It’s been 18 years since New York embarked on its policy of giving consumers a choice of electricity and gas suppliers – and only now is the state planning to offer a reliable way to compare prices among different energy companies.
At its Feb. 20 meeting, the Public Service Commission gave Con Edison and other utilities six months to set up Web pages that allow customers to compare prices among energy service companies, or ESCOs. The commission also required ESCOs to file historic pricing information, which it plans to compile and publish itself.
With electricity and gas prices at record levels this winter, NYP&L readers are asking whether switching from Con Edison’s default service to an ESCO might save them money.
If price is your main consideration, you’re probably better off sticking with Con Ed’s default service. The only study ever done in New York to compare ESCO prices with a utility’s default plan found that ESCOs usually cost consumers a lot of money.
But I must use the word “probably” in suggesting you stay with utilities’ default plans. That’s because there’s now no reliable data on how much ESCOs charge. The PSC admits, in an order published Feb. 25, that “neither buyers nor sellers have good information about prices” and that the retail markets for residential consumers “cannot be considered to be workably competitive.”
The state hopes the utilities’ new Web pages will solve this problem.
According to the state’s current ESCO Web site, www.newyorkpowertochoose.com, Con Edison’s default price for a kilowatt hour of electricity in January was 23.17 cents. This is only the supply price, and does not include the delivery rates, which are a separate item on your bill.
Other companies offering service to Manhattan residents on the site are at the moment advertising higher prices than Con Ed’s default price. One, ABN Energy, charges 27.9 cents per kilowatt hour; another, Amplified Power & Gas, charges 30 cents.
Many companies say they charge less – but there’s usually a catch. Agway Energy says it charges 8.9 cents per kilowatt hour – but that’s an introductory rate. There’s no way to be sure what Agway will charge after the first month. Other companies offering low introductory rates are American Power and Gas, which charges 9.1 cents for a kilowatt hour, and NRG Energy Solutions and Spark Energy, which both advertise prices of 9.9 cents. What these companies charge after the introductory period is anyone’s guess – if you sign up with them, you’re taking a chance.
The information on the state’s Web site is sometimes unreliable. According to the state’s site, Perigee Energy offers fixed-price contracts to Manhattan residents ranging from 10.9 cents per kilowatt hour for a six-month plan to 12.29 cents per kilowatt hour for a 12-month plan. But on Perigee’s own Web site, the pricing is different – from 11.5 cents for an 18-month plan to 11.95 cents for a 12-month plan.
Whichever site you believe, Perigee’s advertised prices are about half what Con Edison charged in January. But if gas and electricity prices revert to normal in the next few months, Perigee customers will find themselves overpaying. In April 2013, Con Ed’s default plan hit a low of 7.7 cents per kilowatt hour on one customer’s bill. That’s more than three cents lower than Perigee’s lowest rate.
If you want to gamble on Perigee’s fixed-rate plan, consider this other catch: The company will charge you a cancellation fee of up to $100 if you back out of the contract. That’s not unusual – other companies charge up to $150 for cancellations.
Energy service companies are growing quickly in the state. According to a PSC report issued in December, ESCOs have a 26 percent market share among residential electricity customers in Con Edison’s territory, and a 24 percent market share statewide. Statewide, ESCOs grew their customer rolls by 22 percent from July 2012 to June 2013. Despite their generally higher prices, ESCOs’ customer rolls will surely grow even more as desperate consumers seek ways to escape high energy bills.
Some ESCOs lure customers by offering “green” energy from wind and solar sources. Others draw business with rebate plans, gift cards and other gimmicks. And some have relied on aggressive door-to-door selling – which the PSC’s Feb. 25 order seeks to curb with several new rules [see pages 27 to 31], including requirements that salespeople carry more ID and that companies hire independent contractors to verify customers’ wishes.
There’s evidence that deregulation has raised electricity prices for Con Edison customers, who pay the highest rates charged by any big-city electric utility. But deregulation is here to stay – state officials remain committed to the idea. The PSC’s push for more ethical sales practices and transparent pricing is its latest gambit to make the policy work.
For more on this topic, check this post on the Public Utility Law Project’s Web site.
Update, April 28: See my story on this topic on Capital New York.