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AARP Urges NYers to Reject ESCOs; End to Delay in Probe of High Prices

Posted on 07/10/17 by Stacey Kratz, AARP New York

AARP has filed a letter urging state administrative law judges to reject the latest maneuverings by New York’s Energy Service Company industry to continue delaying a state inquiry into their deceptive marketing practices and false promises of savings.

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AARP and the Public Utility Law Project of New York (PULP) also encouraged consumers to avoid signing up with energy service companies (ESCOs) in the interim.

“AARP is urging its members and all New Yorkers to refrain from signing contracts with ESCOs until state regulators can basically ensure that the industry matches or beats the prices of established utility companies,” said AARP New York State Director Beth Finkel.

“Time is money. As every day passes and ESCOs continue marketing, more vulnerable New Yorkers sign contracts and wind up facing energy costs they can’t afford,” continued Finkel.

“PULP is similarly urging residential consumers to avoid taking service with ESCOs,” said PULP Executive Director Richard Berkley.

Federal data shows ESCOs charged residential electric customers 22 percent more, on average, than traditional utility companies did in 2015 – up from 14 percent more in 2014.

The state’s utility-regulating Public Service Commission (PSC) launched an evidentiary hearing last December into ESCO practices and prices that harm consumers, but ESCO industry lawyers have already delayed the hearing from proceeding – postponing any resolution to New York’s ESCO crisis by approximately two months so far, with ESCO requests for at least another two months’ delay currently being considered by the PSC’s administrative law judges.

“Every additional day that ESCO reform is delayed, more seniors are put at risk of paying too much for energy services,” Finkel wrote in the letter to PSC Administrative Law Judges Ashley Moreno and David R. Van Ort. “We hope that you order no further delay in this matter beyond what is absolutely necessary.”

AARP is also applauding the ruling last week by State Supreme Court Judge Henry Zwack to uphold a separate moratorium established by Governor Andrew Cuomo and the PSC prohibiting ESCO sales to low-income New Yorkers, first issued nearly a year ago.

A PSC analysis found New Yorkers who signed up with an ESCO paid nearly $820 million more for their power than if they had stayed with their local utility company during the 30-month period ending June 30, 2016.

“As Justice Zwack said in his June 30th decision upholding the PSC’s power to ban ESCOs from serving low/fixed-income consumers, ‘… the ESCO market is in need of immediate reform to protect low-income consumers,’” PULP’s Berkley noted. “PULP, with our colleagues at AARP, have been fighting the ESCOs’ innumerable delays, because every month’s delay in court or in the State’s inquiry into ESCO practices costs residential customers millions in excess energy charges We stand with the PSC and Governor Cuomo as they continue their fight to protect consumers against overcharges, deceptive business practices, and other ESCO behavior.”

ESCO gas customers in the National Grid and National Fuel Gas service territories paid rates to ESCOs exceeding an astounding 30% above what they would have paid their utility companies, while those in the Orange & Rockland, KeySpan Energy Delivery Long Island (KEDLI) and KeySpan Energy Delivery New York (KEDNY) territories paid over 20% more, the PSC’s analysis concluded. ESCO electric customers in National Grid’s territories paid over 20% more, while those in Con Edison’s, Central Hudson’s and Rochester Gas & Electric’s paid in excess of 15% more.

Overcharges by ESCOs to residential customers between January 1, 2015 and June 30, 2016 by utility service territory, according to the PSC, were:

  • Consolidated Edison, $269,169,398 for all residential ($41,079,285 for low-income) – and the average ESCO customer overpaid by $164.27 per year (655,000 customers)
  • National Grid, $175,732,447 ($18,552,899) – (average annual customer overcharge: $216.72; about 323,000 customers)
  • KEDNY, $114,001,448 ($7,466,035) – (average annual customer overcharge: $215.64; about 179,000 customers)
  • New York State Electric & Gas, $86,250,711 ($14,399,273)
  • Orange & Rockland, $48,287,861 ($2,123,321)
  • Rochester Gas & Electric, $45,574,583 ($5,215,098) – for September 2014 through June 2016 only
  • National Fuel Gas, $29,245,339 ($4,886,632) – for 2015 through June 2016 only.
  • KEDLI, $28,138,897 ($1,048,114)
  • Central Hudson, $23,062,745 ($1,065,237)

About 13% of New York’s approximately seven million residential electric customers (roughly 910,000) buy from ESCOs, as do about 16% of the state’s roughly 4.5 million residential natural gas customers (about 720,000). Nearly 120,000 ESCO electric and 72,000 ESCO gas customers participate in low-income programs.

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