ALBANY, N.Y. (AP) — Many New Yorkers who took advantage of initial discounts in aggressive campaigns by independent, retail energy providers are actually paying more for electricity and natural gas than if they stayed with the major utilities, according to the state Public Service Commission.
On Thursday the PSC decided to review the operation of more than 100 retailers that arose from deregulation of the utility industry in New York in the late 1990s, which promised lower rates through competition. The retailers supply gas and electricity over the lines of traditional utilities, including National Grid, New York State Electric and Gas Co. and Consolidated Edison.
Deregulation was supposed to drive prices lower, although it also allows customers to choose to buy power from emerging renewable energy such as solar and wind power, even if it costs more. The retailers also can offer longer term price stability and what the PSC calls “value-added” services, such as home heating equipment repair and maintenance, airline miles or similar rewards. That also could account for at least some of the higher costs.
An initial review by the PSC found some New Yorkers, including many in low-income neighborhoods, paid much more than if they had stayed with the big utility companies. They were sold on promises of lower utility rates, the report found.
Although some customers paid less, 49 percent of upstate customers paid at least $20 more per month, according to the PSC. Downstate customers more often paid less than if they stayed with their utilities.
The PSC said it’s difficult especially for residential and small business customers to know and compare prices for electricity and natural gas. The regulator also has received complaints of aggressive and misleading marketing by some of the retailers.
“Department staff has raised concerns and questions about certain aspects of the retail market; as a result, the commission will begin a new proceeding to further examine the operations of these markets and explore possible actions to improve their efficiency,” PSC Chairman Garry Brown said.
The retailers are called energy service companies, or ESCOs, in the industry and by the state regulator. About 85 of the retailers provide electricity in New York and more than 100 provide natural gas.
The trade group representing the retailers supports a PSC crackdown on any misleading and overly aggressive marketing tactics.
“We welcome a full and fair evaluation of the facts,” said Bryan Lee of the Retail Energy Supply Association. “We’re concerned that the issue of ESCO pricing versus utility default pricing has been presented in a vacuum without the proper context.”
Part of that context, he said, was that natural gas prices surprisingly fell over the last two years. He said ESCO prices would provide a clearer benefit to customers if prices rose because the retails can offer longer term rate stability.
“Many different surveys show customers appreciate having a choice,” Lee said. “Chairman Brown said it’s working very well for large industrial customers and sophisticated shoppers. The concern is residential and small commercial customers who don’t have the insight or information they need.”
Although the PSC can’t regulate the retailers, it could create a website or service that allows customers to easily compare buying power from the retailers or the utilities.
___ Online: www.dps.ny.gov .
