ESCOs Propose "Education" of Central Hudson Customers with $500,000 Postcards Touting Utility Choice

Energy services companies ("ESCOs") are asking Central Hudson to spend approximately $500,000 to bombard its more than 250,000 residential customers with three large postcards exhorting them to choose ESCO service. In addition, they propose more bill stuffers and public relations efforts by Central Hudson to push customers to take ESCO service, including "Public Service Announcements (PSAs), guest appearances on drive-time and talk radio, and letters to the editor/advertorials outlining Central Hudson’s efforts and where consumers can find more information [about switching to ESCOs]." The ESCO proposal was submitted in a "collaborative" proceeding concerning the use of more than $800,000 of unspent customer funds left over from past programs.

PULP opposes the proposal for the following reasons:

1. There is no objective evidence that switching to an ESCO is to the residential customer's long term advantage or that it is cost effective from either a customer or total societal perspective.
Utilities Ask PSC to Keep Data on ESCOs Secret, PULP Network, November 25.

2. ESCO service may actually be less efficient and more costly, sustained by unjustifiable sales tax breaks on delivery service that prop up inefficient competition and erode governmental revenues and essential public services. ESCO Advertises 9.75% Tax Savings on Delivery Service, PULP Network, June 18, 2009.

3. In light of the harsh conditions facing customers during the recession, the Public Service Commission called for more austerity by utilities to hold costs down. See PSC ORDERS UTILITIES TO LOOK AT TIGHTENING BELTS — Utilities Have 30 Days to Develop Austerity Plans in Light of Economic Downturn, PSC Press Release, May 14, 2009. To align with the Commission's goal of cutting expenses, consideration should now be given to using the funds available to ease ratepayer burdens, either by reducing rates generally or augmenting the utility's low income programs.

4. The ESCO sales tax break is currently causing a revenue loss to the state of $150 million, plus losses to many local governments, due to the unjustified delivery service tax break given to ESCO customers. ESCO Tax Subsidies: A Hidden Cost of the New York PSC's "Retail Access" Scheme, PULP Network, January 12, 2009. In light of austerity conditions facing state and local governments, no further encouragement of switching to ESCOs should be made with ratepayer funds. The impact on state and local governments of more ESCO migration should be quantified, local governments should be notified of the revenue loss they will face if all CHG&E customers were to switch to ESCOs, and they should be given an opportunity to comment on the ESCO proposal.

5. Customers who have chosen not to switch to alternative utility service, notwithstanding a decade of entreaties from ESCOs, the PSC, and distribution utilities to do so, should not have to pay for more ESCO marketing malarkey, relabeled deceptively as "utility customer education and outreach."

6. The ESCOs' proposal does not address the need for information about the higher prices, onerous contracts and anti consumer practices of ESCOs. ESCOs Cost More -- A Familiar Experience, PULP Network, March 16, 2009. Real customer education should include the views of non-ESCO third parties, or education about how to check whether the ESCO prices are higher than the utility prices, or how to switch back to utility service. Any real educational materials should address the many problems faced by consumers who switch to ESCOs, the lack of any study demonstrating value provided to consumers by ESCO service (beyond short term promotions and a tax break on delivery service unrelated to any societal value of the ESCO service), and the cost, delay and difficulty customers often face in switching back to full service. The Commission should not approve spending customer money on ESCO outreach and "education" that ESCOs are unwilling or unable to do for themselves with their own funds.

7. The use of ratepayer funds for ESCO service "education" and promotion of deregulated ESCO service should be stopped, if not permanently, at least temporarily, until the economy recovers in the CHG&E service territory, until household incomes in the CHG&E service territory rise enough so that they can afford the added risks, costs and burdens of ESCO service and its promotion, and until economic conditions of state and local government improve enough to afford the further loss of sales tax revenues due to ESCO migration.

Update

12/24/09 - Craig Wolf, Few Central Hudson Customers Take Advantage of Deregulation, Poughkeepsie Journal, Dec. 20, 2009.