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The New York PSC issued an order addressing rehearing of its June 2023 order implementing registration and regulation of retail energy brokers and consultants, addressing among other things the issue of compensation to entities which are unregistered as brokers/consultants, and issuing several clarifications on activities which do or do not fall within the definition of energy broker or energy consultant.

“Through this Order, the Commission grants rehearing regarding three aspects of the June 2023 Order and otherwise denies the three petitions for rehearing. {Emphasis added.} 

First, the Commission grants rehearing related to the aspect of the June 2023 Order that prohibited payments by energy service companies (ESCOs) to unregistered energy brokers and energy consultants pursuant to contracts executed before the effective date of the Uniform Business Practices (UBP) modifications adopted in the June 2023 Order. In this respect, this Order clarifies that ESCOs will be prohibited from making payments to unregistered energy brokers or consultants where the act of brokering or consulting is performed after the effective date of the UBP amendments, regardless of when the contract mandating such payments was executed. {Emphasis added.}

Second, this Order grants rehearing regarding the heretofore required disclosure of broker or consultant compensation during the third-party verification process. Specifically, the Commission omits the requirement for such disclosure to be included in the third-party verification procedure on the grounds that it is unlikely to elicit accurate information from customers regarding whether the Commission’s compensation disclosure rules have been followed. {Emphasis added.}

Third, the Commission grants rehearing concerning the application of §7(2) and (3) of the Climate Leadership and Community Protection Act (CLCPA) and finds that the provisions adopted in the June 2023 Order will not interfere with the CASES 23-M-0106, et al. -3- attainment of the statewide greenhouse gas emissions limits established in Article 75 of the Environmental Conservation Law and will not disproportionately burden disadvantaged communities. 

Further, the Commission provides clarification regarding the applicability of the State Environmental Quality Review Act (SEQRA) to the provisions adopted in the June 2023 Order and finds that the provisions adopted through the June 2023 Order are exempt from review under SEQRA. The Commission also adopts an effective date of the revised UBP and the Uniform Business Practices for Distributed Energy Resource Suppliers (UBP-DERS), and the date by which energy brokers and energy consultants must register with the Commission, which will be 60 days from the effective date of this Order. 

Finally, in response to the Metergy Petition, this Order finds that the registration requirements of PSL §66-t do not generally apply to submeterers and submetering service providers; however, submeterers and submetering service providers may undertake activities that fall within the definitions of “energy broker” and/or “energy consultant” and thus subject them to the registration requirement under PSL §66- t. This issue is further clarified in the body of this Order.  {***}

As previously reported, on June 23, 2023, the Public Service Commission (Commission) issued the Order Adopting Energy Broker and Energy Consultant Registration Requirements, which effectuated the provisions of Public Service Law (PSL) §66-t.1 Petitions for rehearing of the June 2023 Order were timely filed by: (1) NRG Energy Inc. and the NRG Retail Companies (collectively, NRG); (2) Family Energy, Inc. (Family); and (3) the New York Retail Choice Coalition (NYRCC). In addition, a petition was filed on November 17, 2023, by Metergy Solutions LLC and Quadlogic Controls Corporation (Metergy Petition), seeking a declaratory ruling that PSL §66-t does not apply to submeterers or submetering service providers.

Deadline For Compliance / First Annual Registration Package – “[T]he Commission sets a new deadline for energy brokers and energy consultants to submit their first annual registration package within 60 days of the effective date of this Order. Staff will be required to complete review of initial registration packages and issue letters notifying applicants of approval or denial by December 2, 2024.

Following the initial registration date, the annual compliance year will run from September 1 to August 31, with annual renewals due on August 31 each year. For energy brokers and consultants that register on the initial registration date (within 60 days of the effective date of this Order), or for energy brokers and consultants that register after the initial registration date, but prior to August 31, 2024, their 2024 registration package, including the annual registration fee, will be valid until August 31, 2025.” [Emphasis added]

Applicability of Energy Broker and Energy Consultant Definitions – “We find the definitions of “energy broker” and “energy consultant” to be sufficiently circumscribed based on the specific activities subject to coverage and consistent with the plain language of PSL §66-t. For these reasons, the Commission rules that the definitions of “energy broker” and “energy consultant” included in the June 2023 Order are not unconstitutionally vague.”

“The June 2023 Order states that “individual employees of a registered broker or consultant need not register because these entities will be covered under their employer’s registration.”24 In other words, in the Commission’s view, it is enough to have jurisdiction over the registered broker or consultant, and not their employees, to ensure compliance with PSL §66-t. The Commission also noted, in response to stakeholder comments requesting clarity about registration requirements for third parties that market on behalf of ESCOs, that “the Commission must ensure that it has direct regulatory authority over any contractors and agents of an ESCO if the contractor or agent’s business activities fit the definitions of ‘energy broker’ or ‘energy consultant.’” This reasoning applies in the same manner to contractors or agents of energy brokers or consultants.”

Compensation Disclosure – “The Commission disagrees with NRG that the Commission lacks authority under PSL §66-t to require ESCOs and DER suppliers to include on the Customer Disclosure Statement compensation that they pay directly to energy brokers and consultants. Public Service Law §66-t(4)(a) requires energy brokers and energy consultants “to disclose their form and amount of compensation to customers via a conspicuous statement on any such contract or agreement” with the customer. As noted, PSL §66-t(4)(b) requires the ESCO to provide a similar disclosure on the Customer Disclosure Statement when it “collects broker compensation on behalf of an energy broker or energy consultant.” In most instances, the contract between the ESCO and the customer is the only contract that will exist in relation to the transaction facilitated by the broker or consultant, as many brokers or consultants do not enter a contractual relationship with the customer. Additionally, the broker or consultant that works in conjunction with an ESCO is most likely to receive compensation that is either collected by an ESCO on behalf of the broker or consultant or is paid by the ESCO to the broker or consultant. By its terms and by its structure PSL §66-t(4)(a) and (b) evinces a legislative intent to ensure that all commercial parties subject to an agreement with an ESCO or DER provider disclose the exchange of compensation among them to provide a straightforward and accurate disclosure of compensation to the customer so that the customer can then properly evaluate such parties’ motivations in recommending an energy supplier. Additionally, the disclosure requirements under PSL §66-t(4) are self-effectuating in that they do not require the PSC to adopt regulations to make them effective. Section 66-t otherwise provides the Commission with broad regulatory authority to effectuate its purposes.33 Finally, PSL §4(1) provides the Commission with broad power “necessary or proper to enable it to carry out the purposes of this chapter.” Taken together, we find that these provisions provide the Commission with ample authority to require ESCOs and DER suppliers to disclose compensation provided directly to energy brokers and consultants.

“We also note that the Commission has broad authority beyond that provided under PSL §66-t to impose a requirement on ESCOs to disclose any compensation they pay to brokers or consultants. In Matter of National Energy Marketers Ass’n v. N.Y.S. Pub. Serv. Comm’n,34 the Court of Appeals confirmed that the Commission has broad authority to condition an ESCO’s eligibility to access utility distribution systems on such terms and conditions that the Commission determines to be just and reasonable.35 While PSL §66-t expressly requires ESCOs to disclose the compensation that the ESCO collects on behalf of their brokers and consultants, the Commission’s authority under PSL §§5(1)(b), 65(1), 66(5), and 66-d(2) provides an additional basis upon which to require ESCOs to disclose all other compensation it pays to the broker or consultant. Thus, the Commission determines that, in addition to the authority provided by PSL §66-t, the disclosure of compensation is just, appropriate, and reasonable and will further transparency and competition.”

“Based on the requests made in the petitions and comments, the Commission finds it necessary to provide additional guidance to ensure that entities subject to the compensation disclosure requirements understand their compliance obligations and do not seek to conceal compensation behind a general disclosure statement. Accordingly, if a broker or consultant receives financial compensation, the disclosure shall include either the dollar amount or, if the dollar amount is not known at the time of disclosure, the disclosure shall include an explanation of the formula that will be used to calculate the financial compensation for the broker or consultant. The same requirements apply to any additional fees that may be applied to that transaction in the future. Thus, if the dollar amount and frequency of future fees is known, that information shall be disclosed, and, if the dollar amount and frequency are not known, the formula that would be used to calculate future payments shall be disclosed. For any non-financial compensation, if the value of such compensation is known then a description of the non-financial compensation and the dollar value of the compensation shall be disclosed. If the dollar value of non-financial compensation is not known at the time of disclosure, then a description of the non-financial compensation will suffice. Disclosures should also identify the entity paying the compensation to the broker or consultant.” [Emphasis added]

Safe Harbor Re: Broker Compensation Disclosure – The NYPSC denied ESCO requests for a safe harbor concerning the broker compensation disclosure.

As reported previously, in petitions for rehearing several ESCOs had requested that a safe harbor be granted to ESCOs regarding their efforts to comply with compensation disclosure requirements prior to their review by DPS Staff in annual ESCO filings.

“The Commission does not agree that a safe harbor is necessary. ESCOs will be expected to comply with compensation disclosure requirements between the time when the UBP modifications take effect and the annual filings and will not be granted safe harbor if their statements are found to be noncompliant prior to being reviewed by Staff in ESCO annual filings. The June 2023 Order, as well as this Order, provide adequate guidance with respect to this issue.” [Emphasis added]

Disclosure Statement & TPV – “The Commission agrees with the concerns raised in Family’s petition and RESA’s comments regarding the timing of the TPV and when a customer would receive the customer disclosure statement that resulted from a telephone agreement. Additionally, the Commission finds that the inclusion of such a question in TPV requirements is not essential to the Commission’s enforcement of compensation disclosure requirements and, without context, such a question may not elicit an accurate answer from customers on whether compensation was properly disclosed as customers are unlikely to have knowledge of compensation disclosure requirements. Accordingly, the Commission grants Family’s petition to the extent of modifying the UBP to remove this question from TPV requirements.” [Emphasis added]

“Doing Business” with Unregistered Energy Brokers or Energy Consultants – “Only those brokers or consultants that submit initial registration packages within 60 days of the effective date of this Order may continue to operate during the initial Staff review of registration packages. If brokers or consultants have submitted their initial application within 60 days of the effective date of this Order, then ESCOs may continue to do business with these brokers or consultants while Staff reviews registration applications. An ESCO cannot do business with a broker or consultant who submits an initial registration package after the effective date of these requirements until that entity’s registration is approved.” [Emphasis added]

Verifying Registration of Energy Brokers and Energy Consultants – “The list of registered energy brokers and consultants will be generated automatically based on registrations and revocations submitted in the docket for Matter No. 23-01227. ESCOs and DER suppliers will be required to monitor the list generated to ensure any broker or consultant they are doing business with is registered. If ESCOs and DER suppliers subscribe to receive notice of filings in Matter No. 23-01227 then they will receive a notification when a registration is revoked. ESCOs and DER suppliers are also encouraged to adopt a requirement that brokers and consultants provide proof of registration to the ESCO or DER supplier and that the registration remains in good standing. The Commission finds that these mechanisms provide appropriate notice to ESCOs regarding energy brokers and consultants that are properly registered.” [Emphasis added.]

Prohibition on Payments to Unregistered Brokers and Consultants – “The Commission grants, in part, the aspect of the petitions filed by NRG and Family seeking clarification regarding the prohibition on unregistered brokers or consultants accepting compensation. Specifically, NRG and Family object to the Commission’s initial determination that the prohibition against unregistered brokers or consultants accepting compensation could apply to compensation provided under contracts signed before the effective date of the UBP amendments. Public Service Law §66-t(2)(c) provides that “[n]o person shall accept any commission, service fee, brokerage or other valuable consideration for selling, soliciting or negotiating an energy contract in this state if that person is required to be registered under this section and is not so registered, unless stated otherwise herein.” As noted above, the definitions of “energy broker” and “energy consultant” are activity-based. Individuals or entities must be registered under PSL §66-t if they performed the activities that would qualify them as either an energy broker or energy consultant. The June 2023 Order made clear that the appropriate analysis regarding this issue is whether or not the entity subject to coverage under PSL §66-t performs a covered action subsequent to the effective date of these requirements. [Emphasis added.]

Under the June 2023 Order, the Commission determined that the existence of a contract for brokering or consulting services that was executed prior to that registration deadline would not permit an unregistered broker or consultant to receive compensation for any energy brokering or consulting services performed after that effective date, irrespective of the contract arrangement between the ESCO and energy broker or consultant. As part of our review in this Order, the Commission acknowledges here a potential scenario whereby (1) an ESCO might have entered into a contract prior to the registration deadline with an individual whose activities are covered under the definitions of either “energy broker” or “energy consultant,” and (2) the contract may have authorized such individual to obtain compensation associated with signing up a customer on behalf of the ESCO or providing some related service, and such consideration might be envisioned as continuing beyond the registration deadline. We understand the question posed in the petitions as concerning whether the Commission would allow the ESCO under these circumstances to provide, and for such individual to receive, compensation after the registration deadline if the individual does not register as an energy broker or energy consultant by the deadline. Upon further review of such specific circumstances, the Commission, at this time, does not interpret §66-t to allow an ESCO to continue to provide compensation under a contract to either an unregistered energy broker or energy consultant where the activities of a “energy broker” or “energy consultant” are undertaken after the registration deadline, even where a contract covering such activities was executed prior to that registration deadline. The Commission bases this determination on the text of PSL §66-t(2)(c), which prohibits such individual from accepting “any commission, service fee, brokerage or other valuable consideration for selling, soliciting or negotiating an energy contract in this state if that person is required to be registered under this section and is not so registered.” Under this provision, the prohibition against receiving valuable consideration is tied back to the individual broker or consultant undertaking the specified activities noted after the registration deadline. Based on this interpretation, the Commission finds that an unregistered “energy broker” or “energy consultant” may continue to receive payments under a contract in connection with covered activities, even after the registration deadline, so long as the payments/compensation are tied to an activity undertaken prior to the deadline. To be clear, PSL §66-t(2)(c) otherwise prohibits an unregistered broker or consultant (1) from receiving compensation with respect to any contracts that were executed after the effective date of these requirements (i.e., the registration deadline), and (2) from undertaking any covered activities after the registration deadline, even if the contract was executed prior to the deadline.” [Emphasis added.]

Submeterers and Submetering Service Providers – “We find as a general matter that submeterers and submetering service providers do not fall within the scope of either definition. However, as discussed below, the definitions of “energy consultant” and “energy broker” found in §1 of the UBP and UBP-DERS are based on the activities of an entity and person, not their title. Thus, any submeterer or submetering service provider may still be subject to PSL §66-t if they participate in activities that come within the purview of either definition.”

“[T]he Commission finds, as a general matter, that submeterers and submetering service providers, as defined by the Commission’s regulations, are not subject to regulation as energy brokers or energy consultants under PSL §66-t. To be clear, the definitions of “energy broker” and “energy consultant” are activity based. A person or entity would not be considered an energy broker or energy consultant based solely on actions taken as a submeterer or submetering service provider. However, a submeterer or submetering service provider may be required to register as an energy broker or energy consultant if such individual or entity engages in additional activities that otherwise fall within the coverage of PSL §66-t. However, it should be noted that PSL §66-t(5)(a) specifically prohibits anyone having any interest in real property from receiving any rebate, consideration, or valuable thing from a broker or consultant as an inducement for, or as compensation for, energy-related business.” [Emphasis added.]

Declaratory Ruling and Order on Rehearing  (04/18/2024)
Press Release – PSC Strengthens Customer Protections In New York’s Rapidly Growing Clean Energy Market  (04/18/2024)
23-M-0106
In the Matter of Commission Registration of Energy Brokers and Energy Consultants Pursuant to Public Service Law Section 66-t.