The New York State Public Service Commission (PSC) plans to review the programs and practices initially established to encourage market development of retail electric and natural gas access to determine whether they may have outlived their usefulness and could be allowed to expire or whether the costs of the programs could be shifted from ratepayers to market competitors.

"Continuing to burden ratepayers with the costs of programs or practices promoting market development may be of questionable value, if the removal of obstacles to entry and market development has been achieved," the PSC noted.

PSC Chairwoman Patricia L. Acampora said there currently are more than 100 energy service companies (ESCO), "including many companies that are large and well-capitalized, [that] are eligible to do business in New York. These ESCOs serve more than 1.3 million customer accounts, with about 40% of the state's electric usage and 46% of natural gas usage met by ESCOs or through other alternatives to utility supply. Programs and practices initially established by the commission to encourage market development at the inception and early stages of retail access may no longer be needed."

To promote retail access, the PSC initially prescribed programs and initiatives to identify and eliminate barriers to entry and obstacles to the development of those markets. Efforts also were made in utility rate plans to promote the success of retail markets through advertising and other ways to attract competitive providers. Consequently, the PSC noted that competitive markets have grown substantially, with an overall statewide increase in the last year of about 44% in the number of electric customer accounts moved to ESCOs (a 15% increase in load) and an 18% increase for natural gas customer account movement (a 4% increase in load).

Among large time-of-use metered electric customers, 74% of statewide electric usage is served through the retail marketplace, and for large natural gas customers, 83% of statewide gas usage is supplied by nonutility sources, the PSC noted. In the past year, these figures represent a 6% increase in large electric customer movement (a 12% increase in load), and a 13% increase in large natural gas customer movement (a 12% increase in load).

The commission also noted that mass market customers are trying retail access in increasing numbers. Statewide, ESCOs now serve about 11% of the residential electric customer accounts in New York, with a penetration rate for residential customers reaching as high as 37% in one service territory, and with only one utility service territory falling substantially below the 10% figure. For natural gas customers, the statewide residential penetration rate is approaching 10%, with migration below 1% at only two of the 11 gas companies offering retail access.

In the past year, the PSC said the statewide increase in residential electric customer movement is 55% (a 41% increase in load), and the increase in residential natural gas customer movement is 19%, although overall load decreased.

The PSC is seeking proposals to modify the existing retail access programs and practices to better align the programs and practices to the current state of market development. Additionally, the PSC said it could consider changes to proposals in future rate proceedings with the understanding that it may be necessary to defer to the generic process in reaching a decision on any particular policy or program. Consideration in rate cases would allow the PSC "to respond rapidly where a proposed modification to a retail access program or practice would clearly prevent subsidization of competitors or benefit ratepayers."

Proposals on Case No. 07-M-0458 may be submitted to the PSC until June 7. Reply comments may be filed until June 27. For information, visit the website at www.dps.state.ny.us.

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