Thursday, September 06, 2012

PULP Files Testimony in Niagara Mohawk Cases Urging Improved Low Income Rates, Tools to Compare ESCO Bills

National Grid d/b/a/ Niagara Mohawk filed new natural gas and electric rates on April 27, 2012, supported by extensive testimony and documentary evidence, available in the PSC case file for Case 12-E-0201.  The changes have been suspended pending New York State Public Service Commission (PSC) review for reasonableness and possible modification, which will take at least 11 months. In a rate case, all of a utility's rates, charges, tariffs, rules, practices and procedures are subject to review, with the utility bearing the burden to show they are just and reasonable.  PULP intervened as an active party in the rate cases, is conducting discovery, and on August 31, 2012, filed testimony urging the PSC to modify Niagara Mohawk's low income rates and programs to make natural gas and electric service more affordable.

PULP's testimony points out the severe hardships faced by low-income customers in the Niagara Mohawk service area, and reviews the current Niagara Mohawk low-income rates and modest improvements made by the utility in its rate filing.  For example, currently, gas customers' bills are reduced, for about 28,000 to 74,000 customers per month, who receive a rate reduction of only $7.50, totaling about $6 million per year.  Niagara Mohawk proposed to raise the monthly minimum gas charge to over $20, and to increase the low-income discount to $10, and no changes in its $5 per month discount for low-income electric customers. 

PULP proposes a monthly $15 minimum charge reduction and usage charge reductions for gas service, changes that would make bills more affordable for more low-income customers, and put Niagara Mohawk's low-income rate structure and programs more in line with other National Grid utilities in Massachusetts and downstate New York.  PULP also urges further changes in the rate structure to reduce charges to low-income electric and gas customers who are eligible for HEAP and other public assistance programs based on household need.

In contrast, the Department of Public Service (DPS) Staff, a party in the rate cases, filed testimony opposing even the modest expansion of low-income gas rates as proposed by Niagara Mohawk, and Staff also proposes no change in the electric rate reduction.

For at least fifteen years, deregulation, retail competition and ESCO service have been touted by the DPS as possible routes for customers to save money on their utility bills:  For example, the DPS website claims:
You could save money by shopping for lower cost power from an ESCO. It is important to compare the prices offered by any supplier who sells electricity and to know what you are signing up for.
Energy Choices - The Facts from the PSC  (Emphasis added).   PULP's testimony recommends that the PSC not rely on shopping for ESCO service as a means for customers - particularly low-income customers -  to reduce their utility bills.  Instead, PULP recommends addressing the low-income affordability issues directly, e.g., by reducing bills through low-income rates and programs, plus energy efficiency programs.

In contrast to a regulatory approach to affordability, the DPS exhorts customers seeking to reduce their bills to shop for utility bill savings through ESCO service, through its "Power to Choose" website.  To encourage customers to try ESCO service, the PSC has approved "ESCO Referral Programs" designed to shift customers ESCO service with an initial short term price discount, followed by a transition to undisclosed future rates.  Niagara Mohawk's PSC-approved ESCO referral program, "New Choices," promises "you will save a guaranteed 7% on your energy supply bills for a two-month introductory period."  Customers who want to participate in "New Choices" but who cannot decide on which ESCO to pick can be shifted to an ESCO picked for them at random by Niagara Mohawk. After the introductory period, customers are switched to a different rate, not disclosed when the contract is formed, and they have a short window of time in which to exit the program.  ESCO contracts may then provide for automatic renewal, with a short window near the end of the term for the customer to exit without penalty.  The PSC has allowed ESCO to charge early termination fees if they quit ESCO service before their contracts end, stating in an Order:
ESCOs may also continue to make offers to consumers at prices other than those reported....  Moreover, because reporting is limited to the price snapshots, ESCOs may promptly revise their offers after the snapshots are submitted....
Case 06-M-0647, et. al, In the Matter of Energy Service Company Price Reporting Requirements, Order Adopting ESCO Price Reporting Requirement and Enforcement Mechanisms (issued November 8, 2006).

Niagara Mohawk provides an example of how to compare ESCO charges with its charges for supply service, which illustrates that a customer will receive savings if they switch to ESCO service.  ESCO prices are listed at the PSC Power to Choose website, but these may not be the actual charges.  The PSC Order quoted above only requires ESCOs to file on the 5th of the month what their prices were on the 1st of the month, and the ESCO prices are allowed to be changed without public notice.  Because the ESCOs use the utility's billing and collection services, they file their price changes only privately with Niagara Mohawk, which uses those charges - and not the charges published by the PSC at Power to Choose -  to bill customers.  Thus, it is difficult to know the actual rate being charged to ESCO customers, and hard to compare what one's bill would be if one were to switch, either from full Niagara Mohawk service to ESCO service, or from ESCO service back to full utility service.

According to information provided by Niagara Mohawk in response to PULP's discovery, its customers who bought gas and electricity from ESCOs were sent 377,736 Final Termination Notices arising from non payment of charges in 2011, averaging 31,478 per month, and approximately 5,000 electric customers and 2,000 gas customers switch back from ESCO service to full utility service each month.

 In the event of a service termination for non payment of bills by a customer receiving ESCO service, the HEFPA 2002 amendments require Niagara Mohawk to offer reinstatement of service based on the lesser of charges for ESCO service or the charges it would have made had the customer not switched.  Also, the utility buys ESCO receivables for more than 99% of its residential ESCO customers. Thus,  in the regular course of business, Niagara Mohawk must have a ready comparison of what ESCO customers would have been billed had they not switched.  PULP sought information through the rate case discovery process to ascertain the utility bill impacts of ESCO service, as compared to bills that would have been issued had the customers not switched, for the most recent 24 months.

The Retail Energy Supply Association (RESA) moved to bar release of the information, arguing it is not relevant and that it is a trade secret that must be kept confidential.  RESA is a national proponent of ESCO service and its members include many of the ESCOs selling energy in New York state.  PULP filed papers opposing RESA's motion to suppress the information, pointing out that it did not mention the name or prices of any ESCOs.  The Department of State's Utility Intervention Unit also supported PULP's request and opposed secrecy of the information.  Administrative Law Judges ruled that PULP's information requests are relevant, and directed Niagara Mohawk to provide the information regarding the difference between bills to ESCO charges and what the utility would have charged for its service on a confidential basis.  This enabled parties to obtain and use the information in their testimony, pending a decision on trade secret status of the information.

PULP filed testimony addressing the impact of ESCO service on customer bills.  The redacted public version of the testimony omits the information subject to the pending ruling on its trade secret status.  In addition to urging less dependency on retail utility competition to lower bills and more direct measures to to address the affordability issues, PULP is recommending that the PSC require National Grid d/b/a/ Niagara Mohawk to provide bill calculation tools to better enable people to compare what they are being charged for service (be it ESCO service, service from a landlord, or service from another utility) with what Niagara Mohawk would charge for similar usage over the same time periods. See Utility Choices, Watertown Daily Times, August 30, 2012; Energy Competition: Reveal prices to level playing field for consumers, Syracuse Post Standard, September 6, 2012.

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