Nat'l Energy Marketers Ass'n v. N.Y. State Pub. Serv. Comm'n
| Decision Date | 30 June 2017 |
| Docket Number | 5860-16. |
| Citation | 60 N.Y.S.3d 760,57 Misc.3d 282 |
| Parties | NATIONAL ENERGY MARKETERS ASSOCIATION ; Bluerock Energy, Inc.; Residents Energy, LLC; and Verde Energy USA New York, LLC, Plaintiffs/Petitioners, v. NEW YORK STATE PUBLIC SERVICE COMMISSION, Defendant/Respondent. Retail Energy Supply Association, Plaintiff/Petitioner, v. New York State Public Service Commission, et al., Defendants/Respondents. |
| Court | New York Supreme Court |
Barclay Damon, LLP, (David G. Burch, Jr., Esq., of counsel), Syracuse, Attorneys for Plaintiff/Petitioner Retail Energy Supply Association.
Boies, Schiller & Flexner, LLP, (Jason Cyrulnik, of Counsel), Armonk, Attorney for Plaintiff/Petitioner National Energy Supply Association.
Paul Agresta, Esq., General Counsel (Jonathan D. Feinberg, Esq., Solicitor, of counsel), Albany, Attorney for Public Service Commission, Defendant/Respondent.
Eric T. Schneiderman, Attorney General of the State of New York, (Judith Vale, Esq., Assistant Solicitor General, of counsel, Andrew Rhys Davies, Esq., Assistant Solicitor General, of counsel), New York, Attorney for Amici Curiae Office of the Attorney General.
In these 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 re-issued 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,
2016 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 has made applications to file an amicus curiae brief in both actions before the Court, and which are opposed by RESA. The Court grants these applications, and has considered the Attorney General' 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 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' application for a temporary restraining order, preliminary injunction, and expedited discovery; and also denies and dismisses petitioners' application for contempt. The Court grants respondent's 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 contracts1 .
The petitions/complaints by NEMA and RESA argue that the PSC failed to comply with the notice provisions of State Actions and Proceedings Act ("SAPA") when enacting the July 15, 2016
Moratorium. 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 re-enacted the July Order on an emergency basis pursuant to SAPA 202(6), while issuing a new SAPA 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 Commissions's emergency rule making of September 15, 2016 and "A Notice of Proposed Rule Making" also failed to comply with SAPA, 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 SAPA 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 SAPA, and that the PSC's determination was unreasonable, arbitrary and capricious. While continuing to contest noncompliance with SAPA, 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 Companies.
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 it's jurisdiction and it's determination is arbitrary and capricious. The Second Cause of Action is for declaratory and injunctive relief, 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 (5th and 14th Amendments to the U.S. Constitution and Article 1, Section 7 of the State Constitution ), 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 State Environmental Quality Review Act ("SEQRA")4 ; are fundamentally flawed and without basis; and that they were ordered before the noticed evidentiary processes and thereby based upon inaccurate pricing comparisons. Petitioners also argue that the Moratorium Orders violate the privacy rights of low income customers. Petitioners assert that the PSC does not have authority to make these rule changes, including changes which will interfere with contractual relations and violate established law.5
In its First Amended Verified Answer, the PSC raises three objections in points of law. The first is that petitioners lack standing to assert the privacy rights of their low-income customers. Second, respondents assert that the proper procedural vehicle for the relief sought by petitioners is by way of Article 78 and this is not a hybrid action. Thirdly, respondent asserts that petitioners have failed to exhaust their administrative remedies by not raising before the PSC any of the challenges to: (1) the lack of energy related value added services for ESCO low-income customers; (2) the diminution of the value of the public assistance funds to low-income customers; (3) comparisons of utility and ESCO bills to determine that ESCO low-income customers were being overcharged. Respondent also asserts that petitioners have failed to offer their own product and pricing information, instead offering only bullet points criticizing respondent's data.
Turning first to respondents' objection that the proper procedural vehicle for the relief petitioners seek is an Article 78, and that this not a hybrid action, the court agrees. Challenges to a legislative act—having...
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