Senate Bill S2361C

                                 BILL NUMBER:  S2361

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

 PURPOSE OR GENERAL IDEA OF BILL :  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 extend 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 CPB 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.

                                 BILL NUMBER:  S2361A

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

 PURPOSE OR GENERAL IDEA OF BILL :

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 extend 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 CPB 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.

                                 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.