AARP Looks to Clean Up New York Energy Market

Jan 25, 2013, 13:43 ET from AARP New York State

Promise of Lower Energy Bills, Often Leave Consumers Seeing the Opposite, Advocates Seek Stronger Consumer Tools & Transparency

ALBANY, N.Y., Jan. 25, 2013 /PRNewswire-USNewswire/ -- As temperatures drop across New York State, competition for consumers' utility dollars is soaring – often times coming with the "promises" of lower rates.  However, in comments filed by AARP and the Public Utility Law Project (PULP) with the New York State Public Service Commission (PSC), the groups claim current market rules have failed to protect consumers from falling prey to bad deals on energy.

"The New York State Public Service Commission is taking a hard look at the tactics and value of unregulated energy providers in the state. AARP commends them for this step to more closely monitor the industry," said Bill Ferris, Legislative Representative for AARP in New York. "As energy costs for New York consumers soar, saving money by switching energy provider become very attractive – we just want to make sure consumers have all the facts before signing the dotted line." 

According to AARP and PULP, there is growing evidence that many customers who switch from a traditional energy provider to an ESCO end up paying much higher bills. Data from National Grid's recent rate case shows that among customers who made the switch to an ESCO 84% of electric bills and 92% of gas bills were higher than for customers who stayed with National Grid.  Over the 24-month period studied, those with higher bills paid nearly $500 more for electricity and $260 for natural gas, on average.

The PSC is currently reviewing the industry's practices and looking to consumers for input. AARP is encouraging New York residents to make their voices heard by taking a PSC survey on the issue:

"Allowing customers to select alternative energy providers, like ESCOS, should not come at the risk of exposing customers to even higher energy bills," added Ferris. "AARP is calling for better transparency of the industry and better tools to encourage informed customer choice – we want to ensure New York consumers don't fall prey to tactics that leave them on the hook with higher bills than before."

Today, AARP and PULP recommended the PSC:

  • Help consumers more effectively comparison shop between ESCOs and utility companies by developing bill calculators and more widespread access to energy pricing information on utility company websites. 
  • Requiring utilities to include a line item on ESCO customer bills that identifies what the customer would have paid had supply been purchased from their old utility.  
  • Stronger oversight of door-to-door marketing activities.
  • Regulation of termination fees.

"We believe that many people hope to save money on their utility bills are induced to try ESCO service through PSC-sponsored promotions that give tiny savings for two months before shifting the customer to higher prices not initially disclosed.  The overwhelming evidence is that over time ESCO customers pay more," said Gerald Norlander, Executive Director of the Public Utility Law Project (PULP). "The PSC and the utilities must stop promoting and subsidizing ESCO service, take prompt action to protect all residential customers from deceptive practices and false claims of savings, and put an end to the harm to the vulnerable customers who are often threatened with service termination because they cannot afford to pay more for electric and gas service from ESCOs."

New York has among the highest energy costs in the nation, with older individuals getting hit particularly hard by any changes to monthly utility bills.  While older adults spend roughly the same on their utility bills as other age groups it consumes a much large portion of their household income.  AARP is particularly concerned with how a switch to alternative energy providers will impact older New Yorkers on limited income.

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AARP is a nonprofit, nonpartisan organization with a membership that helps people 50+ have independence, choice and control in ways that are beneficial and affordable to them and society as a whole.  AARP does not endorse candidates for public office or make contributions to either political campaigns or candidates.  We produce AARP The Magazine, the definitive voice for 50+ Americans and the world's largest-circulation magazine with over 35.1 million readers; AARP Bulletin, the go-to news source for AARP's millions of members and Americans 50+; AARP VIVA, the only bilingual U.S. publication dedicated exclusively to the 50+ Hispanic community; and our website,  AARP Foundation is an affiliated charity that provides security, protection, and empowerment to older persons in need with support from thousands of volunteers, donors, and sponsors.  We have staffed offices in all 50 states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands.

SOURCE AARP New York State