ESCOs Oppose Release of Electric and Gas Bill Comparisons

In the 2012 National Grid (Niagara Mohawk) rate cases, the Utility Project sought discovery of any study of the utility regarding residential ESCO price comparison data, i.e., comparing what ESCO customers were charged with what they would have paid had they not switched to ESCO commodity supply service.  The response provided a study indicating that ESCO customers paid more for gas and electric service than customers who had not switched.  The utility noted in providing that data, however, that it was incomplete.

The Utility Project followed up with a discovery request for the most recent two years’ data comparing charges.  The information requested was known because utilities purchase all residential ESCO receivables and collect them as utility charges.  The utility needs the data because  if  service is suspended to a residential ESCO customer for nonpayment, the utility is required by law to calculate payment terms for service reinstatement based on the lesser of bills with ESCO charges or what bills would have been for full utility service over the period of time when the arrears arose.

ESCOs opposed release of the data requested by the Utility Project, but Administrative Law Judges overruled their objections. See  ALJs Rule that Differences Between ESCO Charges and Niagara Mohawk Charges are Not Trade Secrets Requiring Confidential Treatment, September 7, 2012.  The data provided shows that ESCO customers in general pay more for the same service than customers who did not switch.

For the 24 months August 2010 through July 2012, the data from Niagara Mohawk shows that most  bills, 84.3% for electricity and 92.1% for gas, were higher for those customers who had switched to ESCO service. Only 15.7% of electricity bills and 7.9% of gas bills were lower.  For low-income customers, 91.5% of electricity bills and 93.4% of gas bills were higher for those customers who had switched to ESCO service. Only 8.5% of electricity bills and 6.6% of gas bills were lower.  For regular (i.e., non low-income customers), 83.2% of electricity bills and 91.8% of gas bills were higher for those customers who had switched to ESCO service. Only 16.8% of electricity bills and 8.2% of gas bills were lower. The data also shows that the net extra cost incurred by ESCO customers over what they would be charged by Niagara Mohawk was $101,775,321 for electricity and $27,375,032 for gas.

Thus, over the two-year period, ESCO customers in Niagara Mohawk territory paid $129,150,353 more for ESCO service.

This data  compared all of the bills for Niagara Mohawk’s residential ESCO customers for a two year period – the sample is basically 100% of the data universe.  It is the most comprehensive data set available regarding the cost to customers when they shift to ESCOs.

This is of particular concern to the Utility Project, which seeks more affordable service for the poor,  because many low income customers who struggle with hardship to pay their utility service are induced to take ESCO service by high pressure telephone and door to door sales pitches based upon the suggestion that they will save money.  In fact, the best available evidence shows ESCO service adds to the economic burdens and hardships of many low-income customers who as a consequence of shifting to ESCO service face even higher bills, larger late charges, termination threats and actual terminations for bill collection purposes.

Some ESCOs suggested that the data obtained from Niagara Mohawk by the Utility Project — probably the most comprehensive data set in the nation — is not a representative sample.

The Utility Project unsuccessfully sought analogous price comparison data from Central Hudson in its merger case in 2012-13 and from Con Edison in its 2013 rate cases.  Utilities are required by HEFPA to make a shadow bill calculation  in order to develop down payment and deferred payment plans for ESCO customers who have not paid their bills and whose service is suspended for bill collection purposes.  HEFPA requires a suspension of service must be halted

upon the receipt of payments by or on behalf of the customer to the terminating utility such that the amount paid by such customer to the terminating utility plus the amount previously paid the terminating utility plus any other charges paid to the utility providing distribution service during the period when such customer’s arrears accrued is equal to or greater than the amount such customer would have paid if the entire utility service had been obtained from the utility providing distribution services during such period.  PSL 34.5(d).

PSC regulations 16 NYCRR § 11.9(c)(6) also require utilities to restore service to an ESCO customer terminated for nonpayment when the customer has paid or made arrangements to pay what the utility would have charged.  Unlike National Grid, Central Hudson and Con Edison claimed, in response to Utility Project information requests, they had not performed studies and did not have or could not produce the ESCO bill comparison data and refused to conduct a study.

In response to another discovery request from the Utility Project in the last rate case, Con Edison did perform a manual comparison of  the April 2013 bill of an  a 90 year old widow (who was not aware her account had been switched to ESCO service), which found that her charges were $19.07 a month more for electric and $52.32 a month more for gas than if her account had not been switched to ESCO service, totaling $71.39 more for ESCO service, in one month.

In a generic proceeding to investigate functioning of retail markets, the Commission indicated it received  more bill comparison information, including data from Central Hudson, Con Edison, and National Fuel Gas.

On January 17, 2014, the Utility Project initiated a FOIL request for PSC/Department of Public Service records of such ESCO bill comparison data.

The Records Access Officer sought the views of the ESCOs prior to releasing records.  The ESCOs’ trade association, RESA, filed a Response Opposing the Release of Information, claiming the information about their charges is a trade secret and that it should not be provided while the PSC case assessing retail markets is pending.

A ruling has not yet been issued by the Records Access Officer to decide whether the ESCO bill comparison information provided by utilities to the PSC, which includes data from other utilities who bill for ESCO charges, will be released.

Gerald Norlander

Follow New York’s Utility Project  on Twitter

Pin It

Leave a Reply