AARP & PULP: NYS Right to Put Brakes on ESCOs, Protect Utility Consumers

Consumer Groups Praise Regulators for Moratorium on Energy Service Company Sales to Vulnerable Customers

ALBANY, New York – AARP New York State Director Beth Finkel and Public Utility Law Project of New York (PULP) Executive Director Richard Berkley issued the following joint statement on the New York State Public Service Commission’s (PSC) order phasing in a moratorium on sales by energy service companies (ESCOs) to low- and fixed-income consumers in New York state over 60 days:

“State regulators have taken an important stand for energy affordability in New York.

“The Public Service Commission’s new order will protect New York’s low- and fixed-income utility consumers from the overcharges endemic to the ESCO industry while a court battle threatens to leave those consumers vulnerable.

“The PSC’s action comes on the heels of federal data showing that ESCOs, which were allowed into the marketplace in the 1990s to save consumers money by providing competition, have actually charged New York customers more over the past decade than traditional utility companies – 14% more on average in 2014, the highest rates in the nation.

“The PSC tried to remedy the problem in February with an order to identify and crack down on ESCOs’ deceptive business practices and requiring ESCOs to guarantee in writing that they would charge low-income, fixed-income and small commercial customers lower prices than those charged by utility companies unless the ESCO offered a product with at least 30% renewable energy.

“But courts granted the ESCO industry a temporary restraining order preventing the PSC from enforcing that order.

“AARP and PULP responded by urging consumers not to sign a contract with any ESCO unless it could prove it would save the consumer money and document that proof with the PSC.

“With the court restraining order still in place, AARP and PULP applaud Governor Andrew Cuomo, PSC Chair Audrey Zibelman and the PSC for stepping in to block more ESCO sales pitches to vulnerable consumers until the legal fight over the proposed consumer protections is resolved.”

Editor’s note: Last year, 5,044 New Yorkers lodged complaints against ESCOs with the PSC; there were 1,076 “escalated” complaints - complaints not initially resolved by the ESCO. Of those, 30% involved questionable marketing practices, 25% involved dissatisfaction with prices charged – or no savings realized, and 22% involved “slamming” - enrollment of customers without their authorization.

Recent pricing data from across the state show disturbing examples:  

• Four companies in the Hudson Valley charged more than double what Central Hudson charged for electricity, and another charged triple the utility’s rate for natural gas; 

• A New York City ESCO charged more than triple Con Edison's already highest-in-the-nation rate for electricity, and several ESCOs charged more than double the utility’s rate for natural gas; 

• Several Upstate ESCOs charged more than double National Grid's electric rate; 

• A Finger Lakes region ESCO charged eight times what Rochester Gas & Electric’s price for electricity under a variable rate plan.

The PSC’s review found several ESCOs blatantly misrepresented themselves by, for instance, having employees pretend to represent the local utility to trick potential customers into signing costly and harmful contracts. While these practices violate state rules, many consumers are unaware they were defrauded.

Contact: Erik Kriss, ekriss@aarp.org

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