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New York Says Retail Competition Failing Energy Consumers

Unbundled retail energy markets have failed to fulfill their promise of competitive rates and development of innovative energy services, particularly those that increase energy efficiency, New York regulators said late last week in announcing hearings and meetings on market reforms.

"Despite efforts to realign the retail market, customer abuses and overcharging persist, and there has been little innovation, particularly in the provision of energy efficiency and energy management services," the New York Public Service Commission (NYPSC) said in a notice issued Friday.

Energy service companies (ESCO), gas and electric, have engaged in "substantial overcharges and deceptive practices," NYPSC stated. "...[B]y obtaining testimony under oath, we will give ESCOs the opportunity to explain their pricing practices and to hear from consumers who have been harmed by these practices. We will then push ahead with reforms to ensure that ESCOs provide useful, value-added, economical services to New York consumers..."

NYPSC said it plans to consider whether: ESCOs should be prohibited from serving their current products to mass-market customers; rules applicable to ESCOs need to be modified; and new rules and products may be developed that would stimulate value-added products and reasonable rates.

The first two items are to be considered in evidentiary hearings before an administrative law judge. The third is to be considered in "collaborative meetings" with "interested parties." April 7 is the deadline for the filing of pre-filed testimony and exhibits for evidentiary hearing. NYPSC staff is expected to initiate proceedings on the third item.

Trade group Retail Energy Supply Association (RESA) said of the NYPSC investigation, "a fair and impartial review...will show clear and unambiguous benefits for consumers and the state's economy. RESA seeks to keep the competitive markets for electricity and natural gas open to all consumers. RESA intends to actively participate in this Public Service Commission proceeding to achieve that goal."

Last summer NYPSC imposed a moratorium on ESCO sales to low-income customers. The proceeding related to that matter [12-M-0476] was consolidated with two other cases relating to ESCOs [15-M-0127] and retail access business rules [98-M-1343] in the current notice. In July when the moratorium was announced, RESA objected, saying "...the moratorium would prevent low-income customers from accessing fixed-price energy offers that provide price certainty when compared to New York utilities' monthly variable rates."

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