Utilities Propose Requiring Retail Suppliers To Submit Deposit for EDI Testing

NYSEG and Rochester Gas & Electric have, as part of a new distribution rate case, proposed instituting a deposit for ESCOs to perform EDI testing.

Specifically, NYSEG and RG&E propose that all new ESCOs should provide a cash deposit of $1,800, per each utility, prior to the beginning of EDI testing.

"If an ESCO applies to serve electric customers at NYSEG and electric customers at RG&E, we would charge them $1,800 at each Company. Further, if the ESCO applies as a separate gas ESCO and electric ESCO (i.e., two different ESCOs run by the same people or parent company), they would be required to pay the $1,800 for each commodity being tested," the utilities said.

If an ESCO goes into production within 60 days of completing EDI testing, the utilities will return the deposit, with no interest. However, if an ESCO does not go into production, NYSEG and RG&E will keep the deposit and apply it to their general revenues.

While "most" ESCOs who perform EDI testing go into production "soon" after testing, the utilities said that, "some ESCOs test and either wait many months or never go into production."

"In essence, the ESCO had NYSEG and RG&E use a spot in our test batch and use our testing resources (i.e., Company personnel and EDI test system) for something that never benefits customers. Customers pay for the testing setup and EDI test system through delivery rates," the utilities said.

"Customers pay for the testing setup and EDI test system through delivery rates. If an ESCO tests and then goes into production, then that ESCO can benefit the general customer population by offering supply services to everyone. If an ESCO tests and is subsequently delinquent in going into production or never goes into production, it has used resources that were funded through delivery rates. As a result, customers never obtain a benefit or may have that benefit delayed greatly," NYSEG and RG&E said.

"To ensure that ESCOs are serious, NYSEG and RG&E recommend that new ESCOs have some financial incentive, albeit a small one, to go into production and serve customers," the utilities said

NYSEG and RG&E said that National Grid charges a deposit of $10,000 for single bill ESCOs and $5,000 for dual bill ESCOs, with the deposit returned within 3 months after the ESCO begins serving customers.