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State launches review of competitive energy market

State energy regulators have launched a full-scale review of the competitive electricity and natural gas markets they created 17 years ago, but which critics say have failed to meet the goal of saving consumers money.

The state Public Service Commission will hold hearings as part of a review of New York's competitive energy markets to determine if changes need to be made to the way energy services companies operate.

James Denn, a commission spokesman, said the agency "has seen substantial overcharges and deceptive practices" by the energy service companies industry that are harming New York consumers.

The PSC estimated that the state's consumers have paid marketers nearly $820 million more for  utility services since 2014 than they would have paid if they had remained customers of their local utility. The average overcharge was $217 for a typical National Grid customer who uses a marketer.

Denn said the hearings would give the energy service companies, which are also known as ESCOs, the opportunity to explain their pricing practices. Consumers who have been harmed will also speak.

"We will then push ahead with reforms to ensure that ESCOs provide useful, value-added, economical services to New York consumers," Denn said in a statement.

While marketers say competition has pushed energy costs lower since deregulation was put in place, consumers, in recent years, often have been paying more if they buy their electricity or natural gas from an independent supplier. Thousands of those customers have complained about deceptive practices by the energy marketers.

"The Commission has determined that the retail markets serving mass-market customers are not providing sufficient competition or innovation to properly serve consumers," the PSC said in its order. "Customer abuse and overcharging persist, and there has been little innovation, particularly in the provision of energy efficiency and energy management services. Commodity price differentiation has not worked, and the market for differentiated services is immature or non-existent."

Marketers said it's important that the state's consumers continue to have the option of picking their natural gas and electricity supplier.

"Consumers enjoy and demand choices in every aspect of their daily purchasing decisions, from car insurance and cell phone providers to doctors and vacation destinations," said Bryan Lee, a spokesman for the Retail Energy Supply Association, which has challenged the PSC's unsuccessful efforts earlier this year to bar marketers from signing up new customers.

"Any policy changes ultimately identified by the commission must preserve opportunities for choice by consumers in their energy supply decisions," Lee said.

The review process is likely to continue well into next year. The state set an April 7 deadline for written testimony to be submitted. That will be followed by in-person hearings and other sessions.

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