New York Strengthens Customer Protections Amid Growing Complaints Against Energy Service Providers

The New York State Public Service Commission has announced reforms to the retail energy market to strengthen customer protections and to enhance price and operational transparency, according to a Dec. 12 press release. The resetting of the retail energy market in New York will impact the day-to-day business of energy service companies, or ESCOs, doing business in the New York State and the two million residential and small commercial customers in New York State who they serve.

The Commission strengthened protections for residential and small commercial customers in the retail energy market by enhancing ESCO eligibility criteria and adopting limitations on the types and prices of products that may be offered to those customers by ESCOs. In its order, the Commission took the following actions:

• Accountability: Increased ESCO accountability by enhancing eligibility criteria and increasing scrutiny of ESCO eligibility and business practices.
• Transparency: Empowered customers by improving transparency of ESCO product and pricing information by establishing a pathway toward an ESCO to utility on-bill commodity price comparison and an itemization of ESCO charges.
• Products: Prohibited ESCO product offerings that lack energy-service-based value by adopting restrictions on the types of products and services ESCOs are allowed to offer residential and small-business customers.

The commission expressed frustration that efforts to reform the state’s retail markets were repeatedly opposed by the ESCO industry in what the commission calls an effort to block it from protecting consumers from unscrupulous industry
practices. Recently, the state’s highest court definitively halted ESCOs’ attempts to use litigation to evade and/or delay consumer-protection regulation. The Court agreed with the Commission and definitively established that the Commission has the legal authority to protect the public by regulating ESCO access to utility distribution systems. This authority includes the power to deny or revoke eligibility for ESCOs that are unqualified to serve New York consumers.

Between 2014 and 2016, the Commission received more than 11,000 initial complaints about ESCOs. The record also shows a positive correlation between the level of extra cost associated with ESCO service and the overall number of initial complaints. ESCOs have been losing market share in New York State. In 2018, approximately two million residential and small commercial customers received electricity or natural gas from an ESCO, down 12 percent from 2.3 million customers in 2017.