zwack tossed the Feburary order.

But there was good news for the commission’s crackdown: Zwack said the PSC “[c]learly … has the authority to establish public utility rates” and noted that other courts have said it has “the very broadest of powers.” “[The] PSC has jurisdiction over rates charged by retail energy companies,” Zwack wrote.

So Zwack’s ruling left the commission plenty of room to continue its push against ESCOs operating in the residential market.

PSC chair Audrey Zibelman said as much in a statement July 26: “The Court’s decision recognizes the Commission’s authority and firmly sided with the Commission that it is both our right and obligation to protect consumers against price gouging and other abuses.  We will and we must use this authority.”

Zwack’s ruling was a disappointment, Zibelman allowed. But in the end, she sees it as merely a delay. “Unfortunately, as a result of the litigation, ESCO customers are still paying millions of dollars more every month than they should be paying for electric and gas services. But this injustice will be short-lived,” she promised.

Already the commission has barred ESCOs from serving low-income customers.

The Retail Energy Supply Association said it is “gratified” that Zwack tossed the commission’s February order. It noted Zwack’s statement that its members were “stripped of any meaningful opportunity to participate in the promulgation” of the order. The association’s statement was silent on the matter of what steps the commission might take next.

Studies show energy service company prices in New York are far higher than the gas and electricity prices charged by Con Edison and other utilities. Read more about ESCO prices here and here. If you want to dive into the weeds of the issue, try this post from December 2013.

 

About Bill Sanderson

I'm a New York-based journalist, and a former reporter at the Concord Monitor in New Hampshire, the Bergen Record in New Jersey, and the New York Post. My work has appeared in The Wall Street Journal, MarketWatch.com and Politico New York. Twitter: @wpsanderson.
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