Households with alternative energy suppliers paid $817 million … – Syracuse.com


December 5, 2016 Facebook Twitter LinkedIn Google+ Alternative Energy


One in five households in New York state buys electricity or natural gas from an independent energy service company – that growing bunch of 200 companies that are advertising for your business.

Many customers do it to save money. But it turns out they pay millions more each month than traditional utility customers, a new study by state regulators says.

Energy service companies charged residential customers $817 million more than utilities would have charged during the 30 months ending in June, according to the first-of-its-kind report.

In the Upstate territory of National Grid, alternative suppliers charged $175 million more than the utility. On average, that’s at least $16 a month extra for each residential customer of an alternative supplier.

The price comparisons, compiled in October, represent the first statewide review of household bill impacts since the state Public Service Commission opened the residential energy market to competition more than 15 years ago.

The results show that on the whole alternative energy marketers charge millions more for electricity and gas than traditional utilities. But not all energy marketers charge more.

The broad-brush study does not provide a detailed analysis of how each energy service company performs, or whether some customers pay extra because they receive benefits like renewable power or furnace repairs that utilities do not provide.

Industry representatives say the numbers are misleading.

PSC officials unveiled the price comparison in court, where they are using the data to bolster their case for reining in energy service companies, or ESCOs. After years of promoting ESCO competition with the utilities, the commission has made an abrupt U-turn and is trying to restrict the independent marketers’ ability to sell to residential customers.

“ESCO customers are still paying millions of dollars more every month than they should be paying for electric and gas services,” PSC Chair Audrey Zibelman said in July. “But this injustice will be short-lived.”

Whether the data will persuade a judge remains to be seen. In a state Supreme Court case in Albany, the PSC argues that the statewide price comparisons justify its July order prohibiting ESCO companies from selling energy to low-income customers.

The National Energy Marketers Association and three ESCOs, including Syracuse-based BlueRock Energy, have challenged the order in court. They won a temporary restraining order, pending a resolution.

Earlier this year the ESCO industry succeeded in blocking a similar PSC decision ordering energy service companies to stop serving all residential customers unless they could guarantee savings or provide renewable energy.

A judge vacated that order in July, saying it was “arbitrary” and “irrational.” State  Supreme Court Justice Henry Zwack also ruled the PSC did not provide the affected companies a reasonable opportunity to argue their position.

NEMA lawyer Jason Cyrulnick says the new PSC pricing numbers do not strengthen regulators’ case because they are “highly flawed and unreliable.”

Here’s where the numbers come from:

PSC officials asked the state’s nine major utilities to provide billing data from 2014, 2015 and the first six months of 2016. Utilities, which deliver energy to all customers, bill ESCO customers as well as their own, so they have the price information to make comparisons.

Utilities were asked to total up the residential bills from alternative suppliers, and to compare those bills to what the utility would have charged for the same energy usage.

The difference totaled more than $817 million. Each of the utilities reported lower prices than the energy service companies over the 30-month period.

But that simple assessment masked details that might be important to customers trying to decide whether to go with an alternative supplier. Among the lost details:

— Customers of some energy service companies saved money, at least for part of the time studied. The $817 million in higher bills was the net difference between customers who paid more and those who paid less.

— Energy service companies charge extra for premium products that utility companies do not offer, such as renewable energy or fixed prices. The state’s data do not indicate what percentage of higher prices were tied to premium products.

— A few energy service companies guarantee annual savings, typically 1 percent off the utility’s price. If the utility ends up charging less, the energy service company is expected to send a refund check to the customer, which would not be reflected in the utility’s pricing data.

NEMA lawyers have asked the state Supreme Court in Albany to let them examine details of the utility pricing data before the case is decided. Cyrulnick said utilities routinely seek true-up adjustments to their monthly energy supply prices, which could distort the comparisons with ESCO prices.

“Those numbers typically change,” he said.

Utilities are motivated to make their prices look good, Cyrulnick said: They stand to win back customers if energy service companies are forced to abandon low-income households, he said.

Utility rates in New York are structured to prohibit the monopolies from making a profit on energy commodity charges. They typically recover only the cost of energy supplies and derive their profits from state-regulated delivery charges, which all customers pay.

Contact reporter Tim Knauss anytime | email | Twitter | 315-470-3023

ESCO price comparison by Tim Knauss on Scribd

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