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Consumers urged to shop around for gas, electricity

The state's chief utility regulator has a solution for consumers facing electricity and natural gas hikes of as much as 35 percent this winter: shop around.

"Just play these companies off each other. It's competition," said William Flynn, chairman of the state's Public Service Commission.

State officials are adding price-shopping to energy conservation and home efficiency improvements as tools consumers can use to blunt the blow of the expected surge this winter. They say the state's march over the past decade to permit more competition in the energy industry gives consumers some new choices to try to lower their bills.

But one watchdog group warns consumers not to believe it.

"It's fake competition," Jerry Norlander, executive director of the Public Utility Law Project, a consumer group, said of the PSC's idea for consumers to shop around.

The PSC is so concerned about promoting private energy suppliers as alternatives to the traditional utilities that it is giving consumers false hope that they might be able to cut into the soaring energy costs that will soon be hitting their utility bills, Norlander said.

"They've been drinking the competition wine too much. They're not dealing in reality," Norlander said of the PSC push for consumers to price shop.

Norlander said such competition would be great for consumers -- but that it is not how the market works in New York. Consumers might initially save a couple dollars on their electricity bill each month, for instance, but that introductory savings could be swallowed up by energy suppliers raising fees after a come-on period. He warned consumers not to be lured into thinking that the state's energy market has anywhere close to the competition, say, for telephone service.

Indeed, it is confusing for residential customers to try to get through the maze that is the business of energy pricing. The PSC's Web site -- -- lists alternative energy suppliers for customers of National Fuel, Niagara Mohawk and the New York State Electric and Gas Corp. Six companies are listed as alternatives to National Fuel, some offering temporary price breaks or cost caps.

But trying to determine an apples-to-apples comparison of those costs is nearly impossible for the typical homeowner. Moreover, the price information is updated monthly, and carries no guarantees about future prices -- unless a consumer locks into a fixed-price energy purchase program from one of the suppliers. But such programs are difficult for the average consumer to decipher if the best deal is being offered or not.

Big industry has moved to embrace the fledgling competition in the state's energy market, where a savings of a couple percent a month from one supplier to the next can mean much to a large factory.

Today, 55 percent of New York's large companies and industrial users buy their energy through suppliers other than the traditional utility company.

But residential users, for many reasons that are not necessarily their own fault, lag far behind. Only 6 percent of New York residential energy customers buy from an alternative to a utility.

State officials have been looking at possible answers to what promises to be a tough financial hit on energy consumers this winter. There is talk of additional subsidies for low-income households, tax breaks and incentives to get people to update the energy efficiencies in their homes.

Flynn, the PSC chairman, said high winter energy costs have been a growing concern for months.

"This was a problem before those hurricanes ever happened," Flynn said of Katrina and Rita that have hit the Gulf Coast, a region that is a major supplier of natural gas to New York state.

Flynn said consumers need to be taking steps now to shave their energy bills, but added it is also a time officials need to be considering a variety of long-term energy alternatives, such as solar and wind power. "This is a time when everything should be on the table," Flynn told reporters Tuesday at a conference outside Albany by the Independent Power Producers of New York.

The gathering, featuring suppliers and utilities and system operators, was as much about hailing a push in New York to more competition as it was about this winter's looming energy price crisis.

"No matter what product or service you're talking about, consumers are always better off when they have choices," said David Flanagan, a PSC spokesman. He said while there may be little room for suppliers to compete with utilities on the cost of the product -- such as natural gas -- they often can provide other benefits, such as furnace repair contracts or free energy efficiency audits.

Flynn suggested the coming winter heating season is the time to try an alternative to the traditional utility company. "The price spike is coming," he said of the wintertime energy costs.


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