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Can ESCOs Save You Money on Your Energy Bill?

Can ESCO's save you money?

Have you had a positive experience with ESCO's? ...or negative experiences?
Please advise. I frequently receive calls from constituents who are looking to
save money on their energy bills. ESCOs compete with Con Ed and can sell
electricity and natural gas.

The questions people ask me: will they save
money? Are the savings temporary? What do they do if there are service outages?

There are about 19 ESCOs in the Westchester area. 35 supply natural gas. Are ESCO ads deceptive? Are savings real?  

Would you be interested in volunteering your time helping us provide neighbors with helpful consumer tips? And, comparisons?

Please read the letter below (after the short explanation about ESCOs) from a resident of Edgemont who discusses his personal experiences and makes some good recommendations.

My email is pfeiner@greenburghny.com. Would love to hear from you.

_ PAUL FEINER

 

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 it 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 1-877-MOVE-234.

PowerMove is a program offered by Con Edison to encourage customers to switch to an ESCO. With this program you get a 7% 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.

THE FOLLOWING IS AN EMAIL I RECEIVED ABOUT AN ESCO FROM A
CONSTITUENT.
>
> My neighbors contacted us in response to a recent mailing from Plymouth Rock Energy, an ESCO and it seems there is a serious fleecing of the public taking place with Electricity and Gas Bills. It is quite likely that people - like us - are paying out thousands of dollars a year for nothing.....
>
> I compared bills with two neighbors and I am seeing significant differences in price - a variable of as much 3x (9.7c. per kilowatt hour vs. 19.8c) and bills that vary as much $400 vs $200 for the SAME AMOUNT of electricity.
>
> I have seen NO guidance anywhere in terms of actual pricing and in some case people have been slammed - i.e. pushed into new suppliers other than Con Ed without realizing it and thereby paying more.
>
> Example: we got a $500 bill for electricity even though we were out for a good part of the month while my neighbor paid $300 for more usage.
>
> The ESCOs claim they can't guarantee costs because they say energy pricing is variable etc.
>
> SOLUTION
>
> If we ask people to send in one summer bill and one winter bill in the same months we can put this into a spreadsheet and show true lowest cost.
>
> You can actually post a monthly rate for Kws and BTUs so people will know and switch accordingly.
>
> We need a few accounting type volunteers to keep track.
>
> In fact, I can guarantee you that if you put out a press release asking for this data - or held a town hall meeting - there would be an avalanche of concern.
>
> Once people realize how much they are being fleeced.......and how.......they will be pretty fired up
>
> PS Con Ed claims they are legally bound to avoid giving guidance so no one knows who to trust.

This post is contributed by a community member. The views expressed in this blog are those of the author and do not necessarily reflect those of Patch Media Corporation. Everyone is welcome to submit a post to Patch. If you'd like to post a blog, go here to get started.

Jerry Eimbinder October 11, 2012 at 01:32 PM
Are people who switch to an ESCO for natural gas supply informed that this can result in Con Ed adding a new charge to their bill? The additional Con Ed fee can reduce the amount of savings provided by the ESCO. This additional charge by Con Ed is for maintaining an extra reserve of natural gas should the ESCO underestimate the amount of natural gas Con Ed will actually deliver. The statement that energy supply represents 60 percent of monthly natural gas cost appears inaccurate. Could you recheck this or let us know the source for this information?
Xavier Yrausquin July 18, 2013 at 12:47 PM
Not all suppliers cause that fee to begin. It's all about how suppliers balance. If they balance daily with con ed, I believe this fee never appears.

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