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A03245 Summary:

BILL NOA03245A
 
SAME ASSAME AS S02376-A
 
SPONSORDinowitz
 
COSPNSRWallace
 
MLTSPNSR
 
Amd 65, Pub Serv L
 
Prohibits suppliers of natural gas or electric service from changing a customer's supplier of gas or electric service (commonly known as "slamming") unless such supplier complies with requirements established by the public service commission; authorizes the commission to establish requirements for customer consent; makes enforcement provisions to punish violators of slamming requirements.
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A03245 Actions:

BILL NOA03245A
 
01/29/2019referred to consumer affairs and protection
02/08/2019amend and recommit to consumer affairs and protection
02/08/2019print number 3245a
05/30/2019reported referred to codes
06/04/2019reported referred to rules
06/05/2019reported
06/05/2019rules report cal.73
06/05/2019ordered to third reading rules cal.73
06/06/2019passed assembly
06/06/2019delivered to senate
06/06/2019REFERRED TO RULES
06/12/2019SUBSTITUTED FOR S2376A
06/12/20193RD READING CAL.120
06/12/2019PASSED SENATE
06/12/2019RETURNED TO ASSEMBLY
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A03245 Memo:

NEW YORK STATE ASSEMBLY
MEMORANDUM IN SUPPORT OF LEGISLATION
submitted in accordance with Assembly Rule III, Sec 1(f)
 
BILL NUMBER: A3245A
 
SPONSOR: Dinowitz
  TITLE OF BILL: An act to amend the public service law, in relation to unauthorized changes in suppliers of natural gas and electric service   PURPOSE OR GENERAL IDEA OF BILL: To prohibit unauthorized changes in suppliers of natural gas or electric service and to establish additional enforcement methods.   SUMMARY OF SPECIFIC PROVISIONS: This bill would amend Section 65 of the Public Service Law by adding a new subdivision 16 to prohibit a supplier of natural gas or electricity or any person, firm or corporation acting as such supplier from making or directing an unauthorized change in gas or electric service, commonly known as slamming. This bill would further authorize the Public Service Commission (PSC) to establish requirements for obtaining the authorization of a customer to effect a change in the customer's supplier of gas or electric service and for the verification of such change. This bill would also authorize the PSC to punish violators of slamming requirements by seeking a judicial penalty under Public Service Law Section 25 or an administrative penalty not to exceed $1,000 for every violation associated with each meter service point, and by seeking injunctive relief. Section 25 of the Public Service Law currently authorizes penalties, subject to judicial discretion, in amounts not to exceed $100,000 per offense. The PSC currently requires Energy Service Companies (ESCOs) to establish procedures to obtain authorization of customers for a change in gas and electric service and for the verification of such change, as a condition of eligibility to serve customers in New York State. Such eligibility may be revoked by the PSC if the ESCO fails to comply with service requirements. Natural gas local distribution companies require a written authorization or a verified oral declaration by a customer prior to a change in supplier and may deny transportation of gas on their systems to a marketer that fails to obtain the necessary authorizations.   JUSTIFICATION: The deregulation movement of the 1980's included the banking, airline and telecommunication industries. The next logical step was to deregu- late the energy industry. By allowing new companies to enter in to the energy retail market, competition would increase. The result would be lower prices and improved service. In 1996, New York deregulated its energy market by removing those barriers to economic competition. Utili- ty companies would give customers the freedom to choose alternative Energy Service Companies, or ESCOs, with what was called the Power to Choose Program. ESCOs were private utilities which were to provide elec- tricity and natural-gas services, savings and green energy options. They were the alternatives to the traditional utility companies, which would still be in charge of distributing power. There are now over 200 alter- native ESCOs as well as traditional suppliers in New York. In the course of introducing this business model, prices were supposed to be driven down and service was supposed to become better. That didn't happen for New York. Although the drawbacks of deregulation in other industries have by and large resolved themselves, the ESCO market has gone unad- dressed. ESCOs came under fire in 2016. A review found that multiple ESCOs were jacking up bills resulting in overcharging for electric and gas service, failing to deliver on promises for savings and clean energy, and were unscrupulously preying on low-income, senior and limited English speak- ing consumers. Customer reviews written for New York's database of ESCOs display phrases like 'excessive telemarketing calls', 'unpredict- able variable and high rate contracts', 'early cancellation fees,' non- transparent door to door sales tactics,' poor Better Business Bureau rating' and 'widespread customer complaints'. ESCOs have notoriously been cited for using deceptive sales tactics. 'Consultants' misrepresent themselves by pretending to be employees of the local utility company. The consultants push consumers into signing predatory contracts often by cold-knocking at a home or apartment door. These exchanges result in new contracts being signed, which is called 'slamming.' Eventually, unaware consumers discover that their rates have increased dramatically. Rates are as much as triple the amount of what they would otherwise be paying with Con Ed, National Grid or other util- ity providers. Data suggests that New York customers pay as high as 17% more for utility fees under ESCO contracts compared to the rates typi- cally charged with their local utility. Under the current regulatory climate, it is very difficult for ESCOs to face any regulatory penalties for these unscrupulous practices. The worst offender of all of the ESCOs operating in New York is Ambit Energy, who claims to be the largest ESCO in the state. They have over 300,000 customers and account for about one fifth of PCS complaints; seven times the complaints of Con Edison. Automatic enrollment in vari- able rate plans without notification to the consumer are the basis for a number of class-action suits against Ambit. ESCOs function like a network marketing firm, which illustrates the level to which the organ- izations operate. They don't generate or deliver the energy. They have consultants that act as 'entrepreneurs' rather than 'employees'. Many ESCOs also exist just on paper, indicating how easy it is to set the business model up in New York State. In 2016, the PSC estimated that there are about 281,000 low-income customers getting gas or electricity from ESCOs. The commission said that over a 30 month period those individuals paid approximately $96 million more than they would have paid if served by their own utility. In December of 2016, the state PSC approved a prohibition on ESCOs sell- ing to low-income customers unless they get special dispensation from the regulator. Building on that PSC decision to crack down on ESCOs, this amendment to the Public Service Law to prohibit unauthorized chang- es of suppliers of natural gas and electric service would further strengthen consumer protections for all New York State residents from unscrupulous behavior such as 'slamming'.   PRIOR LEGISLATIVE HISTORY: 2017-18: A.5235 - Passed the Assembly/S.5023 - Referred to Energy and Telecommunications 2015-16: A.1903 - Passed the Assembly/S.2557 - Referred to Energy and Telecommunications 2013-2014: A.351-A - Order to Third Reading Rules Calendar/S.3442-A- Referred to Energy and Telecommunications 2011-2012: A.8433 - Referred to Consumer Affairs and Protection/S.6455 - Referred to Energy and Telecommunications 2009-2010: A.3245 - Referred to Consumer Affairs and Protection. 2007-2008: A.349 - Referred to Consumer Affairs and Protection. 2005-2006: A.77 - Referred to Consumer Affairs and Protection.   FISCAL IMPLICATIONS: Increased revenue to general fund resulting from administrative and judicial penalties.   EFFECTIVE DATE: This act shall take effect on the one hundred twentieth day after it shall have become a law. Effective immediately, the addition, amendment and/or repeal of any rule or regulation necessary for the implementation of this act on its effective date are authorized and directed to be made and completed on or before such effective date.
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A03245 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                         3245--A
 
                               2019-2020 Regular Sessions
 
                   IN ASSEMBLY
 
                                    January 29, 2019
                                       ___________
 
        Introduced by M. of A. DINOWITZ -- read once and referred to the Commit-
          tee  on  Consumer Affairs and Protection -- committee discharged, bill
          amended, ordered reprinted as amended and recommitted to said  commit-
          tee
 
        AN  ACT  to  amend  the  public service law, in relation to unauthorized
          changes in suppliers of natural gas and electric service

          The People of the State of New York, represented in Senate and  Assem-
        bly, do enact as follows:
 
     1    Section 1. Section 65 of the public service law is amended by adding a
     2  new subdivision 16 to read as follows:
     3    16.  Unauthorized changes in natural gas or electric service prohibit-
     4  ed. (a) No supplier of gas or electric service or any  person,  firm  or
     5  corporation  acting  as such supplier's agent or representative shall on
     6  behalf of a customer make or direct any change in a supplier of  gas  or
     7  electric  service unless such supplier, agent or representative complies
     8  with requirements to authorize and verify  the  change.  The  commission
     9  shall  have  the  authority  to establish requirements for obtaining the
    10  authorization of a customer to effect a change in the customer's suppli-
    11  er of gas or electric service and for the verification of  such  change.
    12  In  construing and enforcing the provisions of this subdivision, the act
    13  of any person, firm or corporation acting as an agent or  representative
    14  of  a  supplier of gas or electric service shall be deemed to be the act
    15  of such supplier of gas or electric service. For the  purposes  of  this
    16  subdivision,  "supplier  of  gas  or electric service" shall include any
    17  person, firm or corporation that offers, sells or delivers all  or  part
    18  of natural gas or electric service, including, but not limited to, a gas
    19  or  electric  distribution company, a gas or electric corporation, a gas
    20  or electricity provider, marketer, aggregator or broker.
    21    (b) The failure to comply with  the  provisions  in  this  subdivision
    22  shall  subject a supplier of gas or electric service to either the judi-
    23  cial penalty authorized in section twenty-five of this chapter  for  the
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD01192-03-9

        A. 3245--A                          2
 
     1  failure or neglect to obey or comply with a provision of this chapter or
     2  the  administrative  penalty established in this subdivision. In seeking
     3  such judicial penalty or  assessing  such  administrative  penalty,  the
     4  commission  shall  take  into account the nature, circumstances, extent,
     5  gravity and number of the violations, and with respect to the  violator,
     6  the  degree  of  culpability, any history of prior offenses and repeated
     7  violations, and such other matters as may be appropriate  and  relevant.
     8  The  remedies  provided  by this subdivision shall be in addition to any
     9  other remedies provided by law.
    10    (c) The commission, after opportunity for a hearing,  shall  have  the
    11  authority  to  assess  directly  an  administrative  penalty against any
    12  supplier of gas or electric service for each violation of this  subdivi-
    13  sion or order of the commission implementing or enforcing the provisions
    14  of  this subdivision. Such penalty shall not exceed one thousand dollars
    15  for each violation associated with each meter service point. All  moneys
    16  recovered  from  any administrative penalty shall be paid into the state
    17  treasury to the credit of the general fund.
    18    (d) Whenever the commission determines that any  supplier  of  gas  or
    19  electric  service is violating or about to violate any provision of this
    20  subdivision or any regulation or order of the commission implementing or
    21  enforcing the provisions of this subdivision, or has failed to  pay  any
    22  penalty  assessed  pursuant  to  the provisions of this subdivision, the
    23  commissioner shall have power to bring an action or enforcement proceed-
    24  ing as provided by section twenty-six of this chapter.
    25    § 2. This act shall take effect on the one hundred twentieth day after
    26  it shall have become a law. Effective immediately, the addition,  amend-
    27  ment and/or repeal of any rule or regulation necessary for the implemen-
    28  tation  of this act on its effective date are authorized and directed to
    29  be made and completed on or before such effective date.
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