New York ESCO Says Broker Fees "Often Higher Than Hypothetical Margin" Of ESCO, Up to 5x Higher

August 29, 2023

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Copyright 2010-23 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

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In recent comments to the New York PSC, EnergyMark, LLC stated, "EnergyMark and other ESCO’s have noted Energy Broker and Consultant fees that are often higher than the hypothetical margin (before associated physical and financial risks) of the ESCO on a given opportunity -- sometimes 3-5 times higher."

EnergyMark's comments were made in the New York PSC's broker licensing proceeding, as EnergyMark stated that, "EnergyMark is in full support of the registration of Energy Brokers and Energy Consultants, and is in support of the disclosure of Energy Broker and Consultant fees[.]"

"While there are many good actors in the Energy Broker and Consultant marketplace, there are also some that attempt to portray the ESCO industry as predatory and anti-consumer. They do so while operating in a gray market, hiding their fees, and at times stating a 'no cost' to consumer value proposition as they are paid by the ESCO awarded their deals," EnergyMark alleged

"EnergyMark recognizes that some brokers/consultants may be performing services beyond an electricity or natural gas bid which they may be including in their fee on a gas or electric contract, but disclosure of this fee allows the customer to properly evaluate the cost of the services they are being provided and make their own decision about the value of the services," EnergyMark said

EnergyMark said, "Certain stakeholders in the Energy Broker and Consultant community have suggested that ESCO’s should be obligated to disclose their fees. Unlike an Energy Broker or Consultant whose margins are contractual guarantees of payment whether a profit is realized or not by the supplier, ESCOs can only assume a hypothetical margin based on the information available at the time. Hourly, daily, monthly, or annual fluctuations in customer usage, utility tariff changes, market movement, transmission constraints, and most damaging -- customer payment default, can occur during the term of the agreement, and can eliminate the ESCO’s projected margin. Fee disclosure for brokers and consultants is already prevalent in industries like insurance and real estate, where a 'broker fee' is uniformly stated on a policy or contract. It is important to note, that Energy Brokers / Consultants are selling a service, whereas ESCO’s, in addition to providing a service, are taking title of, and selling a commodity, subject to financial and physical risk."

EnergyMark alleged, "EnergyMark has seen an increase in misleading and improper tactics from some Energy Consultants and their representatives in the last several years."

EnergyMark alleged that some examples of these misleading sales practices include:

• "Unregistered door-to-door sales"

• "Misrepresenting themselves as a representative of the utility or current supplier to obtain copies of invoices"

• "Bait & switch and aggressive sales tactics"

• "Unauthorized enrollments of customers"

EnergyMark said, "These practices harm consumer faith in the energy supply industry and will continue if NYS does not require registration and accountability. Consumers should have an opportunity to hold companies that use these deceptive practices accountable through PSC complaints and enforcement. Therefore, we believe the registration process and fee disclosure will help reduce these anti-consumer tactics from certain Energy Consultants."

In separately filed comments, Electree LLC also used the broker registration proceeding to renew its previously reported (story here) calls for a utility price to compare to be listed on every utility bill, including utility consolidated bills of shopping customers

Electree said, "While a direct invoice from Con Edison provides clear insights into the supply cost per kWh, this clarity wanes when consumers opt for alternative suppliers. The current method to decipher this cost is not only labyrinthine but is devoid of pivotal information, thereby stifling the spirit of competition. It's disconcerting to note such an intricate methodology, necessitating a myriad of calculations absent from Con Edison’s official portal."

Electree said that, for customers who do not have a price to compare on their bill, the process to determine a price to compare, for ConEd residential customers, is, "inordinately challenging[.]"

Electree said that, to determine a ConEd residential price to compare, customers must: engage ConEd's online market supply charge calculator for the specific dates; factor in a multitude of adjustments, tariffs, taxes, and surcharges, and navigate "ambiguous guidelines on prorating components, decimal accuracy, and date inclusions/exclusions amidst overlapping billing intervals."

Electree said "This cumbersome system patently undermines a consumer's ability to make enlightened choices. At Electree LLC, we staunchly believe in a consumer's right to unambiguous, accessible information without delving into intricate computations or elusive data. We ardently propose that the NYPSC obliges Utilities to consistently highlight the comparison supply price on every invoice, drawing parallels with the New Jersey Board of Public Utilities. Furthermore, Utilities should integrate a user-friendly residential supply charge calculator online, enabling consumers to seamlessly ascertain the comprehensive rate per kWh, encompassing all supply elements."

Case 23-M-0106

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