Thursday, November 13, 2008

CLECs Lose Certificates to Offer Service for Not Submitting Tariffs, Why Not ESCOs?

Last week, the New York Public Service Commission issued an order which effectively cancelled the Certificates of Public Convenience and Necessity for 271 competitive local exchange carriers ("CLECs).

Why did the agency take such an action? Somehow, each and every one of these companies failed to file a tariff with the Commission, publicly setting out their rates, as required by section 92.1 of the Public Service Law. It was long overdue for some of these providers, which may have been certified for 10 years or more without ever submitting a tariff, but the job was done. Enforcement of the statute and regulations should be the very least we expect from the Commission.

Why, then, are Energy Service Companies ("ESCOs") permitted to provide service in New York without ever filing a tariff? ESCOs are the home energy equivalents of telephone service resellers (a type of competitive LEC which also does not own its own facilities, but merely delivers the utility service using the distribution utility's pipes. Why are telephone service resellers required to file tariffs and not ESCOs?

Sure, the simple answer is that the Public Service Law says so, but why is this so? Public tariff filing promotes transparency, discourages rate discrimination, and permits ready comparison of prices, for the same reasons we require gasoline stations and grocery stores to prominently post prices. Another is that under Public Service Law section 75, a seller of electricity and natural gas cannot collect anything from a customer in court if the rates have not been fixed by the Commission, which occurs only when the rate tariffs are filed and allowed to take effect.

A close look at the expensive PSC "Power to Choose" website that purports to facilitate ESCO price comparison shows in its disclaimer that the ESCO price information there is worthless and cannot be relied upon:
"Information contained herein is voluntarily supplied by participating ESCOs. The Department of Public Service and the Public Service Commission do not guarantee the validity of this information."
Thus, the PSC-funded website does not claim to reveal even the once-a-month prices submitted to PSC staff by ESCOs under the PSC's weak price reporting order. That required disclosure of prices once a month can be prices limited to just a few new customers on that day and then prices can be changed the next day with no filing and disclosure at all. See PSC Makes ESCO Service Comparisons Difficult. Perhaps the reason for this lack of transparency is that there is no reliable evidence that ESCO service saves customers money over time.

A quick survey of the Commission's monthly complaint statistics reveals that the lion's share of all complaints submitted to the Commission arise from ESCOs. These entities, at the moment, do not pay regulatory assessments which support the Commission's activities and are required by all other regulated utilities -- including telephone resellers. Instead of filing tariffs, ESCOs are subject to the PSC's so-called "Uniform Business Practices," which are included in the distribution utility's tariff. This places an unnecessary level of extraction between the Commission and these supposedly regulated ESCOs. Sure, they were made subject to HEFPA in 2002, when the Legislature rebuked the Commission's effort to circumvent the statutory consumer protections, but, to date, PULP knows of no instance where complaint against an ESCO was ever actually decided by the Commission.

The time has come to clamp down on ESCOs and the problems that they cause. Oftentimes, ESCO savings are illusory to the customer, customers only realize they are locked into a bad contract after the onerous early termination fees kick in. It is a mystery why the Commission continues to promote the current ESCO regime. See PSC Votes to Continue Retail Access Programs Promoting ESCO Service.

The time has come to stop the PSC's coddling of ESCOs and make ESCOs file tariffs like the regulated utilities they pretend to be and seek to compete with.

Telephone resellers have to file tariffs and so should ESCOs. We now know that the Commission means business when it requires CLECs to submit tariffs. The time has come for ESCOs to take responsibility as well.

Lou Manuta

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