CONSUMER ALERTS

March 2009

Confused over electricity or gas supplier choices?

In many states, including New York, your monthly utility bill tells you that you might save money if you use an Energy Supply Company (ESCO) to provide your electricity or gas. Your local utility would continue to deliver the service to your home or business.
      The New York City Comptroller’s Office recently looked into ESCO practices in New York State, and identified some trouble spots you should be aware of. (This information may also apply to you if you live outside New York State; check with your local utilities and regulators.)
      Information is not reliable. The New York State Public Service Commission (PSC) has a “Power to Choose” website (www.powertochooseny.com) that is usually the first place to go for New York Stateconsumers wishing to compare ESCO fees and rates. This is a good place to start, but the information on this site can be inaccurate or outdated. Furthermore, the website does not make it clear that the listed rates may be “promotional rates” good for only a few months. The rates that go into effect after that are higher—sometimes higher than the rate you would pay if you stuck with your utility.
      Information provided by the ESCOs themselves can be unreliable and/or difficult to understand. The Comptroller’s staff called a number of ESCOs in New York, and were given incorrect or misleading information in several instances. Some charges that appear on the website were not disclosed when staff called, and the marketing material they reviewed was often written in complex, technical language.
      It can be difficult or impossible to get a copy of the customer service agreement (contract) from an ESCO unless you sign up. While you can cancel without penalty within three days of receiving the agreement, this puts the burden on you. If you miss the three-day window, cancellation penalties can be hefty. Also, the contracts themselves are difficult to read; three days might not be enough time if you want to consult someone else for advice.
      The bottom line is that you should exercise caution before you decide to purchase your energy from an ESCO. Following are some helpful ideas recommended by the Public Service Commission, the Public Utility Law Project, and others: 

• DO NOT give your utility account number to any ESCO unless you definitely want to sign up.

• On the phone, get the ESCO’s name, address and phone number, and the name and ID number of the person you are speaking to.

• Make sure you know how long your contract with the ESCO will be, and whether it is for a fixed rate or a variable rate. 

• Be sure you understand what the cancellation penalties are, and under what circumstances you would have to pay them.

• Find out whether there are any fees (administrative fees, fees for overusage or underusage, etc.) that you might have to pay.