Relates to limiting the sale of electricity or natural gas by entities other than utility corporations to non-residential customers only

Title of bill

An act to amend the public service law, in relation to limiting authority for retail wheeling or delivery of natural gas not purchased from the electric or gas corporation delivering it to non-residential customers

Purpose

The bill limits the sale of electricity or natural gas by entities other than utility corporations which deliver it to non residential customers only.

Summary of provisions

Sections 1 and 2 of the bill amend the public service law §§ 66-12b(b) and 66-d relating to authorization of retail wheeling of electricity and contract carriage of natural gas purchased from sources other than the delivering utility to clarify that such retail wheeling or contract carriage shall be allowed only with respect to non residential customers.

Section 3 provides for an immediate effective date.

Justification

In the physical world it is impossible to separate electricity or natural gas sales from the wires or mains of the utility that actually provides the service. For nearly twenty years the New York public service commission has at great expense promoted the separate sale of electricity and natural gas to residential and non residential customers by entities other than the utility corporations actually providing the services, through financial contracts with "energy services companies." Despite state and in some areas local sales tax preferences, the commission's effort to unbundle and separate the retail sale of commodity gas or electricity did not succeed in lowering prices or improving services for residential customers. Rather, the introduction of new middlemen selling utility services door to door or through high pressure telephone sales techniques increased transaction costs that were not outweighed by any gain in economic efficiency, and generally increased costs for end users. As a consequence, despite illusory promises of savings, residential customers who switch to energy services companies for contracts to buy electricity or natural gas have paid more, not less for the service.

The advent of many poorly supervised new entities selling natural gas and electricity led to predatory, high pressure telephone and door-to door sales tactics, "slamming", excessive charges, and other abuse of residential customers, many of whom are vulnerable, elderly, and low-in-come. Despite large numbers of complaints to utilities, elected officials and the public service commission, the commission is unable to assure the provision of service by the alternative providers on terms that are just and reasonable, and on better economic terms for residential customers than traditional full service from the distribution utility companies.

The commission's undue emphasis upon individual customer "shopping" from a myriad of retail providers diverts attention to real solutions to New York's high prices for utility services, and diverts customer attention and awareness from increased efficiency and conservation. Also, commission promotion of unbundled services and handling of thousands of complaints arising from sales tactics and excessive rates and charges or alternative retail sellers diverts limited commission

resources from improving its regulation of rates, charges, and services of the utilities.

Legislative history

New Bill

Fiscal implications

Increase in sales tax revenues to school districts and local governments that tax residential utility service when customers of energy services companies revert to full utility service, due to the effective end of a sales tax exemption of utility delivery service to residential customers who switched to an energy services company (ESCO) for commodity purchases.

See Division of Budget 2016-17 Report on Tax Expenditures, p. 106.

Effective date

This act shall take effect immediately.