- Last Updated on Wednesday, 26 March 2014 15:20
Has a salesperson knocked on your door lately, encouraging you to switch from your local utility to an energy service company (ESCO)? Has a telemarketer called you at home, promising substantial savings if you make the switch?
If you’re a residential customer, it’s likely that you have received - - or will soon receive - - an aggressive sales pitch from one or more of the ESCOs that are authorized to sell electricity and natural gas in Westchester. The promised savings may sound tempting, but are they real? Will there be any changes in service? Who do you call if there’s an interruption in service?
For over ten years, ESCOs have sold electricity and natural gas in competition with regulated utilities. There are approximately 19 ESCOs that supply electricity to Westchester customers, and 35 that supply natural gas. However, many consumers have complained about misleading and deceptive ESCO marketing practices, overstated savings, billing problems and excessive termination fees. So before deciding whether to switch to an ESCO, it’s important to know the facts. Here’s what you should know.
What Am I Buying From an ESCO?
A consumer can choose to buy electricity or natural gas from an ESCO instead of from their local utility (in Westchester, Con Edison or NYSEG). However, the energy itself is still delivered by the local utility. So any savings achieved by switching to an ESCO are limited to the supply (not delivery) portion of the bill. Energy supply comprises about 50% of an electricity bill, and 60% of a gas bill.
How Do I Find an ESCO?
The state Public Service Commission (“PSC”) licenses ESCOs in New York and maintains a searchable online database, called “Power to Choose,” of ESCOs that are authorized to do business here. You may also call 1-888-Ask-PSC1 for additional information.
The PSC also has a guide called “Use Your Power to Choose.”
Con Edison customers can explore alternate energy suppliers through its PowerYourWay Web site. However, PowerYourWay does not include ESCO price information.
NYSEG customers can explore alternate energy suppliers through its Web site.
What Should I Look For?
The Power to Choose Web site allows you to see the current rate charged by your utility and by the ESCOs that are authorized to do business where you live. Note, however, that Power to Choose only offers one month of rates, making it difficult to compare prices over the long term. Prices can vary significantly from month to month due to market conditions and weather.
Many ESCOs offer value added services, such as fixed prices (the rate per kwh, ccf, or therm is the same each month), green power (electricity generated from renewable resources such as wind, solar, or hydro), furnace repair service, or telephone service bundled with your energy bill. When considering an ESCO, check for information on these value added services.
What Are the Pricing Options?
ESCOs offer a number of pricing options including fixed pricing, which can shield you from big price fluctuations; variable pricing, which is tied to the market price for energy and may fluctuate depending on supply and demand; and indexed or capped pricing mechanisms.
How Will I Be Billed?
In most cases you will receive a single bill covering both your supply and delivery costs.
Who Do I Call If There’s An Interruption in Service?
You will continue to call your local utility, as it will continue to deliver energy to your home even if you switch to an ESCO.
Can I Switch Back From an ESCO to the Local Utility?
Yes. However, some ESCOs require a one- or two-year contract, and charge a termination fee if you cancel the contract early. Be sure to check for this before you sign a contract with an ESCO.
Are There Misleading Marketing Practices?
Yes. There are persistent complaints that some ESCO representatives make false statements, misrepresent themselves as agents of the local utility and engage in misleading marketing practices such as promising savings that don’t materialize.
To address these concerns, the PSC has adopted new marketing standards for ESCOs. Among the expanded consumer protections is a required “Consumer Disclosure Statement” on the first page of every sales agreement, setting forth the most important terms of the ESCO agreement, such as the contract’s term and any termination fees. In addition, agents who go door-to-door must wear a picture ID with the name of their company on it. The new measures also include measures to protect non-English speaking customers.
What Is “Slamming”?
Many consumers reported being “slammed” by an ESCO, that is, being switched to an ESCO without their authorization. ESCO representatives - - including telemarketers and door-to-door salerpersons - - sometimes claim to be working for the local utility. They offer special deals, and ask to verify the customer’s account number. Armed with the account number, the ESCO then notifies the local utility that the customer has authorized the switch.
If you’ve been slammed, contact your local utility. You’ll be switched back from the ESCO, unless the company can show proof that you authorized the initial switch. You can also file a complaint with the PSC.
Is There Tax Relief If I Switch to an ESCO?
Yes. If you switch to an ESCO through Con Edison’s PowerYourWay program, Con Edison delivery charges on electricity are not subject to sales tax, and the sales tax on delivery charges for natural gas will be lowered significantly.
What is PowerMove?
Con Edison customers who switch to an ESCO through the PowerYourWay program may be eligible for a one-time offer called PowerMove. For more information, call (877) MOVE-234.
PowerMove is a program offered by Con Edison to encourage customers to switch to an ESCO. With this program you get a seven percent discount off the Con Edison supply rate for the first two months. After that, you are then charged the supply rate of the ESCO of your choosing. Therefore, you’re guaranteed savings for the first two months compared to what you would have paid if you stayed with Con Edison. After the two months, savings are not guaranteed.
Will I Save Money If I Switch to an ESCO?
Not necessarily. Some consumers complain that they don’t actually save money over the course of a year, while others complain that the savings are minimal. Some ESCO customers wind up paying even more than they did with the local utility. Ultimately, conserving power is the best way to get your bill down.
Are you an ESCO Consumer?
The Department of Public Service is interested in obtaining information from consumers regarding their experience with ESCOs, as part of a review of those markets. Public Service Commission has a short survey which asks pointed questions about customer understanding and experience with the competitive retail electricity and natural gas marketplace.