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NY PSC Staff: Low-Income ESCO Customers Paid $96 Million More Than Default Service From 2014 To June 2016

November 21, 2016

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Copyright 2010-16 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

An analysis by New York PSC Staff filed with the Supreme Court for the County of Albany indicates that low-income customers served by ESCOs in aggregate paid $96 million more than what the cost would have been under default service for the period January 2014 through June 2016.

In opposing a preliminary injunction and extension of a current temporary restraining order against implementation of a PSC-ordered moratorium on ESCO service to low-income customers, a PSC Staffer said in an affidavit filed with the court that, "I believe low-income customers have been, and will continue to be, materially harmed via their participation in ESCO agreements if the moratorium is not reinstated."

PSC staff estimates that there are approximately 7 million residential electric customers and approximately 4.5 million residential gas customers in New York State. Approximately 13% of residential electric customers receive ESCO commodity service, while 16% of residential gas customers receive ESCO commodity service. Further, approximately 9% of the residential electric and 10.6% of the residential gas customers are participants in their incumbent utility low-income programs (low-income customers). Of those low-income customers, approximately 19% of electric customers and 15% of gas customers take ESCO service.

In the affidavit, PSC Staff said that the data indicates that for the 30 months ended June 30, 2016, New York State residential (and in some instances small commercial) utility customers who chose to take service from an ESCO paid nearly $817 million more than if they instead elected to take commodity supply from their incumbent utility. Similarly, low-income customers who chose to take service from an ESCO paid almost $96 million more than residential customers that elected to take commodity supply from their utility for the same period.

ESCOs have criticized such comparisons in the past for ignoring any value-added services provided by ESCOs with the commodity, as well as due to timing or reconciliation issues (see further discussion here)

According to PSC Staff, as of June 2016 Consolidated Edison Company of New York, Inc. (Con Edison) reports that 103 ESCOs provide electric commodity to approximately 490,000 customers and 93 ESCOs provide natural gas commodity to approximately 165,000 residential customers in its service territory.

A recent PSC Staff bill analysis comparing the total bills of these customers to what they would have paid had they taken commodity supply from ConEdison shows that the customers collectively paid $269 million more during the period January 2014 - June 2016 as they took commodity service from an ESCO. Similarly, for just the first two quarters of 2016, ESCO customers were billed nearly $44 million (16.8%) more than what Con Edison would have billed these customers if they had remained full service utility customers. A similar calculation for low-income customers indicated that for the period January 2014 through June 2016, ESCO customers were billed $41 million more than they would have been billed if they had taken service from ConEd, and for the first two quarters of 2016, ESCO customers were billed over $7 million (18%), more than if they had remained full service utility customers, PSC Staff said

At Niagara Mohawk, where there are approximately 235,000 electric and approximately 88,000 gas residential ESCO customers, PSC Staff said that for the period from January 2014 - June 2016, ESCO residential customers were billed over $175 million more as they took service from an ESCO. For the first two quarters of 2016, ESCO customers were billed over $45.5 million, or approximately 25%, more than if they had taken commodity service from the utility. During the period January 2014 - June 2016 low-income customers were billed $18.5 million, and for the first two quarters of 2016 $5.4 million, or approximately 30.7% more, as they took service from an ESCO, PSC Staff said.

At Keyspan-NY during the period from January 2014 - June 2016, residential natural gas customers were billed nearly $114 million more as they took commodity service from an ESCO than what they would have been billed for the same period if they had purchased commodity from Keyspan-NY. For the first two quarters of 2016, the approximately 179,000 ESCO customers were billed $19.3 million, or 20.4%, more. The approximately 14,000 low-income customers using ESCO services in Keyspan-NY's service territory were billed nearly $7.5 million more for the thirty months ending June 30, 2016 and nearly $1.4 million, or 23.5%, more for the first two quarters of 2016, than they would have been billed if they had purchased commodity from Keyspan NY, PSC Staff said

At Keyspan-LI, during the period from January 2014 - June 2016, ESCO residential natural gas customers were billed over $28.1 million more than if they had purchased commodity from KEDLI, and over $9 million or 27.2% more for the first two quarters of 2016. KEDLI's low-income customers served by ESCOs were billed 35% more than they would have been under KEDLI's default service for the first six months of 2016.

For the NYSEG service area during the period from September 2014 - June 2016, ESCO residential and small commercial customers were billed over $84 million more compared to what they would have been billed for the same period if they had purchased commodity from NYSEG, and over $19 million more for the first two quarters of 2016. For low-income customers, the total amount billed to customers who took service from an ESCO was greater than what NYSEG would have billed by more than $14 million for the period September 2014 through June 2016 and $2 million or 17.5% more for the six months ended June 2016.

For Rochester Gas and Electric during the period from September 2014 - June 2016, ESCO residential and small commercial customers were billed $45.5 million more as they purchased commodity from an ESCO compared to what they would have been billed for the same period if they had purchased supply from RGE, and nearly $11 million more for the first two quarters of 2016. For low-income customers, the total amount billed was greater than what RG&E would have billed by over $5 million for the period September 2014 through June 2016 and $1.2 million (13%) for the first six months of 2016.

For Central Hudson Gas and Electric during the period from January 2014 - June 2016, ESCO residential and small commercial customers were billed over $23 million more as they purchased ESCO commodity compared to what they would have been billed for the same period if they had purchased commodity from Central Hudson, and over $5 million more for the first two quarters of 2016. During the January 2014 - June 2016 time period low-income ESCO customers were billed more than $1 million more than if they had purchased commodity from the utility, and for the first half of 2016, over $260,000 or 17%.

For Orange and Rockland Utilities during the period from January 2014 - June 2016,ESCO residential customers were billed over $48 million more compared to what O&R would have billed for the same period, and nearly $15 million more for the first two quarters of 2016. Low-income customers were billed over $2.1 million and over $700,000 or 8.5%, respectively than if commodity was purchased from O&R.

For National Fuel Gas Distribution Corporation during the period from January 2015 - April 2016, ESCO residential customers were billed over $29 million as a result of purchasing commodity from an ESCO than what they would have been billed if they purchased commodity from NFGD, and over $12 million more for the first six months of 2016. For the period January 2015 - June 2016 low-income ESCO customers were billed almost $5 million more than if they had purchased commodity from NFGD and for the first 6 months of 2016, nearly $2 million, or 28.9% more.

In the affidavit, PSC Staff also said that a "significant" portion of customers were under the mistaken impression they were saving with ESCOs.

PSC Staff explained that, in response to utility letters to customers informing low-income customers of the moratorium, "some customers contacted the Department, either to the OCS call center or to the External Affairs office, to express dissatisfaction with the Commission's decision stating that they did not agree with the Orders and further that they believed that they were saving money with their ESCO."

"For each of the customers who complained to the Department, Staff requested that the distribution utilities prepare a bill analysis to show what the customer was billed for ESCO commodity and delivery, to what the customer would have paid for commodity and delivery if both were provided by the utility," PSC Staff said

"Eleven customers that believed they were saving money with their ESCO were in fact billed 5.6 % more on average for electric and 28.2% more for gas service than they would have if they had taken commodity and delivery service from their incumbent utility. This small sample highlights that a significant portion of customers are under the mistaken belief that their ESCO is providing them with savings when in fact they aren't," PSC Staff said

See the charts below for the PSC data:

PSC Data

Corrected NYSEG Data

Explanatory Notes

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