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Upstate Uproar

Retail Choice: New York utilities cry “bait and switch,” but it’s not that simple.

Fortnightly Magazine - July 2005

that his companies serve.

“We have a lot of fixed-income customers,” he notes. “They need a fixed price. So our strategy is to stay in the commodity business.”

AARP and PULP lend at least some credence to Laurito’s points.

Back in the early days of the New York Independent System Operator (NY-ISO), according to PULP director Norlander, O&R failed to hedge its wholesale power costs or stabilize standard-offer commodity rates for residential customers.

“While other New York utilities protected their residential customers,” writes Norlander, “by negotiating long-term electricity supply contracts when they sold their power plants, thereby reducing … exposure to NY-ISO spot market rates, O&R and Con Edison customers were exposed to severe price spikes.”

At the same time, adds Norlander, Con Ed was petitioning the Federal Energy Regulatory Commission to reduce gaming and market manipulation by the very same generators “from whom it was buying large quantities of power at spot market rates.”

These failures, Norlander argues, spawned an exodus of utility customers to unregulated ESCOs. That, he suggests, made PowerSwitch appear successful as a tool to achieve migration, but for all the wrong reasons.

Some say that PowerSwitch simply allows O&R to scratch its affiliate’s back by funneling accounts to Con Ed Solutions, the unregulated marketing subsidiary. But O&R answers that over three and one-half years, Solutions has snagged only 7,000 of some 67,700 in total ratepayer enrollments.

By contrast, according to Laurito, NYSEG and RG&E, under the Voice Your Choice plan, have helped 206,000 of their native-load electric customers migrate to ESCOs—representing more than a quarter of the approximately 800,000 residential electric customers that PSC data shows have migrated so far.

“We support customer choice,” Laurito insists. “But choice should be voluntary.”

Back at the PSC, Administrative Law Judge William Bouteiller had cut off all further comment in the O&R case beyond May 2. And in Manhattan, in early June, Clendenin told Fortnightly that Con Ed was working with regulators to iron out the details for its own similar plan.