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Paradise Lost: New York Continues Rollback of Climate Favorable to Retail Choice
October 19, 2012
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Copyright 2010-
Ostensibly in response to intense criticism of retail supplier pricing during the past two months, the New York PSC yesterday announced it will begin, "a formal proceeding to assess retail energy markets including by seeking comments addressing possible actions that could be taken by the Commission to improve the operation of these markets for the benefit of customers."
"Department staff has been reviewing the performance of the retail electricity and natural gas markets particularly for residential and small non-residential customers," said Commission Chairman Garry Brown.
The PSC noted that Staff requested and analyzed data from utilities concerning the prices charged and/or dollar amounts billed by ESCOs, in comparison with what would have been billed by the utility for the same service, and also reviewed ESCO-related consumer complaints received by the Department.
Staff reported that, "it is very difficult for energy consumers, particularly residential and small nonresidential customers, to know and compare prices of electricity and natural gas commodity services that are available from the utility and ESCOs."
Matters would note that Staff has concluded this difficulty remains some four years after the PSC required ESCOs to use a "Schumer-box"-style disclosure statement.
The PSC noted that National Fuel Gas Distribution and Central Hudson have developed online tools that allow ESCO customers to compare their costs paid under competitive supply versus a shadow-billed utility supply cost.
Staff has previously recommended that such information also appear on utility consolidated bills for ESCO customers at Central Hudson and Niagara Mohawk.
While the new review, to be addressed in Dockets 98-M-1343 and 06-M-0647, may serve only as a forum to implement Staff's recommendation at utilities without current rate proceedings before the PSC, it also opens the door for more unfavorable policies with respect to ESCO and bundled service price comparisons.
Such potential policies include a requirement that the ESCO disclosure statement list the current utility supply rate, or that the ESCO is otherwise under an obligation to inform the customer of the current utility supply rate (perhaps during the verification process, immediately after the ESCO rate is confirmed). Other potential measures include requiring ESCOs to make publicly available to all prospective customers historic pricing information, and a comparison of past costs under competitive supply versus utility supply (Since it is customer-specific, Staff's previously recommended cost comparison would be limited to customers on competitive supply and would not be available to prospective customers).
Moreover, the PSC's action is the latest in a series which have moved New York from a state which seriously considered removing the utility from the default supplier role almost a decade ago, to a state which has:
(1) Embraced (albeit in a measured manner) utility-managed hedging of default supply
(2) Put the brakes on the expansion of hourly pricing for default service customers
(3) Increasingly allocated to ESCOs the costs of any system change or implementation related to the retail market, even where ESCOs are not the cost-causers (e.g. ESCOs did not seek the change), with Staff recommending at NiMo that ESCOs be assigned the cost to develop any comparison of utility versus ESCO costs
(4) Left pending, for at least several years (and longer in most cases), of a series of retail market enhancements, including customer lists, ESCO referrals, calculation of the customer complaint rate; provision of tax data; reverse slamming; and several EDI issues.
For those new to the industry since 2009, the New York market was previously so progressive regarding retail choice that the PSC actually allowed utilities to earn incentive payments, collected via customer rates, for reaching certain choice-related milestones.
While still one of the most viable retail markets, the New York experience, after a change in administration in 2007, should serve as a stark signpost to retail suppliers evaluating the viability of markets in other states, which may currently seem on a path to favorable retail market designs, because today's climates are anything but permanent, and absent true structural market change, today's progress can be undone with the stroke of a pen.
Copyright 2010-
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