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N.Y. Low-Income Assistance Report Doesn't Support Utility Fixed-Price Supply Option, Refrains From Addressing Limits on ESCO Pricing

July 14, 2015

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Copyright 2010-15 EnergyChoiceMatters.com
Reporting by Karen Abbott • kabbott@energychoicematters.com

A report from Staff of the New York PSC issued last month examining programs for addressing energy affordability for low income utility customers, including alternatives to the current disparate programs at each utility, does not recommend fixed price utility supply pricing, and declined to address limits on ESCO pricing.

A straw proposal for a uniform program would include a discount to low-income customers calculated on the basis of the total bill. It therefore includes the utility's supply costs; however, it is intended to be applied as a discount to delivery charges. Retail access customers therefore would receive the same discount; and if the ESCO supply charge is less than the utility's charge, the percentage discount is amplified (and vice-versa), Staff noted.

Notably, the Staff report did not address limits on ESCO pricing, given such issues are being addressed in another proceeding implementing PSC directives concerning conditions placed on ESCO service to low-income customers (click here for background on such conditions).

"The proper limit on the level of supply prices charged to low income customers by ESCOs is being directly addressed in the Retail Energy Markets proceeding, and we will not further address it here," the Staff report said.

The state's Utility Intervention Unit has proposed that customers should not be permitted to participate in a utility low income program unless they take full service from their utility or if their ESCO guarantees that, on an annual basis, the ESCO will not charge the customer more than what the customer would have paid the utility

The Staff report also listed a number of concerns with the use of utility fixed-price supply options as a means of addressing affordability for low-income customers.

"[F]ixed supply pricing carries a number of concerns. These include the cost of hedges required to achieve full price certainty, ease of switching and other impacts on competitive markets, and keeping utilities indifferent to whether customers purchase commodity from the utility or from ESCOs," the Staff report said

"The Straw Proposal therefore does not recommend a utility fixed price option at this time," the Staff report said

NYSEG and RGE said that a low income fixed supply price option would address the variability in monthly bills based on market price volatility.

Case 14-M-0565

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