PSC "Creates Negative Public Perceptions Of ESCO Pricing Practices"

Certain actions undertaken by the New York PSC, "create[] negative public perceptions of ESCO pricing practices," the Retail Energy Supply Association said in comments to the PSC.

RESA was specifically commenting on the PSC's extraordinary decision to mitigate Niagara Mohawk default service rates for electric customers, as first reported by EnergyChoiceMatters.com

RESA objected to the uncompetitive guaranteed cost recovery granted to NiMo for such rate mitigation.

However, RESA noted that the negative impacts on ESCOs go beyond the simply uneven playing field with respect to polar vortex costs.

"The Commission’s action also creates negative public perceptions of ESCO pricing practices," RESA said.

"As noted, ESCO customers located in the National Grid service territory will face bills that reflect the actual costs incurred by the ESCO to obtain electric supplies in January. However, utility supply customers will be provided with artificially reduced bills that reflect the Commission’s regulatory action. In this process, customers will incorrectly view ESCO service as more expensive not realizing that their bills were artificially reduced and that the deferred revenues will be subsequently recovered from customers with interest. Once again the competitive playing field is pushed in favor of the utility," RESA said.

"The capping of the February charges will also unfairly likely harm the reputation of certain ESCOs providing residential service. The Department of Public Service ('DPS') has instituted a Residential Scorecard that rates ESCOs serving residential customers by the number of complaints lodged against them with DPS during an annual period. The Scorecard process simply aggregates all complaints against each ESCO and does not differentiate between meritorious complaints and those which are without merit. Thus, any action that precipitates an increase in consumer complaints will necessarily create a worse rating for certain ESCOs. The Commission’s action in this Order will likely cause an uptick in consumer complaints against ESCOs, as customers will compare the Commission sanctioned capped utility rate against the higher market based rates associated with ESCO variable service. The ESCOs that are subjected to these complaints will have done nothing inappropriate; nevertheless, their rating on the Scorecard will suffer," RESA said.

Given the skewed default service pricing arising from the PSC's rate mitigation, RESA also recommended that the Commission should consider directing NiMo to terminate the availability of its ESCO-vs-Default Service Price Calculator commencing with February 2014 and continuing until the recovery of the mitigation credit is completed