By William Opalka

A state court Friday blocked New York regulators from implementing sweeping new rules over retail electric providers, ordering a show cause hearing April 14 (870-16).

The ruling by the Albany County Supreme Court stayed the first phase of regulations passed by the New York Public Service Commission last month, which would have required retail suppliers to guarantee savings for new customers and those with renewing contracts.

The Retail Energy Supply Association asked the court Thursday to block the rules, saying it was an overreach of the commission’s authority and would effectively eliminate customer choice.

“This is great news for consumers, as it protects their right to freely decide for themselves what energy products offer value,” RESA spokesman Bryan Lee said. “RESA looks forward to working collaboratively with the commission regarding its concerns in a productive way so that consumers retain the right to choose their energy provider and the value-added products and services that come along with such a choice.”

The PSC said the rules, adopted Feb. 23, were put in place to counter deceptive business practices committed by some energy service companies. (See Zibelman: Rules Meant to Enable Markets.)

In its petition for a temporary restraining order, RESA said regulators were panicked by negative press coverage of unscrupulous retailers and rushed the order without giving proper notice or having fully developed procedures.

“The order sends a strong message that the commission and the attorney general’s office cannot be trusted with enforcing the existing consumer protection laws against a small handful of alleged bad actors in the retail energy market,” RESA wrote. “Further, the … order is an unconstitutional legislative act by an administrative agency with an expansive agenda, which has made a sweeping policy decision that monopoly pricing and monolithic commodity offerings in New York’s energy sector are preferable to competition and customer choice.”

Numerous energy service companies (ESCOs) had asked the PSC for a 45-day delay in implementing the rules, saying they were imprecise and that the companies needed more time to comply.

The Public Utility Law Project of New York opposed the extension, saying three related proceedings before the PSC should have alerted the ESCOs that tighter state regulation was coming.

“The reforms instituted by the Feb. 23 order have been foreshadowed for years, and if the ESCO industry chose not to put contingency plans into place, that is unfortunate for them,” PULP wrote. “Meanwhile, mass market consumers have been overcharged, slammed and subjected to numerous other practices that have wrought considerable financial harm upon small commercial and low-income households who have long awaited the consumer protections soon to be in force.”