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New York AG, UIU Seek "Immediate" Prohibition on ESCO Service To Mass Market Customers; PULP Seeks Complete Mass Market Prohibition

AG, UIU Seek Mandatory Standard Contract For All Mass Market ESCO Sales

September 18, 2017

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Copyright 2010-17
Reporting by Paul Ring •

The New York Attorney General and New York Utility Intervention Unit filed joint testimony in the New York PSC's retail energy mass market review proceeding seeking an "immediate" prohibition on ESCO service to mass market customers

In separately filed testimony, the Public Utility Law Project also said that a complete prohibition of ESCO service to mass market customers is necessary

PULP presented calculations showing, "From 2014 – 2016, residential utility customers, a group comprised of both LICAAP [low-income] and Non-LICAAP customers, paid $1,166,818,720, or 12.9%, more for ESCO service than they would have paid for supply from a utility provider."

Note this data differs slightly from a comparison over the same period cited by Department of Public Service Staff in Staff's testimony, which was $1,193,039,078

PULP noted that the $1.2 billion figures included ESCO customers who saved money. PULP calculated that certain ESCO customers collectively saved $227 million over the period, while the remaining ESCO customers paid, in aggregate, $1.4 billion more than default service, resulting in the net premium of about $1.2 billion

PULP further said that, on average 1,545,274 ESCO customers incurred more cost for their energy supply each month from 2014 - 2016 than they would have if they had just stayed with their utility. "The small minority that saved money averaged 461,250 monthly," PULP said

For those LICAAP customers overall who incurred extra cost, the average monthly amount of extra cost incurred was $25.06, or 23.2%. For those who saved, the average monthly amount of savings was $13.67, or 12.1%, PULP said

"In all 36 months of the three-year period from 2014-16, residential customers who obtained their energy from an ESCO incurred a net extra cost over what they would have paid had they obtained their supply from their utility. There was not a single month when a net savings to residential ESCO customers was achieved. Net extra cost ranged from a low of $10.1 million in January, 2014 to a high of $57.3 million in March, 2015," PULP said

PULP also presented data concerning which ESCOs were responsible for overcharges, and concluded, "The significance of this situation is this: the burden of extra cost being incurred by residential ESCO customers is not the result of a select group of 'renegade' smaller ESCOs offsetting the benefits to customers of an 'established' group [Tier 1] of ESCOs constituting 90% of the billing and customers by ESCOs in the State. Rather, customers of these largest ESCOs comprising 90% of the market are suffering a burden even worse than customers of the lower tier ESCOs comprising Tier 2. Put simply - while the extra cost burden on customers of Tier 2 ESCOs is, as a group, terrible; the burden on Tier 1 customers is deplorable."

PULP said that about 10-15% of ESCOIDs (e.g. individual ESCOs) provided any net savings to their customers from 2014 – 2016.

PULP identified four ESCOs -- ESCOIDs #51, #55, #123 and #161 -- that provided net savings to their residential utility customers every year from 2014-16.

While the identities are subject to protective order, PULP recommended that the Commission study the operating characteristics of these four ESCOs to determine which aspects of their business model(s) could be applied to any reformed framework for retail energy choice in New York State.

In separately filed testimony, the UIU and the NYAG recommended that the PSC place a prohibition on ESCOs’ service to mass market customers, effective immediately, unless and until the additional consumer protection measures are put into place.

"The PSC may consider including an opportunity for ESCOs to petition for a waiver of the prohibition and seek permission to continue serving mass market customers if they offer a guaranteed savings program, provided ESCOs meet the assurance criteria set forth in the PSC’s December 16, 2016 Order Adopting a Prohibition on Service to Low-Income Customers by Energy Service Companies," UIU and the AG said.

Among the proposed consumer protections offered by the AG and UIU is requiring that all ESCOs utilize a standard contract for energy commodity service to mass market customers, "so that consumers can easily compare the contractual terms and understand the difference between offerings."

The AG an UIU support a prohibition on door-to-door marketing and proposed "checks" on outbound telemarketing, such as recording the entire call

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