National Energy Marketers Ass'n v. New York State Public Service Commission

57 Misc. 3d 282, 60 N.Y.S.3d 760
CourtNew York Supreme Court
DecidedJune 30, 2017
StatusPublished

This text of 57 Misc. 3d 282 (National Energy Marketers Ass'n v. New York State Public Service Commission) is published on Counsel Stack Legal Research, covering New York Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
National Energy Marketers Ass'n v. New York State Public Service Commission, 57 Misc. 3d 282, 60 N.Y.S.3d 760 (N.Y. Super. Ct. 2017).

Opinion

OPINION OF THE COURT

Henry F. Zwack, J.

In the two proceedings pending before the court is an order to show cause (OTSC), supported by verified petitions/complaints filed by National Energy Marketers Association, BlueRock Energy, Inc., Residents Energy, LLC and Verde Energy USA New York, LLC (collectively NEMA) and Retail Energy Supply Association (RESA), seeking a temporary restraining order and a permanent injunction. The parties seek nullification of what has come to be known as the “Low-Income Moratorium,” first issued by the Public Service Commission (PSC) on July 15, 2016 and reissued on September 15, 2016 as an “Emergency Order.” In response to both petitions, the September 28, 2016 OTSC by the court (O’Connor, J.) included a temporary restraining order (TRO) preventing the implementation of any of the provisions of the moratorium until further order of this court. The petitioners also moved for “emergency discovery,” which Judge O’Connor reserved upon and which remains pending before this court.

Also pending is an order to show cause dated February 9, 2017 seeking contempt for what petitioners describe as the PSC’s “blatant disregard of the temporary restraining order.” The OTSC alleges that the PSC’s issuance on December 16, [284]*2842016 of the Prohibition on Service to Low-Income Customers by Energy Service Companies—and which petitioners refer to as the “Third Moratorium Order”—was a clear violation of the September 2016 TRO. Respondents cross-moved on February 14, 2017 to vacate the TRO.

The Office of the Attorney General and the Utility Intervention Unit of the State of New York have made applications to file an amicus curiae brief in both actions before the court, which are opposed by RESA. The court grants these applications, and has considered the Attorney General’s briefs in making the further determinations.

For the reasons that follow, the court denies and dismisses NEMA’s first amended verified petition and complaint, together with denying and dismissing NEMA’s application for a temporary restraining order, preliminary injunction, and expedited discovery; and also denies and dismisses RESA’s verified petition and complaint, together with denying and dismissing RESA’s application for a temporary restraining order, preliminary injunction, and expedited discovery; and also denies and dismisses petitioners’ application for contempt. The court grants respondents’ cross motion to vacate the temporary restraining order.

The July 15, 2016 order—Order Regarding the Provision of Service to Low-Income Customers by Energy Service Companies—imposed a moratorium on energy services companies’ (ESCOs) enrollment and renewal of low-income customers, specifically those who participate in low-income assistance programs. The PSC found that the moratorium was “necessary to ensure that the financial benefits provided to [low-income consumers] through utility low-income assistance programs are not absorbed by ESCOs who in turn, provide gas and electricity at comparatively higher prices, without any corresponding value” to financially vulnerable consumers. The order required ESCOs to block low-income customers from enrolling with them, and to de-enroll existing low-income customers at the expiration of their contracts.1

The petitions/complaints by NEMA and RESA argue that the PSC failed to comply with the notice provisions of the State Administrative Procedure Act when enacting the July 15, 2016 [285]*285moratorium. They assert that the PSC, after considering their petitions for a rehearing, nonetheless entered an “Emergency Order” on September 15, 2016—Order on Rehearing and Providing Clarification—which reenacted the July order on an emergency basis pursuant to State Administrative Procedure Act § 202 (6), while issuing a new State Administrative Procedure Act notice on October 5, 2016, the notice of “Emergency/ Proposed Rule Making.” According to petitioners, enactment of the September 15, 2016 order did not constitute an “emergency.”

Petitioners argue that the October notice, which doubled as both support for the Commission’s emergency rule making of September 15, 2016 and “A Notice of Proposed Rule Making,” also failed to comply with the State Administrative Procedure Act, as did the subsequent determination made by the PSC on December 16, 2016—the Order Adopting a Prohibition on Service to Low-Income Customers by Energy Service Companies. Thereafter, NEMA filed its first amended petition and complaint, renewing its arguments regarding the State Administrative Procedure Act deficiencies in the first two moratoriums, and adding that the prohibition suffered from the same faulty procedure. Petitioners assert that the October notice provided 45 days for public comment, but did not comply with the requirement that a public hearing be scheduled. Petitioners assert that there was no meaningful process to cure the substantive and procedural deficiencies underlying its prior attempts to enact the moratorium—such as a hearing or collaborative—that no true emergency justified the use of the emergency powers under the State Administrative Procedure Act, and that the PSC’s determination was unreasonable, arbitrary and capricious. While continuing to contest noncompliance with the State Administrative Procedure Act, petitioners also cited the PSC’s reliance on a deficient evidentiary record void of verifiable data such as ESCO rates, utility rates and different products offered; its violations of customer privacy rights; its constitutional violations; and the arbitrary and capricious manner in which the PSC sought to implement the moratorium.

Concluding that the ESCOs overcharged customers by $819 million between January 2014 and June 2016, with low-income ESCO customers paying $96 million more over the same period, the PSC adopted the Order Adopting a Prohibition on the Service to Low-Income Customers By Energy Service Compa[286]*286nies. The order (prohibition), which petitioners refer to as the “Third Moratorium,” provides, in pertinent part, that

“[f]or new enrollments, the prohibition will be implemented through a rejection by the utility, through an electronic data interchange (EDI) transaction, if the prospective customer is an APP.[2] Beginning 60 days after the effective date of the Order, utilities will be required to place a block on all APP accounts. In the event the APP is enrolled with an ESCO at any time after the prohibition is in effect, that enrollment shall be void.”

The prohibition requires ESCOs to notify their low-income customers that they will be de-enrolled at the expiration of their existing agreement.

In the first amended verified petition and complaint, six causes of action have been asserted.3 The first cause of action asserts that respondent has acted in excess of its jurisdiction and its determination is arbitrary and capricious. The second cause of action is for declaratory and injunctive relief, and the third cause of action asserts denial of due process, as does the fourth cause of action. Petitioners’ fifth cause of action asserts denial of constitutional protections (US Const 5th, 14th Amends; NY Const, art I, § 7), taking without compensation, violation of the Contracts Clause and denial of equal protection. Petitioners argue that the moratorium orders—including the prohibition—fail to comply with the State Environmental Quality Review Act;4

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Bluebook (online)
57 Misc. 3d 282, 60 N.Y.S.3d 760, Counsel Stack Legal Research, https://law.counselstack.com/opinion/national-energy-marketers-assn-v-new-york-state-public-service-commission-nysupct-2017.