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N.Y. Proposes ESCO Rules, Tables Enron Plan

Fortnightly Magazine - July 15 1997

Finding it "too early" to consider proposals by Enron and Wheeled Electric Power to assign the state's electric utility customers to retail competitive energy service companies, the New York Public Service Commission nevertheless has mapped out a proposal to introduce competition in retail energy markets through a state-established retail provider of last resort.

The commission also would like to make information readily available to allow consumers to make informed choices. The proposed policy would permit adequate oversight of the market to ensure its fair operation (Opinion No. 97-5, Case 94-E-0952).

The PSC ruled that only transmission and distribution utilities may act as providers of last resort (POLR), at least until the PSC can implement effective alternatives. Thus, the PSC said it was too early to consider proposals by Wheeled Electric Power and Enron to assign customers among competitive ESCOs.

"Though it is true that customer inertia may slow development of the ESCO industry, we are not satisfied that ESCOs could satisfactorily fulfill this responsibility in the near term, or that customers would find involuntary assignment among providers acceptable," the PSC wrote.

The PSC did not decide to introduce competition to the POLR function, due to lack of agreement among parties on approaches, limited experience with ESCOs providing electric service and lack of reliable estimates of POLR costs.

The PSC said that although market forces eventually could drive out poorly performing companies, customers could be harmed in the meantime. It added that a threat of sanctions was particularly important in a transitional market. Relying on customer complaints to gauge service quality may be inappropriate, the PSC said.

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