Experts Warn New York PSC Against Retrograde Action in Electricity

NEW YORK, Sept. 15, 2017 /PRNewswire/ -- New York Public Service Commission efforts to prohibit energy service company (ESCO) sales are unsupported by fundamental economics and will harm consumers, and likely thwart programs to transform New York's energy marketplace and promote cleaner, customer-empowering technologies.

That's the message in testimony from two industry experts submitted today to the PSC by the Retail Energy Supply Association in an ongoing proceeding in which prohibition of ESCO sales has been proposed as an outcome. The two experts with more than half a century experience in competitive energy markets urged the commission to use its existing authority to police the marketplace and not engage in wide-reaching prohibitions and price regulation.

"To the extent that there is evidence of marketing abuses by ESCOs, the Commission is right to take action," said Frank Lacey, independent industry consultant. "RESA supports rigorous oversight of ESCO behavior and swift enforcement action against any ESCO engaged in unlawful or deceptive practices. However, I do not believe it is appropriate to economically regulate an entire industry as a policy substitute for enforcement and oversight," he said.

Jeff D. Makholm, Senior Vice President/Managing Director at National Economic Research Associates said "it is not unreasonable for the Commission to re-examine the current status of retail energy markets for mass-market customers in New York so as to target and remedy any deceptive marketing practices by certain individual ESCOs." But it would be "unreasonable for the Commission to judge the broad efficacy of mass-market ESCO services by simplistic and misleading average revenue comparisons between manifestly different services provided by ESCOs and the utilities," Makholm testified.

"In any competitive marketplace, there will be some customers paying more than others," Lacey said. If such a "test" were applied to almost any other industry, one would similarly conclude that the marketplace in that industry had "failed," Lacey said, emphasizing that in any market customers readily choose more expensively priced products and services, demonstrating that consumers perceive value in attributes other than price.

However, if the objective is to ensure energy consumers pay the lowest available price, Lacey suggested, then the PSC should require utilities provide default service at the lowest available ESCO price.

Makholm said that preserving and expanding competitive retail access for mass market customers in New York will help the state achieve other energy policy objectives such as New York's Reforming the Energy Vision initiative and the advancement of clean energy goals.

Lacey suggested enhancements and reforms of the existing market that would better serve consumers and the state's economy. "The New York market, while it may have been innovative 20 years ago when first walking the path to restructuring, has done very little to improve its market since then," he said, citing the need for actions to address metering infrastructure, utility protocols for data access and customer billing issues. 

For more go to www.resausa.org.

Contact: Bryan Lee, 301-717-2988

SOURCE Retail Energy Supply Association

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http://www.resausa.org