NY Regulators Call to End ESCOs

December 9—The New York Public Service Commission (PSC) has recently set date and called for testimony regarding the state’s Energy Service Companies (ESCO)s. The PSC issued a moratorium on ESCOs selling to low-income communities in July. The moratorium and investigation came after Governor Andrew M. Cuomo announced an action plan to halt the business practices of what he called “unscrupulous companies, whose business model is to prey on ratepayers with promises of lower energy costs only to deliver skyrocketing bills” in February.

A New York Supreme Court Judge soon after struck down the proposed rules, finding that the state had failed to give the ESCOs the opportunity to state their case in a sufficient amount of time. However, the court also ordered the PSC to issue a new batch of rules.

In March, the PSC issued an order requiring ESCOs to either guarantee that Assistance Program Participants (APPs) would pay no more than what they would pay as a full-service utility customer. If the ESCO could not make that guarantee, it had to provide APPs with energy-related value-added products or services.

Ultimately it was the ESCO’s inability to address these higher rates—rates that often exceeded the amount of utility assistance funds awarded to low-income households—that led to the PSC’s decision to issue the moratorium in mid-July on ESCO enrollments and renewals of low-income households.

The original intention behind opening up the energy services market to the retail market, according to the PSC, was to create competition that would spur innovation, particularly in energy efficiency services. However, according to this most recent PSC announcement, retail markets were not providing sufficient competition or innovation. Additionally, the PSC found that, despite efforts to realign the retail market, customer abuses and over-charging persisted. Since 2014, retail marketers have continued to rely on door-to-door sales and have overcharged customers about $820 million more than traditional utilities would have billed for energy.

In the new notice, the PSC proposes to investigate the issue further and is giving interested parties the opportunity to give evidence and testimony regarding the issue. To ensure customers receive valuable services and pay a just and reasonable rate, the PSC will consider whether ESCOs should be completely prohibited from serving their current products to the mass market or whether ESCOs should be required to offer value-added energy efficiency and energy management services as a condition to offering commodity services. The deadline for pre-filed testimony and exhibits is April 7, 2017.

Sources: LIHEAP Clearinghouse, New York Public Services Commission, Media Reports