AARP, PULP: Governor Cuomo and NYS Public Service Commission stand with NYS Utility Consumers who have Overpaid by $816+ Million Over 30 Months to ESCOs

ALBANY, N.Y. – New York utility consumers have a nearly billion-dollar ESCO problem. New Yorkers who signed up with an energy service company (ESCO) paid nearly $820 million more for their power than if they had stayed with their local utility company during the 30-month period ending June 30, 2016, according to the state’s official utility regulating body.

Today the NYS Public Service Commission stated that after considerable experience with energy service to mass market customers by ESCOs, it has determined that the retail markets serving mass-market customers are not providing sufficient competition or innovation to properly serve consumers. As a result, the NYS PSC is opening an evidentiary hearing to examine measures that must be taken to ensure that these customers can pay just and reasonable rates for commodity and other services from ESCOs.

Among the measures to be considered in the evidentiary hearing include: whether ESCOs should be completely prohibited from serving their current products to mass-market customers; whether the regulatory frame work of ESCOs needs to be modified to implement such a prohibition, to provide sufficient additional guidance as to acceptable rates and practices of ESCOs or to create enforcement mechanisms to deter customer abuses and overcharging.

New Yorkers pay among the highest average residential electric bills in the continental U.S., and recent AARP NY/Siena College surveys show well over half of New York’s Generation Xers and Baby Boomers say utility costs are having a serious impact on their financial conditions.

ESCO gas customers in the National Grid and National Fuel Gas service territories paid rates to ESCOs exceeding an astounding 30% above what they would have paid their utility companies, while those in the Orange & Rockland, KeySpan Energy Delivery Long Island (KEDLI) and KeySpan Energy Delivery New York (KEDNY) territories paid over 20% more, the documents show. ESCO electric customers in National Grid’s territories paid over 20% more, while those in Con Edison’s, Central Hudson’s and Rochester Gas & Electric’s paid in excess of 15% more.

“AARP knew consumers who succumbed to appealing-sounding sales pitches by ESCOs were overpaying, but the nearly $820 million total is shocking—staggering,” said Beth Finkel, AARP New York State Director. “Governor Cuomo and the PSC are right on target by trying to clean up the ESCO marketplace and stop this charade, and that’s why we’re supporting their efforts.

“The immense amount of ESCO overcharging is appalling, and PULP joins AARP in standing with Governor Cuomo and the PSC in their fight to stop ESCOs from preying upon vulnerable New York households,” said Richard Berkley, Executive Director of the Public Utility Law Project of New York. “There is no possible reason why ESCO overcharges exceeding $27 million monthly should be tolerated, which is why PULP is supporting the PSC’s actions in Court and through the regulatory process to end the outrageous misrepresentation and overcharges perpetrated by ESCOs.”

The two groups commend the leadership of Governor Andrew Cuomo and the PSC for starting this proceeding to stop the fleecing of New Yorkers by ESCOs and a marketplace gone wrong.  About 13% of New York’s approximately seven million residential electric customers (roughly 910,000) now buy their commodity through ESCOs, as do about 16% of the state’s roughly 4.5 million residential natural gas customers (about 720,000). Nearly 120,000 ESCO electric and 72,000 ESCO gas customers participate in low-income programs.

Overcharges to residential customers by the ESCOs are listed by major utility company territory and to low-income customers in those territories between January 1, 2015 and June 30, 2016, were:

• Consolidated Edison, $269,169,398 for all residential ($41,079,285 for low-income) – and the average ESCO customer overpaid by $164.27 per year (655,000 customers)
• National Grid, $175,732,447 ($18,552,899) – (average annual customer overcharge: $216.72; about 323,000 customers)
• KEDNY, $114,001,448 ($7,466,035) – (average annual customer overcharge: $215.64; about 179,000 customers)
• New York State Electric & Gas, $86,250,711 ($14,399,273)
• Orange & Rockland, $48,287,861 ($2,123,321)
• Rochester Gas & Electric, $45,574,583 ($5,215,098) – for September 2014 through June 2016 only
• National Fuel Gas, $29,245,339 ($4,886,632) – for 2015 through June 2016 only.
• KEDLI, $28,138,897 ($1,048,114)
• Central Hudson, $23,062,745 ($1,065,237)

Contact: Jordan McNerney, jmcnerney@aarp.org