Matter of Retail Energy Supply Assn. v. Public Serv. Commn. of The State of New York
152 A.D.3d 1133
| N.Y. App. Div. | 2017Background
- In Feb 2016 the New York Public Service Commission (PSC) issued a "Reset Order" requiring ESCOs offering new or renewal mass‑market contracts to guarantee savings compared to utility full‑service rates or provide ≥30% renewable electricity; ESCOs had to certify compliance and obtain affirmative customer consent when converting certain contracts.
- PSC adopted these measures citing many customer complaints about unexpectedly high ESCO bills and a determination that mass‑market customers were not receiving comparable benefits to large customers.
- Petitioners (the Retail Energy Supply Association and several ESCOs) challenged the Reset Order in a combined CPLR article 78 proceeding and declaratory judgment action, arguing the PSC lacked statutory authority to regulate ESCO prices and that the Order was arbitrary, capricious, and procedurally defective.
- Supreme Court held the PSC had jurisdiction to impose the rate limitations but vacated three provisions of the Reset Order because the PSC failed to provide required notice and opportunity to be heard under the State Administrative Procedure Act (SAPA). Petitioners also claimed a property interest for due‑process purposes; the court rejected that theory.
- On appeal the Appellate Division affirmed: it held PSC had authority to condition ESCO access to utility systems and impose rate‑related limitations, but agreed that SAPA notice requirements were not satisfied; the judgment was therefore affirmed without costs.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether PSC may impose rate‑related conditions on ESCO mass‑market contracts | PSC lacks authority to regulate ESCO prices; Reset Order exceeds PSC jurisdiction | PSC has broad statutory authority over sale of gas/electric and may condition ESCO access to utility systems, including rate limits | Held: PSC has authority to impose the rate limitations as a condition of access to utility systems |
| Whether ESCOs are "gas" or "electric corporations" subject to article 4 rate‑setting | ESCOs are subject to article 4 as corporations selling gas/electric | PSC argued ESCOs fall within definitions of gas/electric corporations | Held: ESCOs are not "gas" or "electric corporations" under article 4; "plant" wording forecloses that construction |
| Whether ESCOs have a property interest in continued access to utility systems (due process) | ESCOs have a property interest entitling them to procedural due process before conditions imposed | PSC denied there is a protected property interest | Held: No protected property interest in continued access; Supreme Court erred on that point |
| Whether PSC complied with notice and hearing requirements (SAPA) in issuing Reset Order | PSC failed to give required SAPA notice and opportunity to be heard | PSC pointed to prior orders and collaborative reports as notice | Held: PSC conceded SAPA notice requirements were not satisfied for certain provisions; vacatur of those provisions affirmed |
Key Cases Cited
- Niagara Mohawk Power Corp. v. Public Serv. Commn., 69 N.Y.2d 365 (recognizing PSC's broad rate‑setting authority to ensure just and reasonable rates)
- Rochester Gas & Electric Corp. v. Public Serv. Commn. of State of N.Y., 71 N.Y.2d 313 (discussing PSC authority to open retail gas market and transport arrangements)
- Albany Law School v. New York State Office of Mental Retardation & Developmental Disabilities, 19 N.Y.3d 106 (textual/ordinary‑meaning analysis of statutory terms)
- Niagara Mohawk Power Corp. v. New York State Dept. of Transp., 224 A.D.2d 767 (discussing limits on property‑interest assertions for procedural due process)