Top NY Court Backs Regulation of Energy Marketers

Icicles hang off power lines as firefighters work to contain a fire in the Bronx on Jan. 2, 2018. (AP Photo/Seth Wenig)

MANHATTAN (CN) – New York has the right to condition access to its utility infrastructure on so-called energy service companies following the rules, the state’s highest court ruled Thursday.

The unanimous decision from the New York Court of Appeals resolves a controversy that has been simmering since the Public Service Commission imposed the rule in 2014.

That year, the commission discovered through an investigation that energy service companies had been charging residential or small-scale customers higher prices than those charged by utilities.

To counteract that trend, the commission issued an order stating that, unless 30 percent of their energy came from renewable resources, energy marketers had to charge the same for electricity as charged by public utilities if they wanted to access state infrastructure.

The National Energy Marketers Association, the Retail Energy Supply Association and the companies themselves challenged that rule in two separate lawsuits. A New York judge vacated the commission’s order in 2016.

On Thursday, the court eviscerated their claim that the commission had no authority for that act of regulation.

“Indeed, as this court has recognized for over a century, the PSC’s purpose is to regulate and control public utilities, not only to prevent the abuses of monopoly, but also ‘the evils of an unrestricted right of competition,’” Judge Leslie Stein wrote for a six-judge panel.

Commission spokesman James Denn called the ruling a vindication of what the agency had long known.

“We have known that the PSC has the authority to ensure that ESCOs benefit customers, not hurt them, and the court’s decision reaffirms that authority,” Denn said in a statement. “Moving forward, the PSC will continue developing policies to ensure ESCOs provide benefits to New York customers.”

Though today’s ruling clarifies the commission’s power, it does not re-establish the original regulation.

Stein had been quoting from the early 20th century case People ex rel. New York Edison Co. v. Wilcox.

The Wilcox decision, which was published in 1912, described the then-5-year-old commission’s regulatory power toward the dawn of antitrust enforcement in the United States.

“In other words, contrary to petitioners’ arguments, the PSC is not charged solely with monitoring abuses of monopoly power by ‘electric corporations’ and ‘gas corporations,’ i.e., utilities,” Stein wrote today.

Rather, the panel found that the commission had a mandate to prevent “extortionate competition” and “oppressive or discriminating charges.”

The Retail Energy Supply Association’s executive director Tracy McCormick said she is reviewing the ruling.

“While RESA is certainly disappointed in the decision, we stand firm in the belief that retail competition provides consumers with better value and increased innovation and that all New Yorkers have a fundamental right to choose their supplier—a right that should be protected now and in the future,” McCormick wrote in a statement.

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