ALJs Rule that Differences Between ESCO Charges and Niagara Mohawk Charges are Not Trade Secrets Requiring Confidential Treatment (New York’s Utility Project)

In a Ruling issued September 7, 2012, the Administrative Law Judges (ALJs) presiding over the pending Niagara Mohawk electric and gas rate cases denied the motion of the Retail Energy Supply Association (RESA) which, on several grounds, sought to bar disclosure of information requested by PULP regarding the difference between bills issued by Niagara Mohawk to its customers who subscribe to ESCO service and what the bills would have been had the customers not switched to ESCO service. RESA supplied its answers to questions posed by the ALJs, and PULP submitted its response to the motion on August 27

As a threshold matter, the ALJs ruled that the information requested from Niagara Mohawk is relevant:

The information provided by the Company in response to PULP IR Nos. 91 and 107 is relevant to these proceedings because the information pertains to issues that are properly before the Commission in these proceedings. The information provided by the Company has the potential to inform the record with respect to several issues, including the design and structure of the Company’s low income, retail access, and education programs. Rate proceedings often include consideration of these programs, as modification or implementation of such programs often have revenue requirement effects that are properly addressed when reviewing and setting utility rates.

The relevance of the Company’s responses to PULP IR Nos. 91 and 107 is further substantiated with the filing of intervenor testimony on August 31, which included UIU and PULP testimony that relied, in part, on the IR responses. Although Staff did not specifically refer to the IR responses in its testimony, Staff filed testimony recommending the development of bill comparison requirements. The IR responses are relevant in evaluating this testimony.

Next, the ALJs rejected RESAs argument that release of the information violatedagreements between ESCOs and Niagara Mohawk for billing services and purchase of receivables . (Niagara Mohawk purchases receivables from ESCOs at a small discount frmo their face value, and includes charges for the face value of those charges in its bills to customers who bought ESCO service).

First, section 14.7 of the BSA states that no third party rights are conferred by the agreement…. According to RESA, PULP is attempting to exercise such third party rights via its interrogatories to the Company. RESA’s argument is supported neither by the plain language of the contract nor the ample case law regarding attempts by third parties to exercise contractual rights…. In this instance, PULP is attempting to obtain information regarding the delta or difference between monthly ESCO charges and what customers would have paid for utility commodity service. PULP is not seeking to enforce the contract – e.g. the billing arrangement or purchase of receivables – and it is not trying to collect any debts or enforce any contractual obligations. Rather PULP is attempting to obtain the information as part of its efforts to contribute to the record in these proceedings on matters such as the Company’s low income program and its retail access and associated education and outreach programs.

Second, the BSA does not otherwise specifically prohibit the release of the information….

[i]t would be improper for us to expand our reading of the contract beyond the four corners of the agreement…. In addition, even if we determined that such a prohibition existed under the contract, we would still require production of the information. As correctly stated by PULP, parties cannot contract away or preclude the Commission’s exercise of jurisdiction over utility matters….

Finally, the ALJs addressed whether the information could be withheld from public disclosure as a trade secret or confidential commercial information under the Freedom of Information Law, which generally makes all records at a state agency open to the public unless a specific exception applies that would justify confidential treatment of information.

Having found the information relevant to the proceedings and its release not prohibited by the BSA, we now address the issue of whether the information should be withheld from public disclosure pursuant to Public Officers Law §87(2)(d) and 16 NYCRR 6-1.3 of the Commission’s rules. We find that (1) the precedent relied on by RESA is inapplicable to the facts, (2) the information is of a general nature and its disclosure is unlikely to cause competitive harm, and (3) the general retail access policy of the Commission favors public disclosure of this type of information. For these reasons we deny RESA’s request to except the information from public release….

To allow time for possible appeal to the PSC, the information remained confidential and subject to the prior protective order of the ALJs for 15 days.

The unredacted portion of the testimony indicated that Niagara Mohawk customers who bought from ESCOs were sent 377,736 Final Termination Notices arising from non payment of charges in 2011, averaging 31,478 per month.

 

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Update

The unredacted testimony included the following information about the experience of ESCO customers:

For the 24 months August 2010 through July 2012, the data shows that nearly all bills, 84.3% for electricity and 92.1% for gas, were higher for those customers who had switched to ESCO service. Only 15.7% of electricity bills and 7.9% of gas bills were lower.

For low-income customers, 91.5% of electricity bills and 93.4% of gas bills were higher for those customers who had switched to ESCO service. Only 8.5% of electricity bills and 6.6% of gas bills were lower.

For regular (i.e., non low-income customers), 83.2% of electricity bills and 91.8% of gas bills were higher for those customers who had switched to ESCO service. Only 16.8% of electricity bills and 8.2% of gas bills were lower.

The data also shows that the net extra cost incurred by ESCO customers over what they would be charged by Niagara Mohawk was $101,775,321 for electricity and $27,375,032 for gas. An estimated 207,842 customers (84.3%) paid $103,711,214 more for ESCO electricity service while an estimated 107,225 customers (92.1%) paid $27,931,488 more for ESCO gas service.

Only 38,579 of the total estimated 246,420 ESCO electricity customers (15.7%) paid less using ESCO service (their total savings was $1,935,893). Only 9,249 of the total estimated 116,474 ESCO gas customers (7.9%) paid less using ESCO service (their total savings was $556,456).

For low-income ESCO customers, the net extra cost incurred over what they would be charged by Niagara Mohawk was $13,331,134 for electricity and $5,819,450 for gas. 30,195 (91.5%) of a total estimated 33,015 low-income electricity customers paid $13,442,926 more for ESCO service, while 19,473 (93.4%) of a total estimated 20,840 low-income gas customers paid $5,905,789 more for ESCO service. Only 2,820 (8.5%) of ESCO low-income electricity customers paid less using ESCO service (their total savings was $111,791). Only 1,367 (6.6%) of ESCO low-income gas customers paid less using ESCO service (their total savings was $86,339).

For regular ESCO customers, the net extra cost incurred over what they would be charged by Niagara Mohawk was $88,444,187 for electricity and $21,555,582 for gas. 177,647 (83.2%) of a total estimated 213,406 regular electricity customers paid $90,268,288 more for ESCO service, while 87,752 (91.8%) of a total estimated 95,634 regular gas customers paid $22,025,699 more for ESCO service.

Only 35,759 (16.8%) of ESCO regular electricity customers paid less using ESCO service (their total savings was $1,824,101). Only 7,882 (8.2%) of ESCO regular gas customers paid less using ESCO service (their total savings was $470,117).

The data also shows that, of the ESCO customers who had higher bills, over 24 months the cumulative net average cost above what their bills would have been had they not switched to ESCO service was $413.02 for electricity and $235.03 for gas. Of those who experienced higher bills, their average extra cost was $498.99 for electricity and $260.49 for gas. Those with lower bills saved an average of $50.18 for electricity and $60.16 for gas.

For low-income ESCO customers who had higher bills, over 24 months the cumulative net average cost above what their bills would have been had they not switched to ESCO service was $403.79 for electricity and $279.25 for gas. Of those who experienced higher bills, their average extra cost was $445.21 for electricity and $303.29 for gas. Those with lower bills saved an average of $39.64 for electricity and $63.16 for gas.

For regular ESCO customers who had higher bills, over 24 months the cumulative the net average cost above what their bills would have been had they not switched to ESCO service was $414.44 for electricity and $225.40 for gas. Of those who experienced higher bills, their average extra cost was $508.13 for electricity and $251.00 for gas. Those with lower bills saved an average of $51.01 for electricity and $59.64 for gas

 

The testimony and exhibits made public as a result of the ruling are below.

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