Restructuring Today
August 1, 2006

Goodman asks NY PSC for meaningful price comparisons

Requiring marketers to post their offers every month is reasonable, NEMA advised the New York PSC, but utilities should have to disclose their utility rates in a meaningful way so customers can make a fair comparison.

          The PSC has been considering requiring marketers to post offers to the PSC's consumer shopping website (RT, 6/2).

          Chairman William Flynn has been frustrated that marketers haven't jumped at the opportunity to boost the one-stop shopping site.

          NEMA agrees marketers should post their offers every month -- but with a caveat that prices are subject to change with market conditions.

          "Indeed, a well-educated consumer is our best customer," wrote NEMA President Craig Goodman.

          But utilities should provide the same clarity so customers can make an accurate comparison, Goodman added.

          Utilities should disclose in their prices to compare how often their rates can change, how much utility hedging is reflected in the cost and whether their rates are subject to trueups, he noted.

          Customers could make better comparisons if utilities posted historical commodity rates -- as New Jersey regulators ordered LDCs to do (RT, 7/17).

          "As long as a utility is permitted to sell competitive products and services for monopoly prices and hide commodity charges in distribution rates, the public interest will be less than well-served," Goodman noted.

          NEMA supports easy access to competitively priced products, services, information and technology but cautioned the PSC to consider the burden of added costs to marketers.

          "If competitive suppliers must take the first step, to be fair, it should be treated as a down payment on meaningful and detailed utility price disclosure," Goodman argued.

          Utilities can "easily obfuscate" price components in their fully bundled services and "hide" various costs, Goodman accused.

          Goodman cautioned the PSC to take care that marketer reporting rules don't discourage innovation by "falsely making a superior product offering look like a higher-priced commodity."

          It might be "impossible," Goodman warned, to "capture and express the value-added component of some competitive offerings."

          The PSC shouldn't "force conformity onto the most creative element of a competitive market, namely the art of pricing," Goodman urged.

          Despite flaws in price transparency, marketers signed up more than 15,000 new shoppers in June.

          Almost 14,000 of new shoppers were residential customers who can try out suppliers via Orange & Rockland-like marketer-referral programs at more IOUs.

          More than 10,000 of the new residential shoppers are Consolidated Edison customers with 6,000+ new residential shoppers at National Grid (Niagara Mohawk).

          Residential shoppers fell at New York State Electric & Gas and Rochester Electric where shopping is confined to open seasons.

          Shopping fell too at O&R but still is highest in the state with more than 30% of residential customers buying from marketers.

          Marketers gained customers in all classes in June, the PSC reported. (See table on page three)

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