By Robert Dillon
The New York State Public Service Commission’s new rules on retail energy markets – despite declining complaint rates – threaten to limit the energy options available to residential and commercial customers.
In February, new requirements took effect on third-party service providers selling electricity and gas to residential customers, requiring them to guarantee their prices will remain lower than the incumbent utility.
The commission deserves credit for putting consumers first. Unfortunately, instead of protecting customers from deceptive marketing, the price guarantee threatens to undercut the benefits of the competitive market by making it harder for smaller providers to participate.
Independent service providers have been crucial to advancing New York’s transition to lower-carbon power, encouraging customers to improve their energy savings and bringing more renewable energy to the market.
The PSC uses a six-week benchmark to determine the price guarantee. The trouble is that generation prices can fluctuate within that time, leaving service providers on the hook if their costs increase and putting smaller companies at a competitive disadvantage.
Service providers need the flexibility to respond to changes in energy prices in real time. Consumers can switch providers if they feel they are being overcharged – a key benefit of competitive markets.
The new requirements are also redundant of consumer protections at the federal level. Complaints against service providers have already been declining since 2016, when the PSC stepped up enforcement of its existing rules.
New York customers filed 468 complaints against deceptive marketing in 2017 compared to 257 claims in 2018 – a decrease of 45%, according to commission data.
The number of new complaints filed this past June fell to the lowest level since 2011. Initial claims in June totaled 79 compared to 103 in the same month in 2018.
In every market, there will, unfortunately, be a few bad actors. But the data show the current rules, not to mention the ability of consumers to vote with their feet, are working.
Instead of limiting the ability of service providers to compete, residential customers would be best served if the Public Service Commission updated its “Power to Choose” website, ensuring pricing information is transparent and accurate.
After 15 years of competition among energy service providers, New York residents can choose between some 200 companies. That kind of diversity strengthens both the market and customer satisfaction.
Robert Dillon is the executive director of the Energy Choice Coalition in Washington, D.C., an advocacy group.