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New York to Consider Ending Retail Choice for Certain Customers; Retail Investigation Includes “Greatest Hits” of Policies Opposed by ESCOs

By: Energy Choice Matters |

The New York PSC will consider eliminating the availability of retail choice to certain low-income customers as part of its retail market investigation, as the comprehensive investigation will also include a review of a host of policies concerning ESCO marketing and pricing traditionally opposed by ESCOs.

Most notably, the PSC will consider ending Purchase of Receivables without recourse, as more fully discussed in the related story today.

Also shocking is the PSC’s consideration of ending retail choice for certain low-income customers.

The PSC said that data indicates that customers participating in utility low-income assistance programs are more likely to obtain their energy commodity from an ESCO than residential customers who do not participate in these programs.

“Coupled with the fact … that many residential ESCO customers pay more than had they purchased their energy commodity from the utility, this raises a concern that the current operation of the retail energy markets may be in conflict with one of our statutory policy requirements. Specifically, it is this Commission’s policy that the continued provision of electric and natural gas service to customers is in the public interest. Residential retail energy markets, as currently operating, may be inconsistent with the Commission’s efforts to assist low-income customers in maintaining electricity and natural gas service, such as the authorization of more than $100 million annually for ratepayer-funded financial assistance programs,” the PSC said.

The PSC asked for comment on the advantages and disadvantages of allowing customers participating in any state or federal energy assistance program, such as the Home Energy Assistance Program, or in any utility-sponsored affordability program, to obtain commodity service from an ESCO.

The PSC also said that changes to current door-to-door marketing safeguards could benefit customers and improve the transparency of the marketplace.

These changes may include, but are not limited to, requiring ESCO marketers to begin any door-to-door interaction with a disclosure statement, limiting or prohibiting termination fees for contracts arrived at through door-to-door marketing, or placing other restrictions on this marketing method, the PSC said. The PSC also sought comment on the legal and policy reasons for completely prohibiting door-to-door marketing of retail energy.

“Staff’s review has found that such marketing is often associated with what customers perceive to be high-pressure sales techniques, which may not be conducive to customers making an informed decision concerning their energy supply. The most common complaints received by the Department concerning door-to-door marketing are aggressive sales representatives, unauthorized change of energy providers attributable to the sales representative using the utility account number obtained from the customer in door-to-door marketing even though the customer did not sign a contract, marketers misrepresenting themselves and marketers making false or misleading statements,” the PSC said.

Aside from the previously reported disclosure, to customers, of comparisons of utility and ESCO costs, the PSC will review several other pricing disclosure measures under its investigation.

Notably, the PSC asked whether it should collect monthly data on prices charged by ESCOs to residential and small non-residential customers for all or some of their products, with such data to be published by the PSC.

Additionally, the PSC asked whether ESCOs should be required to honor rates and terms posted on the Commission’s Power to Choose website, which currently only requires snapshot pricing.

Furthermore, the PSC asked whether ESCOs should be required to post all of their offerings on Power to Choose.

Moreover, the PSC will examine whether ESCOs should be required to disclose their rate methodology and related billing calculations to customers with variable rate contracts. The PSC asked if all variable rate methodologies should be required to be based on specified formulas tied to publicly available information.

Citing a high number of complaints for certain ESCOs participating in the programs, the PSC will consider termination of the ESCO referral programs, currently in place at Con Edison, Orange & Rockland, Central Hudson, and National Grid (upstate). Of the referral programs, the PSC said that, “Customers may be enticed by the introductory discount and then may remain customers of a particular ESCO because of inertia, paying prices substantially above what they would have been charged by the utility.”

If the referral programs continue, possible modifications would be to: (1) only allow participation by ESCOs that guarantee future savings for some time period beyond the initial two month introductory phase, e.g., during the first year a customer remains enrolled with that ESCO; or (2) require that an ESCO obtain a customer’s affirmative consent to remain with the ESCO prior to the expiration of the introductory period.

The PSC will also consider requiring ESCOs to obtain affirmative consent from customers for contract renewals involving a change in price, or potentially all contract renewals.