This bill has been amended

Bill S2361B-2009

Requires energy services companies to provide customers with a consumers bill of rights

Requires energy services companies to provide customers with a consumer bill of rights; establishes civil cause of action and civil penalties for violations of such provisions.

Details

Actions

  • Jun 15, 2010: REPORTED AND COMMITTED TO RULES
  • Jun 8, 2010: REPORTED AND COMMITTED TO FINANCE
  • May 25, 2010: REPORTED AND COMMITTED TO CODES
  • Jan 6, 2010: REFERRED TO CONSUMER PROTECTION
  • May 27, 2009: PRINT NUMBER 2361B
  • May 27, 2009: AMEND AND RECOMMIT TO CONSUMER PROTECTION
  • Mar 11, 2009: PRINT NUMBER 2361A
  • Mar 11, 2009: AMEND AND RECOMMIT TO CONSUMER PROTECTION
  • Feb 18, 2009: REFERRED TO CONSUMER PROTECTION

Votes

VOTE: COMMITTEE VOTE: - Consumer Protection - May 25, 2010
Ayes (5): Peralta, Huntley, Hassell-Thompson, Adams, Perkins
Ayes W/R (2): Savino, Robach
Nays (3): Saland, Fuschillo, Flanagan
VOTE: COMMITTEE VOTE: - Codes - Jun 8, 2010
Ayes (10): Schneiderman, Breslin, Duane, Parker, Huntley, Sampson, Klein, Perkins, Squadron, Volker
Ayes W/R (1): Bonacic
Nays (5): Saland, DeFrancisco, Golden, Lanza, Flanagan

Memo

 BILL NUMBER:  S2361B

TITLE OF BILL :

An act to amend the general business law, in relation to establishing an energy service company consumers bill of rights

This bill establishes important consumer safeguards in the marketing and offering of contracts for energy services to residential and small business customers.

SUMMARY OF SPECIFIC PROVISIONS :

Bill § 1 adds a new §349-d to the General Business Law to set forth an energy services company consumers bill of rights. Subdivision 1 defines the terms "energy services" (electricity and/or natural gas), "energy services company" or "ESCO" (an entity eligible to sell energy services to end-use customers using the transmission or distribution system of a utility), "customer" (any person sold or offered an energy services contract by an ESCO for residential utility service or through "door-to-door sales", and "door to door sales."

Pursuant to subdivision 2, no person who sells or offers for sale any energy services for or on behalf of an ESCO shall (a) fail to properly identify himself or herself and the energy services company or companies which he or she represents and to explain that he or she does not represent a distribution utility; (b) engage in any deceptive acts or practices in the marketing of energy services; or (c) fail to provide each prospective customer with a statement of an "ESCO consumers bill of rights" developed by the public service commission and the Long Island power authority.

Subdivisions 3-6 set forth the following ESCO contract requirements:

* no required prepayment for energy services.

* no fee for termination or early cancellation of the contract in excess of $1 00 or twice the estimated bill for energy services for an average month (to charge a fee greater than $100, an ESCO must provide the customer or business when the contract is offered with an estimated average monthly bill for energy services.

* no material changes in the terms or duration of any contract for energy services without the express consent of the customer or business.

* all variable charges shall be clearly and conspicuously identified.

Per subdivision 7, any contract for energy services which does not comply with the applicable provisions of this section shall be void and unenforceable as contrary to public policy and any waivers by a buyer shall be deemed void and unenforceable by the seller.

Subdivision 8 authorizes the Attorney General, upon his own motion or Upon referral from the public service commission or the Long Island power authority, to bring a civil action against any energy services company that violates any provision of this section and may recover (a) a civil penalty not to exceed $1000 per violation and (b) costs and reasonable attorney's fees. In any such proceeding the court may direct restitution.

Subdivision 9 authorizes an additional right of private action by any person who has been injured by reason of any violation of §349-d to enjoin such unlawful act or practice and/or recover actual damages or $200, whichever is greater. The court may, in its discretion, increase the award of damages to an amount not to exceed three times the actual damages up to $1000, if it finds a willful or knowing violation. The Court may award reasonable attorney's fees to a prevailing plaintiff

Bill §2 provides that the Public Service Commission (PSC) and the Long Island Power Authority (LIPA) shall amend their consumer protection regulations to incorporate the provisions of bill §1.

Bill §3 makes clear that the "ESCO consumer bill of rights" does not limit the existing authority of the PSC or LIPA to limit, Suspend or revoke the eligibility of an ESCO to sell or offer for sale any energy services for violations of any statute, regulation or policy they otherwise enforce.

Bill §4 charges the PSC and LIPA, in conjunction with the Consumer Protection Board and the Attorney General, to develop a short, plain language statement of an "ESCO consumers bill of rights" which shall summarize the protections afforded to consumers of energy services by this chapter and other applicable laws.

Bill §5 sets forth a severability clause for the provisions of the legislation.

EFFECTS OF PRESENT LAW WHICH THIS BILL WOULD ALTER :

Chapter 686 of 2002 extended the provisions of the Home Energy Fair Practices Act (HEFPA) to cover ESCOs, but its protections only apply after a contract has been executed. No substantive protections exist to prevent deceptive marketing and unfair or misleading contract provisions.

As recently noted by the Consumer Protection Board and the New York City Department of Consumer Affairs, the PSC's guidelines for ESCO marketing are strictly voluntary this bill would make fair marketing standards enforceable and would e;tend protections to small business customers who are currently not covered under HEFPA.

JUSTIFICATION :

Over the past decade, New York has promoted a competitive retail model for the provision of electricity and natural gas. Consumers have been encouraged to switch service providers from traditional utilities to energy services companies. Unfortunately, consumer protection appears to have taken a back seat in this process. The pressing need for consumer protections in dealing with ESCOs is highlighted by recent news items from around the state:

* Stopped outside her home in Flushing by a uniformed salesman promising her utility bills will be cut in half, a senior citizen signs a contract with an energy services company (ESCO). When she finds out later that the contract is for 5 years and her monthly bills are $200 higher, she tries to cancel- only to be told that she must pay an $1800 "exit fee".

* A small business owner in Brooklyn is convinced to sign an energy services contract by a sales agent's assurances that the price would be fixed and he could save at least $200 a month. After a few months, his monthly bill had doubled, and he learned that the contract had a variable charge that fluctuated wildly -- and that canceling it would cost him $7000.

* Complaints from various communities cite ESCO marketing reps masquerading as utility employees, making misleading statements to induce people to sign a contract, and even switching consumers' energy suppliers without their knowledge or consent.

High-pressure and misleading sales tactics, onerous contracts with unfathomable fine print, short-term "teaser" rates followed by skyrocketing variable prices -- many of the problems recently seen with subprime mortgages are being repeated in energy competition. However, the Public Service Commission (PSC) has taken a laissez-faire approach to these problems, offering only a voluntary set of guidelines with no teeth. The fact is, competition in supplying energy cannot succeed without a meaningful set of standards to weed out companies whose business model is to take unfair advantage of consumers.

This bill will require the Public Service Commission (PSC) and the Long Island Power Authority (LIPA) to adopt regulations including the following mandatory consumer protections:

*requiring ESCO marketing reps to identify themselves as such and explain that they don't represent a utility;

*limiting prepayments to not more than a customer's estimated bill for an average month;

*limiting cancellation fees to an amount twice the initial estimated average monthly bill;

*all variable charges will be clearly and conspicuously identified;

*no contract terms could be changed without the consumer's affirmative consent (this would apply to both post-teaser rates and renewals); and

* a short, plain language "ESCO consumer bill of rights to be developed by the PSC and LIPA (in collaboration with CPE and the Attorney General) and given to prospective customers in writing or repeated in telephone sales pitches.

These safeguards would apply to small businesses as well as residential customers. The Attorney General could prosecute violations of marketing standards··referred by the PSC and LIPA, or consumers could enforce the standards themselves through third-party actions.

These provisions will go a long way toward restoring an orderly marketplace where consumers can make informed decisions on their choices for gas and electric service with the confidence that state government will prevent fraudulent practices and ensure a level playing field.

PRIOR LEGISLATIVE HISTORY :

A.10180-B (2008) - passed Assembly, referred to Senate Rules Committee.

FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS :

Minimal.

EFFECTIVE DATE : 150th day after becoming law and applicable to all energy services sold or offered for sale on or after such date; provided, however, that the PSC and LIPA are immediately authorized and directed to take any and all actions, including but not limited the promulgation of any necessary rules, necessary to fully implement the provisions of this bill on such date.

Text

STATE OF NEW YORK ________________________________________________________________________ 2361--B 2009-2010 Regular Sessions IN SENATE February 18, 2009 ___________
Introduced by Sen. PARKER -- read twice and ordered printed, and when printed to be committed to the Committee on Consumer Protection -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said committee -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said committee AN ACT to amend the general business law, in relation to establishing an energy service company consumers bill of rights THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. The general business law is amended by adding a new section 349-d to read as follows: S 349-D. ENERGY SERVICES COMPANY CONSUMERS BILL OF RIGHTS. 1. FOR THE PURPOSE OF THIS SECTION: (A) "ENERGY SERVICES" SHALL MEAN ELECTRICITY AND/OR NATURAL GAS; (B) "ENERGY SERVICES COMPANY" OR "ESCO" SHALL MEAN AN ENTITY ELIGIBLE TO SELL ENERGY SERVICES TO END-USE CUSTOMERS USING THE TRANSMISSION OR DISTRIBUTION SYSTEM OF A UTILITY; (C) "CUSTOMER" SHALL MEAN ANY PERSON WHO IS SOLD OR OFFERED AN ENERGY SERVICES CONTRACT BY AN ESCO (I) FOR RESIDENTIAL UTILITY SERVICE, OR (II) THROUGH DOOR-TO-DOOR SALES; AND (D) "DOOR-TO-DOOR SALES" SHALL MEAN THE SALE OF ENERGY SERVICES IN WHICH THE ESCO OR THE ESCO'S REPRESENTATIVE PERSONALLY SOLICITS THE SALE, AND THE BUYER'S AGREEMENT OR OFFER TO PURCHASE IS MADE AT A PLACE OTHER THAN THE PLACE OF BUSINESS OF THE SELLER; PROVIDED THAT SUCH TERM SHALL NOT INCLUDE ANY SALE WHICH IS CONDUCTED AND CONSUMMATED ENTIRELY BY MAIL, TELEPHONE OR OTHER ELECTRONIC MEANS, OR DURING A SCHEDULED APPOINTMENT AT THE PREMISES OF A BUYER OF NONRESIDENTIAL UTILITY SERVICE, OR THROUGH SOLICITATIONS OF COMMERCIAL ACCOUNTS AT TRADE OR BUSINESS SHOWS, CONVENTIONS OR EXPOSITIONS. 2. ANY PERSON WHO SELLS OR OFFERS FOR SALE ANY ENERGY SERVICES TO A CUSTOMER FOR OR ON BEHALF OF AN ESCO SHALL (A) PROPERLY IDENTIFY HIMSELF
OR HERSELF AND THE ENERGY SERVICES COMPANY OR COMPANIES WHICH HE OR SHE REPRESENTS; (B) EXPLAIN THAT HE OR SHE DOES NOT REPRESENT A DISTRIBUTION UTILITY; (C) EXPLAIN THE PURPOSE OF THE SOLICITATION; (D) PROVIDE EACH PROSPECTIVE CUSTOMER WITH A COPY OF THE "ESCO CONSUMERS BILL OF RIGHTS" DEVELOPED BY THE PUBLIC SERVICE COMMISSION, THE LONG ISLAND POWER AUTHORITY, THE STATE CONSUMER PROTECTION BOARD AND THE DEPARTMENT OF LAW; AND (E) PROVIDE ANY WRITTEN MATERIALS, INCLUDING CONTRACTS AND THE "ESCO CONSUMERS BILL OF RIGHTS", IN THE SAME LANGUAGE UTILIZED TO SOLIC- IT THE PROSPECTIVE CUSTOMER. 3. NO PERSON WHO SELLS OR OFFERS FOR SALE ANY ENERGY SERVICES FOR, OR ON BEHALF OF, AN ESCO SHALL ENGAGE IN ANY DECEPTIVE ACTS OR PRACTICES IN THE MARKETING OF ENERGY SERVICES. 4. NO CONTRACT FOR PROVISION OF ENERGY SERVICES BY AN ESCO SHALL PROVIDE FOR ANY CUSTOMER PREPAYMENT FOR ENERGY SERVICES. 5. NO CONTRACT FOR PROVISION OF ENERGY SERVICES BY AN ESCO SHALL REQUIRE THE CUSTOMER TO PAY ANY FEE FOR TERMINATION OR EARLY CANCELLA- TION OF A CONTRACT IN EXCESS OF (A) ONE HUNDRED DOLLARS; OR (B) TWICE THE ESTIMATED BILL FOR ENERGY SERVICES FOR AN AVERAGE MONTH. TO CHARGE A FEE GREATER THAN ONE HUNDRED DOLLARS, AN ESCO MUST HAVE PROVIDED THE CUSTOMER, AT THE TIME THAT THE CONTRACT IS OFFERED, WITH AN ESTIMATE OF THE AVERAGE MONTHLY BILL THAT CUSTOMER WOULD BE CHARGED FOR ENERGY SERVICES. 6. NO MATERIAL CHANGE SHALL BE MADE IN THE TERMS OR DURATION OF ANY CONTRACT FOR THE PROVISION OF ENERGY SERVICES BY AN ESCO WITHOUT THE EXPRESS CONSENT OF THE CUSTOMER. THIS SHALL NOT RESTRICT AN ESCO FROM RENEWING A CONTRACT BY CLEARLY INFORMING THE CUSTOMER IN WRITING, NOT LESS THAN THIRTY DAYS NOR MORE THAN SIXTY DAYS PRIOR TO THE RENEWAL DATE, OF THE RENEWAL TERMS AND OF HIS OR HER OPTION NOT TO ACCEPT THE RENEWAL OFFER; PROVIDED, HOWEVER, THAT NO FEE PURSUANT TO SUBDIVISION FIVE OF THIS SECTION SHALL BE CHARGED TO A CUSTOMER WHO OBJECTS TO SUCH RENEWAL NOT LATER THAN THREE BUSINESS DAYS AFTER RECEIVING THE FIRST BILLING STATEMENT FROM THE ESCO UNDER THE TERMS OF THE CONTRACT AS RENEWED. THE PUBLIC SERVICE COMMISSION AND THE LONG ISLAND POWER AUTHORITY MAY ADOPT ADDITIONAL REGULATIONS GOVERNING THE RENEWAL PROC- ESS. 7. IN EVERY CONTRACT FOR ENERGY SERVICES AND IN ALL MARKETING MATERI- ALS PROVIDED TO PROSPECTIVE PURCHASERS OF SUCH CONTRACTS, ALL VARIABLE CHARGES SHALL BE CLEARLY AND CONSPICUOUSLY IDENTIFIED. 8. ANY CONTRACT FOR ENERGY SERVICES WHICH DOES NOT COMPLY WITH THE APPLICABLE PROVISIONS OF THIS SECTION SHALL BE VOID AND UNENFORCEABLE AS CONTRARY TO PUBLIC POLICY. ANY WAIVER BY A BUYER OF ENERGY SERVICES OF THE PROVISIONS OF THIS SECTION SHALL BE DEEMED VOID AND UNENFORCEABLE BY THE ESCO AS CONTRARY TO PUBLIC POLICY. 9. THE ATTORNEY GENERAL, UPON HIS OR HER OWN MOTION OR UPON REFERRAL FROM THE PUBLIC SERVICE COMMISSION, THE LONG ISLAND POWER AUTHORITY OR THE STATE CONSUMER PROTECTION BOARD, MAY BRING A CIVIL ACTION AGAINST ANY ENERGY SERVICES COMPANY THAT VIOLATES ANY PROVISION OF THIS SECTION AND MAY RECOVER (A) A CIVIL PENALTY NOT TO EXCEED ONE THOUSAND DOLLARS PER VIOLATION; AND (B) COSTS AND REASONABLE ATTORNEY'S FEES. IN ANY SUCH PROCEEDING THE COURT MAY DIRECT RESTITUTION. 10. IN ADDITION TO THE RIGHT OF ACTION GRANTED TO THE ATTORNEY GENERAL PURSUANT TO THIS SECTION, ANY PERSON WHO HAS BEEN INJURED BY REASON OF ANY VIOLATION OF THIS SECTION MAY BRING AN ACTION IN HIS OR HER OWN NAME TO ENJOIN SUCH UNLAWFUL ACT OR PRACTICE, AN ACTION TO RECOVER HIS OR HER ACTUAL DAMAGES OR FIVE HUNDRED DOLLARS, WHICHEVER IS GREATER, OR BOTH SUCH ACTIONS. THE COURT MAY, IN ITS DISCRETION, INCREASE THE AWARD OF
DAMAGES TO AN AMOUNT NOT TO EXCEED THREE TIMES THE ACTUAL DAMAGES UP TO TEN THOUSAND DOLLARS, IF THE COURT FINDS THE DEFENDANT WILLFULLY OR KNOWINGLY VIOLATED THIS SECTION. THE COURT MAY AWARD REASONABLE ATTOR- NEY'S FEES TO A PREVAILING PLAINTIFF. S 2. The public service commission shall amend its rules and regu- lations governing energy service to residential customers at part 11 of title 16 of the New York state codes, rules and regulations and its rules and regulations governing energy service to nonresidential custom- ers at part 13 of title 16 of the New York state codes, rules and regu- lations to implement the provisions of section one of this act. The Long Island power authority shall amend its regulations adopted pursuant to section 1020-f of the public authorities law to implement the provisions of section one of this act. S 3. Nothing in this act shall limit the existing authority of the public service commission or the Long Island power authority to limit, suspend or revoke the eligibility of an energy services company to sell or offer for sale any energy services for violations of any statute, rule, regulation or policy enforceable by such commission or authority. S 4. The public service commission, the Long Island power authority, the state consumer protection board and the department of law shall develop a short, plain language statement of an "ESCO consumers bill of rights" which shall summarize the protections afforded to consumers of energy services pursuant to section 349-d of the general business law and other applicable laws. S 5. If any clause, sentence, paragraph, section or part of this act be adjudged by any court of competent jurisdiction to be invalid, such judgment shall not affect, impair or invalidate the remainder hereof but shall be applied in its operation to the clause, sentence, paragraph, section or part hereof directly involved in the controversy in which such judgment shall have been rendered. S 6. This act shall take effect on the one hundred fiftieth day after it shall have become a law and shall apply to all energy services sold or offered for sale on or after such date; provided, however, that the public service commission and the Long Island power authority are imme- diately authorized and directed to take any and all actions, including but not limited to the promulgation of any necessary rules and regu- lations, necessary to implement the provisions of this act on its effec- tive date.

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