New York Attorney General Would Effectively Ban Fixed ESCO Pricing to Low Income Customers

The Attorney General of the State of New York has proposed regulations to the PSC that would effectively prohibit the offering of fixed rate energy contracts by ESCOs to low-income customers.

The AG's recommendations came in the PSC's ongoing retail market investigation.

"The PSC should ... require ESCOs to guarantee low income consumers that they will not pay the ESCO more than the customers would have paid to their utility for energy commodity service," the Attorney General recommended. "Of course, ESCOs should be free to choose not to make such offers," the AG said.

This would effectively prohibit the offering of a fixed rate to low income customers, since the rate would need to be modified if it ever exceeded the utility rate in a future month. It was also unclear how logistics of this proposal would work given New York's default pricing is only available after the close of the month.

"[G]iven the limited subsidies provided by the federal HEAP grant and the inadequacy of utilities' low income customer subsidy programs to meet the full needs of low income families struggling to pay their utility bills, it makes no sense to subject these consumers to ESCOs that charge prices above those of the local utility, merely to adhere to a theoretical construct that competitive markets can produce lower prices. As shown by the analysis of ESCO bills in NiMo's territory, the stark reality today is the low-income subsidies benefit the ESCOs - not low income consumers," the AG said.

The AG noted that to implement its recommendation, "ESCOs will need the utility to identify which consumers are participants in the utility's low income rate or have used the HEAP program in the most recent heating season."

In concurrently filed comments, the joint utilities addressed logistics of identifying customers participating in, "any state or federal energy assistance program, such as the Home Energy Assistance Program, or in any utility-sponsored affordability program," a delineation the PSC had offered in a question to stakeholders.

"Unless the scope of assistance programs is narrowed, the Joint Utilities believe it would be very difficult to know all the possible government programs and services customers receive," the joint utilities said.

"Administratively, it would be nearly impossible to track customer eligibility status for programs outside of current utility billing systems capabilities. Further, customer movement in and out of programs would create tracking challenges for utility staffing, and program limitations," the utilities said.

As noted, the joint utilities were addressing a broader universe of low income customers as referenced by the PSC; it was unclear if the same administrative problems would occur if identification of low income customers were limited solely to, "participants in the utility's low income rate or [customers that] have used the HEAP program," as suggested by the AG.