NOTE. The comments herein focus on residential multiple dwelling properties in the lower New York area.
Deregulation allows you the choice of continuing to purchase the commodity of gas or electric from your utility (LDC – Local Distribution Company, Con Ed, LIPA, NGRID, etc..) or from an independent Energy Service Company (ESCO). Regardless of your choice the delivery of that commodity will always be done by the LDC. What is not common knowledge is that even before deregulation the delivery portion was the only portion of the LDC’s rates on which it made profits. The commodity was passed off one for one. The delivery charges were and continue to be regulated by the Public Service Commission to yield a specific profit for the LDC. Therefore, the LDC has no interest in your choice of commodity providers. It will make the same profit whether you purchase its full service (delivery and commodity) or whether you use it for delivery only.
SHOULD I PURCHASE FROM AN ESCO?
Purchasing from an ESCO has its pluses and minuses. Knowing exactly what the LDC charges for commodity is almost impossible to decipher. Therefore, it is extremely hard to compare costs. ESCO’s use this to their advantage by claiming that you will save. In addition, we find that ESCO billing is often problematic and their customer service departments are not consumer friendly. ESCO’s, unlike a LDC, do offer fixed pricing which many properties like because they can fix their budget. However, that does not mean you will save money.
Before considering an ESCO’s offer you should download the Public Service Commission’s latest “Consumer Complaint Statistics”. They can be found at http://www3.dps.ny.gov/W/PSCWeb.nsf/All/448C499468E952C085257687006F3A82?OpenDocument. A review of these statistics will give you insight into a specific ESCO’s customer service.
URAC clients can obtain monthly reports of the commodity costs giving them the information they need to make an educated decision – click for example
NOTE – For the most part, URAC does not recommend that the average client purchase from an ESCO. We have found that, in time, over ninety percent (90%) of ESCO billing has resulted in the customer paying more for service. “Buyer Beware” is good to remember if you are considering this option.
ESCO SAID I WILL SAVE MONEY!
I cannot tell you how many phone calls I receive from clients that were approached by an ESCO which claimed they will save money. Everyone wants to believe that they can save money and ESCO’s thrive on this misplaced belief. If you do due diligence and constantly monitor pricing and also have some luck predicting the market you might save money. However, if you just sign up with an ESCO and never do any research or compare pricing against the LDC you will most likely overpay and not even know it. My advice is to make the ESCO put in writing that they “guarantee” a savings “each month”. ESCO’s always make the claim but will not put it in writing. What does that tell you? Bill Sanderson, a writer for the NY Post, wrote an article on October 14, 2012 titled “Warning to power switchers”.
THE ATTORNEY GENERAL FOUND DECEPTIVE PRACTICE OF PROMISING SAVINGS
NEW SALES TAX LAW FOR NEW YORK CITY ACCOUNTS
Effective August 1, 2009 the delivery portion of accounts located within NYC is no longer sales tax exempt. Other areas of New York still receive this exemption.
PSC DOES NOT REGULATE ESCO’S
In PSC Case 09-G-0289, August 23, 2010, the PSC clearly confirmed that ESCO’s can charge whatever they want and are not subject to PSC supervision. It stated “.. it is well understood that we lack authority to regulate the rates that an ESCO charges any customer (residential or nonresidential). Therefore, neither an informal hearing officer nor the Commission may determine that an ESCO’s charges to its customer is improper.”
HAVE YOU SAVED? (UPDATED 7/7/17)
As of early 2017 Con Edison’s website, if it bills for the ESCO, will provide you with an analysis of whether or not you saved. Log into your account, select one of your accounts, and then click on the “ESCO Bill Comparison Tool”. It might amaze you as to what you find. In the alternative, URAC can always provide an independent analysis of whether or not you saved by purchasing from an ESCO (within Con Edison, NGRID-Brooklyn, LIPA, or NGRID-Long Island). These reports vary in cost but on average one standard rate account for an annual period costs $250.00. Specialized or problematic accounts might require a different fee which will be discussed if you are interested. A customer must provide the billing by the LDC and the ESCO for us to do the comparison. Some information might be available on-line. See a sample report.
GET A BREAKEVEN POINT REPORT IF YOU ARE ENTERTAINING AN ESCO’s OFFER
URAC can provide an independent analysis which will detail the last year’s costs for your specific account showing you the breakeven point for the commodity of gas or electric. You can then use this information and compare it against any ESCO offer. It is a powerful tool if you intend to deal with ESCO’s. These reports vary in cost but on average one standard rate account for an annual period costs $250.00. Specialized or problematic accounts might require a different fee which will be discussed if you are interested. A customer must provide the billing by the LDC for us to do the comparison. Some information might be available on-line. Click here to see a sample.