The New York State Public Service Commission recently implemented Public Service Law § 66-t, which requires energy brokers and consultants to register with the Department of Public Service and disclose certain fees to customers. In particular, parties must now disclose all compensation paid to brokers and consultants, including commissions, bonuses, and non-financial compensation, such as prizes, tickets, etc. Failure to adhere to the registration and other rules can lead to fines, loss of commissions, invalidation of customer contracts, and forfeiture of the ability to operate in New York.
The rules define “energy brokers” as “a non-utility entity that performs energy management or procurement functions on behalf of customers, ECSOs (Energy Service Companies) or DER (Distributed Energy Resource) Suppliers, and (1) that assumes the contractual and legal responsibility for the sale of electric supply service, transmission or other services to end-use retail customers, but does not take title to any of the electricity sold, and does not make retail energy sales to customers or (2) that assumes the contractual and legal obligation to provide for the sale of natural gas supply service, transportation or other services to end-use retail customers, but does not take title to any of the natural gas sold, and does not make retail energy sales to customers.” An “energy consultant” is defined as “any person, firm, association or corporation who acts as broker in soliciting, negotiating or advising any electric or natural gas contract, or acts as an agent in accepting any electric or natural gas contract on behalf of a DER Supplier.”
These definitions are intended to be construed broadly and apply to all segments of the energy market, including energy supply companies, CCAs (Community Choice Aggregators), third party marketers, and potentially CDG (Community Distributed Generation) providers and building owners. For example, if a building owner is involved in facilitating a contract for electric or natural gas supply on behalf of its tenants, that owner would need to register as an energy consultant and comply with ongoing rules related to fee disclosures. Building owners are also now prohibited from receiving rebates for entering into supply agreements for the units within its building.
There is a technical conference next week to discuss the rules further, but, as of now, brokers and consultants must submit their registration packets by August 31. As part of their application, brokers and consultants must, among other things, obtain a letter of credit in the amount of $100,000 or $50,000, respectively. While direct employees of a registered broker or consultant are covered by the parent entity’s registration, independent contractors are not, and will need to separately register with the state, or enter into an alternative arrangement, if they want to continue doing business in New York.
If you are involved, or think you may be involved, in the procurement or facilitation of an electric or natural gas supply contract, we encourage you to contact us to discuss whether you, or your company, need to register and submit an application to the Department of Public Service.
