NYS Exposed: State Attempting to Rein in Energy Marketers

December 19, 2016 11:25 PM

ROCHESTER—If you buy electric or gas from an energy service company (ESCO), you’ve likely been overpaying.  ESCOs promise savings to those willing to switch from RG&E but in reality, customers of the 3rd party suppliers have been paying way more.  A recent study conducted by the New York State Public Service Commission shows that over the last 30 months, customers in RG&E’s service territory who switched to an ESCO ended up paying $45m more than they would have had they stayed with the utility.  

Ted Smith switched to an ESCO almost a decade ago, “the pitch was that you could save money not only on the cost of electricity or gas but also on taxes,” he recalls.  It sounded good, so he agreed and didn’t think too much of it until recently, “I looked at my bills and they appeared high so I started calling around,” he says.  He quickly realized he had been taken advantage of, “I was paying probably $1,000 to $1,500 more a year with this 3rd party than I would have had I stayed with RG&E,” he tells News10NBC.  

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Smith’s story is maddening but it’s not unique.  The New York State Public Service Commission started letting 3rd party suppliers sell energy in New York 17 years ago and since then, the market seems to have gotten out of control. 

Jennifer Lewke (News10NBC) - "Should there have been more controls in place at the beginning of this process to prevent this from happening versus now trying to clean it up?"

Audrey Zibelman (Chair, NYS PSC) - "20/20 hindsight is a great tool but yes, I think that what we've learned from this whole process is when we start markets, we really have to crawl, walk, run and the commission really should have put more constraints on the markets going in…in retrospect, we should have put more controls in place upfront, other states have done that and have had more success in certain ways with these markets."

But that didn’t happen, so now the PSC is doing a top-to-bottom review of the ESCO market.  

Audrey Zibelman - "We're not afraid of looking at this and saying it's not working. It doesn't need to just be killed, it needs to be fixed, it needs to be seriously fixed."

Jennifer Lewke - "I have been reporting on ESCOs for a decade now and we have constantly gotten complaints about their sales practices, along the whole entire way, what's different now?"

Audrey Zibelman – "I think that what’s happened is, when we began on this process…actually just about the time when I joined the commission, the commission has been ratcheting up our attempts to get controls over it."

Especially considering the statistics.  The chart below shows the number of complaints about ESCOs filed by New Yorkers 









Zibelman says if the overhaul doesn’t happen now, those ESCOs that are playing by the rules and actually could save customers money or offer them renewable options not available through the utility, will get lost in the pack.  “If we have customers that are afraid of talking to people who are offering these opportunities because they've been ripped off, our ability to get people in a position to really help themselves will be limited,” she says. 

The PSC will begin hearings after the first of the year where it will solicit sworn testimony from energy marketers and customers in preparation for what could amount to a radical overhaul of how ESCOs do business in New York State.  


Jennifer Lewke

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