In the last few years, many states have begun to rewrite the rules to increase competition among electricity producers. Other states have been studying the issue.
The basic idea is to deregulate the generation of electricity and allow consumers to choose where they buy their power (as they can choose their long-distance phone company). Local utility distributors would continue to deliver the power, for a fee, over their lines.
This form of deregulation is being decided on a state-by-state basis. Each state faces a different energy situation and is taking a different approach. In general, areas with high electricity rates (like California and the Northeast) have been the first ones to move in this direction.
Electric Competition Information
The New York State Public Service Commission (PSC) has opened the State’s electric industry to competition. Changes in the electric market will allow customers to choose their supplier of electricity.
The PSC recently approved utility plans that give electric customers access to new energy suppliers known as energy service companies, or “ESCOs.” The plans require the utilities to offer retail choice to customers who want to shop for electricity and related services. The delivery of electricity to homes and businesses, however, will remain the job of the local utility and continue to be regulated by the PSC.
In a competitive market, electricity prices should be lower than they would be under government regulation. Competition should also produce innovation and new technologies that promote new services. You as a consumer, and the state as a whole, will benefit.
More than a million business and residential customers in New York State are now purchasing their electricity and natural gas from an energy service company (ESCO).
Learning about the competitive energy marketplace, and how to take advantage of it, requires understanding of some basic information.
Your energy bill consists of two parts – supply and delivery. You can purchase your energy supply from either an ESCO or your local electric or gas utility. The delivery portion of your energy service will continue to be provided only by your distribution utility.
There are many ESCOs providing a wide variety of “products” and price options. Some provide long-term fixed prices; others offer variable rates that change with market conditions; others give the option for customers to lock-in a rate during certain peak months of energy use. Some ESCO service is provided at a variable price on a month-to-month basis that can be cancelled at any time. In other cases, ESCOs require customers to enter into a contract for their purchase of electricity and natural gas. In some instances the contract requires the customer to commit to purchasing its energy from the ESCO for a specified period of time. The consumer selects the choice that’s best for them.
ESCOs must take the following steps before offering customers energy including:
Demonstrate they are a certified business registered with the New York State Department of State;
Meet the Public Service Commission’s eligibility criteria, including the filing of their standard customer contracts and disclosure statements;
Establish a complaint handling procedure which is consistent with the New York State Home Energy Fair Practices Act (HEFPA).
Provide financial information to the local utility company to fulfill required credit-worthiness standards.
Before choosing an ESCO you should:
Compare prices and services offered.
Review terms which may cover special fees, deposits, renewals and switching procedures.
Consider customer service features including complaint handling, hours of operation, and toll-free numbers.
Research the company’s background. You may want to know how long the company has been in business, the company’s location or if it is affiliated with a utility or any other company.
Always review the terms and conditions before committing to an ESCO offer.