Con Edison electric customers flee energy service companies

 

Con Edison electric customers are giving up on those folks who promise lower electricity bills.

Energy service companies — ESCOs — lost 6.1 percent of their residential customer accounts in Con Ed’s service area from May 2014 to May 2015, state data shows. The numbers are similar for other utilities in the state. ESCOs’ market share losses were especially steep in National Grid’s upstate territory, where they lost 9.8 percent of their customer accounts.

The decline in ESCOs’ customer rolls comes after several years of steady growth. The statewide data does not include tiny municipal utilities or the Long Island Power Authority.

Con Edison electric residential customers with ESCO serviceESCOs offer consumers a variety of price plans and gimmicks. Some will lock in your price, so you pay the same rate whether electricity prices go up or down. Others offer “green” power plans that promise your power comes from wind, solar and other renewable sources.

Behind ESCOs’ offers lies a sorry fact: They charge higher prices. Federal data for New York shows that in 2014, electric customers who signed up with ESCOs paid 14.7 percent more for electricity than if they stayed with the plans offered by their local utilities. The government data is not broken down by individual utility company.

ESCOs have pushed back against a Public Service Commission effort to clarify their pricing. Is that because they know they charge more?

Here’s something ESCO salespeople won’t tell you: Consumers who stick with utilities’ default plans buy electricity without any markup. Unlike ESCOs, Con Ed seeks no profit reselling the power it buys from generating plants. What Con Ed pays is what you pay. To profit, ESCOs must charge you more than what they pay generating companies.

ESCOs gripe that they can’t compete with the pricing power of Con Ed, National Grid and other big utilities. They complain that utilities have an unfair advantage — they can spread price blips over several months. ESCOs allege that happened in the bitter cold winter of 2014, when surging natural gas prices pushed New York electricity prices to record levels. Utilities’ customers paid the higher charges over several months, ESCOs say. But ESCOs say that under some of their pricing plans, they had to recover the money from their customers right away.

ESCOs opened for business in New York after the state deregulated its power markets in the mid-1990s. They’ve succeeded in helping lower commercial and industrial power prices. But federal data studied by AARP shows ESCOs have failed residential consumers for at least the last eight years.

AARP notes the average residential electric price of 22.28 cents per kilowatt hour for New York ESCO customers was 51% higher than the 14.72 cent average in the 20 states with ESCOs. AARP wants a thorough Public Service Commission probe of ESCO pricing.

Update, December 29: Ambit, a Texas-based ESCO, refunded nearly $1 million in overcharges to 1,500 New York customers, Syracuse.com reports today. Here’s an earlier story on the topic.

About Bill Sanderson

I'm a New York-based journalist, and a former reporter at the Concord Monitor in New Hampshire, the Bergen Record in New Jersey, and the New York Post. My work has appeared in The Wall Street Journal, MarketWatch.com and Politico New York. Twitter: @wpsanderson.
This entry was posted in AARP, Deregulation, energy service companies, Public Service Commission. Bookmark the permalink.

One thought on “Con Edison electric customers flee energy service companies

  1. Craig Harrign says:

    Good post – makes sense. The other side is that consumers typically purchase longer term contracts when rates skyrocket. There is a sense of complacency that occurs when rates go down or remain in place for awhile. Business folks are more attune to the changes in the marketplace, regular consumers only realize it too late. In addition they sign multiple year contracts so they dont have to “worry” about it the future. Your buying a commodity in future electrical prices and consumers fail to grasp that. There are many improvements that the ESCO’s need to bring to the table but they are trying.

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