**********The comments herein focus on residential multiple dwelling properties in the lower New York area**********

BACKGROUND INFORMATION

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 minus's. 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. However, on the plus side, in 2010 we have seen customers' save on gas by purchasing from an ESCO. Albeit, very small amounts. On the other hand, customers' purchasing electricity have not, in general, done so well. In 2010-2011 electricity prices dropped. Many consumer's locked in at fixed pricing and when the market dropped they ended up paying more for electric service. This market has the same characteristics as the stock market. You have to be well informed and keep up on daily prices to make an educated decision. Even then there are no guarantees that you will pay less by using an ESCO as was the case with many consumers in 2010-2011.

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 can not 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 beleive 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?

THE ATTORNEY GENERAL FOUND DECEPTIVE PRACTICE OF PROMISING SAVINGS

The Attorney General found that an ESCO used deceptive practices by promising savings - see http://www.ag.ny.gov/media_center/2011/apr/apr20a_11.html

COMBINING YOUR ESCO BILLING WITH THE LDC BILL

The PSC has established Uniform Business Practices for utility's to follow regarding payment of ESCO amounts that are billed by the local utility company. In short the PSC has declared that any amount billed by the LDC, on behalf of the ESCO, must be paid by the consumer even if the amount is being disputed. An ESCO can tell the LDC to charge whatever they want and the LDC will require that you pay that amount or your service will be turned off. Therefore, the consumer must lay out the money while it is disputing the billing. This is contrary to present policy regarding full service customers. If you are full service customer (i.e. not using an ESCO), you are not required to pay any disputed bill until the complaint has been resolved. Urac recommends that if you are going to use an ESCO do not allow it to combine the billing with the LDC's bill for delivery. Make sure the ESCO bills you directly so that you can withhold payment on disputed amounts and it does not affect service to the building. Shame on the PSC and our government officials for allowing this situation to exist.

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?

Urac can provide an independent analysis of whether or not you saved by purchasing from an ESCO if your accounts are located 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 years 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.