In what was seen as a major breakthrough for the retail market, the New York State Public Service Commission (NYPSC) Wednesday voted out policy statements and an order promoting further development of retail natural gas and electric competition for small consumers in the state.
The order directs the nine largest electric and natural gas utilities in the state to develop individual plans to foster the further development of retail energy markets and to file in future rate cases a detailed analysis of their costs to be allocated between the utility’s competitive and non-competitive services and products, according to a commission press release.
“I think the fact that nearly 100% of the state’s largest gas customers and 62% of the large utility-served commercial and industrial electric load are now being supplied by competitive energy services companies (ESCO) is a testament to this state’s approach to support long-term competitive markets,’ said Commission Chairman William M. Flynn. “There is more work to be done, particularly for smaller-use, residential customers.”
Flynn said the order (Case 00-M-0504) provides a road map to expanding the retail competitive market. The order was expected to be published Thursday.
“This is a very significant development for the competitive market. This is big-time,” said Craig Goodman, head of the National Energy Marketers Association (NEMA). “New York has assumed the leadership mantle, while a lot of the other states have lost direction.”
Goodman credited Flynn, who has been in office less than a year, for taking the retail initiative off the shelf. “They’ve had a recommended decision since July 2001. It was a 250-page decision representing thousands of man-days of work” from a broad variety of stakeholders, Goodman said. It was completed at about the time the Enron scandal broke with the ensuing near-disintegration of the wholesale market.
Flynn pulled it off the shelf in January 2004 and put out a request for additional comments with 14 questions to stakeholders in order to update the document. “I’ve never seen anyone in public life work this fast in getting a top team together and putting out a work product,” Goodman said.
New York “is honestly trying to get real price and technical competition down to the smallest consumer; the big guys have gotten the breaks, while residentials have gotten little or no benefit from competition,” he said, adding that it can be a model for the country because the state in a way is a microcosm of the nation with very diverse areas, cultures and utility operations. “This makes it a makes it very important bellwether state.” The policy statement calls for different solutions to fit different utilities.
Goodman pointed to the “growth kick” New York has gotten from its competitive policy so far as part of the reason for forging ahead on the residential end. “There are 60 marketers doing business in New York, with 12 new ones since the beginning of the year,” Goodman said. “That’s two or three times the number in any other state.” NYPSC has “been leading up to this” in decisions in other cases and with incentives for migration, he said, which means utilities will be able to refocus on reliability instead of the commodity side of the business.
The utilities’ cost of service analysis will help level the playing field for new competitors seeking to enter the retail market by helping them compare more accurately the pricing of their services with those offered by the utilities, the commission statement said.
The NYPSC policy statement will support:
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