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The PSC requested comments on the Staff white paper and the specific questions below:

1. What qualitative and/or quantitative evidence can ESCOs provide that shows their HWP offerings are providing value to customers? This evidence should include, but not be limited to, data specific to the number of consumer service claims, the rate of increase in commodity costs to the consumer over the contract period, and the number of successful service claims that resolve consumer service requests.
2. What barriers, if any, prevent ESCOs from separately disclosing the cost of the service contract from the cost(s) of commodity supply, thereby increasing the transparency of bills including HWP costs?
3. What added value do consumers receive by enrolling in ESCO HWPs when they can otherwise directly sign up for home warranty services that are not tied to their energy provider?
4. What barriers, if any, prevent ESCOs from establishing their own in-house home warranty division that would free them from relying on a third-party to handle the service obligation inherent to their HWP contract?
5. How many maintenance professionals would an ESCO need to employ to ensure their HWP customer base is covered in a way that supports the recommendations in the White Paper?
6. Are there any industry standards in New York or other states regarding HWPs and consumer protections associated with such products that the Commission should consider?
7. Any [sic] there any other consumer protections related to ESCO HWPs that the Commission should consider?

As background, under a Department of Public Service (DPS) Staff white paper issued in May 2024 recommending (among other things) that home warranty products (HWPs) be subject to the current price caps for mass market service.

Currently an ESCO, may offer a HWP without being subject to a price cap after as long as the ESCO obtains prior DPS approval for its specific product.

However, under Staff’s white paper, ESCOs would only be allowed to offer an HWP as a guaranteed savings product or fixed price with 5% cap product. Staff also proposes that HWPs should not be offered in conjunction with a compliant renewable electric product, as compliant renewable products are not subject to a price cap.

Notably, Staff also recommended that “only ESCOs with certified maintenance personnel employed directly by the ESCO itself should be allowed to offer HWPs to consumers.” 

Under Staff’s proposal HWPs would be required to provide a guaranteed service window of three business days from the time of a customer service call. ESCOs or other entities would not be permitted to charge a service call fee to the customer if the service is not “administered” in this timeframe.  Staff further proposed that, upon a customer enrollment onto an HWP, the ESCO shall be required, within 5 business days, to visit the customer’s location to review covered appliances and ensure coverage eligibility. If such site visit is not conducted, Staff recommends that the ESCO enrollment shall be cancelled.

Staff also sought to require line item billing of services received under a bundled commodity and HWP plan.  If a line-item break-out is not provided, Staff recommended that the HWP cost of the plan should not be bundled with commodity charges, and instead should be billed separately by the ESCO to the consumer.

“Staff maintains that any continuation of ESCO HWPs must include the following clearly defined provisions: (1) a single point of contact to address issues with HWP service; (2) a clearly established process of liability in which vague language and excessive coverage limitations are not left to the consumer to navigate; and (3) a clearly established process for consumer recourse.” 

“Regarding the second point, Staff believes that ESCOs must take full responsibility for HWP liability to reduce the logistical burden the consumer might have to navigate should an issue arise with their home warranty.” 

“Instead of forcing consumers to run this frustrating gauntlet, Staff proposes that the ESCO exclusively handle all dispute resolutions to ensure the consumer is made whole. It should not be the consumer’s responsibility to navigate a burdensome process to ensure they receive quality service which they pay a premium for. By establishing ESCOs as the main point of contact to deal with consumer disputes with the home warranty service, a more user-friendly process and equitable outcome for the consumer would be achievable.” 

Staff’s recommendations listed above are meant to address Staff’s concerns, “around the lack of pricing transparency, the negative involvement of third-party home warranty service providers, and weak consumer rights.”

“DPS Staff is concerned that there is an overly complicated process that consumers need to follow to redeem their home warranty service under the third-party ESCO HWP model, which has proliferated in a way that is disadvantageous to the consumer.”

“DPS Staff is also concerned about consumer protections, in that consumers are not receiving sufficient energy related value-added benefits associated with the home warranty service, and in relation to the cost of the products.” 

Staff said that only two ESCOs stated that their employees handle the on-site labor under warranty calls.  Of the 13 ESCOs relying on a third-party for warranty service, Staff said that eight ESCOs use the same third-party provider, with Staff alleging that such third-party provider has a “litany of consumer complaints on the Better Business Bureau website.”  “These complaints describe issues where consumers are faced with a convoluted service redemption process, a misrepresentation of issue resolution timeframes, and an abdication of responsibility for adequate maintenance service.” 

Notice Soliciting Comments  (07/24/2024)
Staff Home Warranty Product White Paper  (05/29/2024)
24-M-0324  (05/29/2024)
In the Matter of the Commission to Regulate Energy Services Company Home Warranty Product Offerings.