ESCOs Cost More -- A Familiar Experience

We have previously commented on the lack of transparency in the retail energy markets spawned by the PSC effort to deregulate the sale of natural gas and electricity. See PSC Makes ESCO Service Comparisons Difficult - How Can Customers Compare ESCO Prices?

A recent guest editorial at the Empire Page illustrates the continuing frustration of consumers who were gulled into trying ESCO electric or natural gas service. Typically, they decided to try ESCO service on the basis of advertisements (funded by utility ratepayers) from the PSC and utilities, and short term "teaser" discounts in PSC-encouraged "ESCO Referral Programs," only to discover, over time, they now pay more, not less.

[S]ince the ONLY reason I made this switch was to save on electricity costs, I decided to investigate exactly how much I had saved in 2008.

After carefully looking over each of my bills I came to a simply stunning conclusion: EVERY month I was paying a HIGHER electricity rate than I would have if I had stayed with National Grid. And it wasn't a small amount, as the monthly increase ranged from 20% to over 40%!
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1 - [The ESCO] initially assured me that their rates would be lower than National Grid's. That proved to be false for all 12 months of 2008.
2 - [The ESCO] said that they would guarantee me a 7% lower rate than National Grid's for the first two months of my service. That did not happen.
3 - [The ESCO] said that I would save due to not to have to pay sales tax on their supplied electricity. Turns out that I didn't have to pay it on National Grid's either, so this was a misleading, phantom benefit.
4 - The state sponsored website shows [The ESCO's] rate as being 6.75¢/ KWH. for my area. The actual LOWEST monthly rate I paid for the last year was 9.75¢/KWH, roughly 50% higher than their proclaimed rate. Again, that was the lowest, so this 6.75¢ is totally inaccurate.
5 - [The ESCO] said I would get an annual 1% rebate. That came through.
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In the meantime I had called the PSC Helpline (1-800-342-3377), and spoke to a competent and sympathetic manager (!). She did acknowledge that the data they have (e.g. rate info) is provided from the companies themselves, that they don't have the manpower to check into whether ESCO companies deliver what they promise, etc.

Notwithstanding this one good person, the bottom line here is that NYS has repeatedly shown in many areas that it has very little real interest in benefiting its citizens. Their posturing on energy issues instead amounts to promoting a bureaucratic agenda and the interests of lobbyists.

NYS and Energy: a Case Study, Empire Page Guest Editorial, Jan. 8, 2009.

Price comparison between full utility service and ESCO service is not easy

• The PSC allows some utilities to change their rates monthly
• Utilities do not post their full rate, including all adjustments and surcharges
• Utility meter reading cycles vary, so a one month comparison period may involve parts of two months and thus two different rates of the utility
• ESCO price reports at the PSC website are voluntary and unverified
• ESCO price reports at the PSC website are on a single day report which can change the next day

PULP is developing a utility bill estimator to enable residential customers who receive utility service from other providers such as ESCOs or landlords who submeter electricity to quickly check whether their bills are higher or lower than they would be if they were direct full service customers of the utility. The estimator currently calculates bills of Con Edison, Orange & Rockland, and Central Hudson.