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New York Staff Propose Comparison of ESCO, Default Service Costs on Bills, NiMo Supports
September 26, 2012
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Copyright 2010-
Staff of the New York Public Service Commission have recommended that Niagara Mohawk provide residential electric and natural gas ESCO customers with a comparison of competitive supply costs versus shadow default service costs, including through a notice on the monthly utility consolidated bill (Case 12-E-0201 et. al.).
"We recommend that Niagara Mohawk provide basic information to ESCO customers concerning the amount that the customer would have been billed if he/she had purchased commodity from the utility," Staff said in testimony in NiMo's rate cases.
"This recommendation is intended to provide ESCO customers with facts that they can use in making their energy supply purchase decisions, including helping ESCO customers determine what they are implicitly paying for value added services. Providing this information to ESCO customers is expected to enhance the ability of consumers to understand the benefits or costs which result from their choice to buy from ESCOs," Staff said.
"Efficient ESCOs should welcome comparisons to the utility product, because they can provide value added products at a competitive price. Many ESCOs make representations of their products versus the incumbent utility's product, so the comparison simply provides a method to verify ESCO representations after the customer has signed up with an ESCO," Staff said.
"In calculating the charges that the customer would have incurred had the ESCO customer purchased commodity from the utility, Niagara Mohawk should accurately reflect all taxes, surcharges and other adjustments that would have been applicable on both delivery and supply, had the ESCO customer been a full service utility customer in the applicable time period," Staff added.
Staff recommended that the cost comparison information be delivered in three ways: printed on NiMo monthly consolidated bills, through a web-based historical utility bill calculator, and printed on any notice of termination or notice of deferred payment agreement default.
NiMo supported Staff's recommendations.
For the comparison included on bills, the following information for both the current billing period and the most recent 12-months would be included: the amount the ESCO customer was actually billed; the amount that the ESCO customer would have been billed had energy been purchased from the utility; and the difference between the two.
Staff said that providing 12 months of data was necessary because, "Many of the ESCOs provide fixed rate or hedged products, [and] the value of these products is only seen over time. If a customer purchases a one year fixed price, it is important to look at that rate's performance over time to see its true value. A fixed rate may appear over priced during some months, but over months provide 12 good value to customers."
Staff said that the information should be presented by Niagara Mohawk, "in a manner that makes no judgment about the superiority of either the utility or ESCO's product," and recommended that the language be reviewed by Staff prior to use.
"All such information should clearly state that the ESCO product may be more expensive in instances if it includes value added services and that customers should contact their ESCOs if they have any questions," Staff said.
Staff recommended that the costs of its proposals be recovered from ESCOs and/or ESCO customers. "[T]hese costs would be incurred to enhance transparency in retail energy markets. The resulting information would benefit ESCO customers and competitive ESCOs. Consistent with fundamental principles of cost causation and recovery, ESCOs and/or their customers, who are both causing these costs to be incurred and who would be the beneficiaries of this information, should fund these expenditures," Staff said.
NiMo estimated the cost to provide the tools and communications described in the proposals to be approximately $298,000.
Copyright 2010-
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