N.Y. PSC Staff Admonishes ESCOs On Pricing Benchmarks; Says Utility Price Can Always Be Used If No Alternatives Developed

During a collaborative meeting yesterday concerning the New York PSC's retail market reset order, Staff of the New York PSC admonished ESCOs for focusing on challenges presented in developing pricing benchmarks to potentially be used to allow and evaluate ESCO products in the market, warning that if no alternative benchmarks are proffered by ESCOs, the utility price can always be used.

The issue of price benchmarks and/or reference prices for mass market ESCO service is being considered in order to allow ESCOs to offer additional products other than those compliant products identified in the February 23 reset order -- guaranteed savings and 30% renewable electricity. Specific pricing benchmarks could be developed for variable price plans with energy-related value-added services, fixed plans, and fixed plans with energy-related value-added services.

ESCOs noted that the current utility default service rates would serve as a poor benchmark for a variety of reasons, including the use of prior-period reconciliations, inequitable use of certain utility assets (e.g. treatment of storage at ConEd until recent changes), and ESCOs' arguments that certain costs associated with providing a retail product such as default service still aren't reflected in bypassable rates despite certain unbundling which has occurred.

Staff said that they've heard loud and clear ESCOs' argument that the utility price is unworkable in ESCOs' view

However, Staff admonished ESCOs for calling the development of alternative pricing benchmarks complicated or unwieldy, saying that to the extent ESCOs do not propose alternatives, the utility price can simply be used.

Moreover, Staff told ESCOs that Staff will not accept a prolonged delay in identifying alternative benchmarks.

Noting that Staff and stakeholders have been addressing issues associated with high ESCO rates since 2011, Staff said that they would not be talking about the benchmark issue a year from now.

Staff intends to develop a recommendation to the Commission on benchmarks whether it is informed by proposals made by ESCOs or whether ESCOs decline to offer a substantive solution

Staff stated that they intended to make pricing benchmark recommendations to the Commission in the June and July timeframe, and said that it may publish a white paper in advance of such recommendations for comment.

"We can always use the utility price, unless you can come up with something else," a PSC Staffer told ESCOs

While certain alternatives, and their drawbacks, were discussed during the March 28 collaborative, no detailed alternative proposal was put forth. Potential avenues for further refinement include development of a wholesale index price, or use of an average retail price based on offers in the market.

A series of white papers on other retail market issues, such as bonding, may also be issued.