Alliance for Retail Choice commends New York Department of Public Service for Its Thorough Report on Competitive Markets

On March 2, 2006, the New York State Department of Public Service (DPS) issued a detailed, 61-page report entitled Staff Report on the State of Competitive Energy Markets that reviewed the results of restructuring in New York. Overall, the staff’s assessment is that restructuring has brought a number of benefits to New York’s energy consumers, including electricity prices that are lower than they would have been if the markets had not been opened to competition.

Highlights of the report include:

While the average real price for residential customers in states without retail electric competition fell by about 8%, the real residential electric price in New York fell by about 14%.

The benefits of a competitive retail electric and natural gas market include the ability to choose suppliers, the availability of both fixed and variable pricing, availability of multiyear contracts, and the provision of environmentally-friendly (i.e., green) energy.

There are 73 competitive suppliers in New York, with at least seven serving residential electric customers in each major utility franchise area. Retail competition in New York has developed to a greater extent for larger-use customers.

In New York, as of December 2005, 527,508 electric accounts had switched to ESCOs for their energy commodity, including 55.6% of large commercial and industrial Time-of-Use (TOU) electric customers, 55.6% of large commercial and industrial Time-of-Use (TOU) electric customers, 38.5% of all customer load.

The Office of Retail Market Development (“ORMD”), the first organization of its kind in the country among utility regulatory commissions, has responsibility for

-- the ESCO eligibility process,
-- utility migration reporting,
-- the Power to Choose Web site,
-- Uniform Business Practices,
-- electronic data interchange standards,
-- evaluation of utility retail access programs,
-- addressing disputes between ESCOs and
-- utilities, and
-- removal/reduction of barriers to entry into New York retail markets

The DPS has identified several best practices as desirable for more widespread use in New York. These include:

-- ESCO referral program
-- Purchase of Receivables
-- Access to customer data (while protecting consumers and their privacy)
-- Alignment of Utility Incentives
-- Hourly pricing for large electric customers
-- Aggregation

The DPS cited as another important measure of the progress in the development of retail energy markets the extent to which the ESCOs are providing value-added services, including fixed commodity prices, capped and indexed commodity prices, bundled telephone service, "green" power generated from renewable resources, or consulting services. Value-added services for large commercial and industrial customers include sophisticated hedging and price-certainty arrangements, energy efficiency and energy management services, and demand response assistance and support.

The full report can be found at the New York DPS website: http://www.dps.state.ny.us/StaffReportCompetition.pdf