Think Twice Before Switching Your Electricity or Natural Gas Supplier

What is an Energy Service Company (ESCO)? 

A sample bill for Con Edison residential customers.

Every utility bill has two portions: supply and delivery.  

  • Delivery rates are set and regulated by the Public Service Commission (PSC) through public proceedings called rate cases.  
  • The supply side of a utility bill is not regulated and is simply passed through to you, the ratepayer, at cost.  

New York deregulated its energy market in the 1990s and introduced third-party suppliers, or energy service companies (ESCOs), to the marketplace in the hope that competition would help lower rates.  

Consumers have the choice to buy electricity or natural gas “supply” from an ESCO rather than their local utility. Electricity or natural gas service is still delivered by their local utility.  

The historic problems with ESCOs… 

Many ESCO marketers entice unsuspecting utility customers with promises of “guaranteed savings” on their utility bills.

In many cases, customers that sign up with ESCOs often end up paying more compared to their local utility company, especially after any introductory rates expire.  

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 a 30-month period
ending June 30, 2016, a PSC analysis found. 

Many consumers across NY have complained, and continue to about deceptive and misleading marketing practices: 

  • Overstated savings; 
  • Excessive termination fees; 
  • Not providing translations of contracts and other papers;  
  • “Slamming” (being transferred to an ESCO without authorization); and   
  • Pretending to be from “the utility” and there to help them. 

Other common complaints relate to billing problems and poor customer service generally. 

What to do if you want to terminate your relationship with an ESCO… 

Start off by contacting the ESCO directly and inform them that you no longer want them to supply your electricity or gas.  

  • Note: some ESCOs require one- to two-year contracts, so termination fees may apply.

If you believe that your account was fraudulently transferred to an ESCO you can file a complaint with the Department of Public Service at: 800-342-3377  

  • Ask the individual to confirm that their name appears on the utility bill.