Retail utility service suppliers known as ESCOs — energy service companies — argue that New York state’s continued fight against them is harmful to the state’s energy markets.
The Retail Energy Supply Association, a leading trade group for ESCOs, made the case in testimony being filed Friday with the state Public Service Commission as part of an ongoing review of the ESCO market.
“Removing ESCOs from the mass market and improving price controls would destabilize and harm the New York power market,” says a summary of RESA’s testimony provided to the Times Union ahead of its submission.
The Cuomo administration has sought to crack down on unscrupulous ESCOs in the wake of allegations that firms were taking advantage of elderly and low income customers and moving them out of cheap introductory pricing to more expensive plans.
ESCOs, or energy service companies, sell electric and natural gas supply to utility customers. Although utilities provide gas and electric supply by default, the state’s deregulated market structure allows for other companies to also sell the gas and electric supply, which the utilities say they pass onto customers without a markup.
Consumer watchdog groups say that ESCOs have often been more expensive than what the utility sells gas and electricity for, even though they market themselves as a cheaper alternative.
Groups like RESA say that isn’t really the standard, and that some customers would rather get fixed rate pricing and perhaps pay more some months than be subject to energy volatility. Utilities in general do not offer fixed price plans.
“In any competitive marketplace, there will be some customers paying more than others,” the RESA summary states.
RESA’s submission of its comments comes the day after the PSC rejected a request by two ESCOs to sell to low-income customers in New York.
The two companies, Drift Marketplace Inc. and M&R Energy Resources Corp., could not convince the PSC that they could guarantee low-income customers would save money compared to getting their supply from their utility.
“The commission prohibits ESCOs from enrolling and renewing customers who are participants in utility low-income assistance programs unless the ESCO can provide guaranteed savings to those customers,” Commission Chair John Rhodes said in a statement. “During a recent 30-month period, ESCOs overcharged low-income New Yorkers for gas and electricity by $96 million. Our work protects low- income customers, as well as all New York ratepayers. “
The PSC did approve, however, the application of Ambit Energy to sell to low-income customers in the state. The PSC had previously shut down the low-income market to ESCOs until they could demonstrate the savings.
“Unlike the other ESCOs, Ambit provided detailed information on its calculations used to determine its monthly prices,” a PSC press release explaining its decision states. “Commission staff reviewed the documents and calculations and are confident in Ambit’s ability to deliver savings. There remain several pending requests from ESCOs seeking permission to market to low-income customers. Those requests continue to be reviewed.”