The Power Game

The New York State electricity market is no longer a regulated monopoly. Consumers now have a range of choices when it comes to electrical power providers. This ongoing series will examine the reasons behind and the impacts of the new energy market on New York State residents and the possible implications for the future of the power industry in the entire Upper Delaware region.

	TRR Graphic In the deregulated power market, the consumer has a choice when it comes to the generator of the power. Electricity is still transmitted over the same lines maintained by NYSEG.

Charges for your power

By CHRIS CONROY

NEW YORK STATE — Times in the energy industry are changing and you get the chance to change, too.

In October, New York State Electric and Gas (NYSEG) customers received a large orange packet of information in their mailbox. Emblazoned on the packet in a starburst is the imperative: “Don’t miss the chance to voice your choice.” This is the enrollment kit for the new world of free market electricity.

Much like the breaking up of the telephone industry that happened in the 1980s, the deregulation of the electrical business is adding more choices, and more confusion, to the lives of customers. For the residential customer, the new market provides four choices of new energy suppliers as well as two pricing plans from NYSEG.

At their most basic, all the choices have three components: the delivery charge, the supply charge and the transition charge.

The Delivery Charge

Even though there is now a choice of electricity suppliers, there is still only one company that maintains the delivery system. NYSEG will still maintain the wires and other delivery systems, such as the meter on your home or business. If the power goes out, NYSEG is still the first company to call. For these continued services, there is a fixed charge in your monthly electric bill. In the future, there is talk of turning the delivery part of the power market into a free market as well, but the reality of that is most likely far off. The charge is definitely fixed at its current level until 2006.

The Supply Charge

Choice is the key part of a free market economy. In the 1990s, when de-regulation of the electricity industry began, a number of companies began the process of building power generation stations. By the mid 90s, a number of these stations were up and running. Now that a full free market has been declared, these power generating businesses are free to offer their electricity to the normal consumer.

Each energy supply company (called ESCOs by most industry literature) is free to offer its own prices, promotions and additional services (such as special billing and contract terms) to the customers. NYSEG is obligated through agreements with the New York State Public Service Commission to inform its customers of their choices and allow customers to choose their own power supplier.

The four companies other than NYSEG which consumers can choose from are Agway Energy Services, ECONnergy Energy Company, Mirabito Gas & Electric and NYSEG Solutions. Each of the companies offers different terms and conditions to their customers. Some will bill through NYSEG, their supply charges showing up on your regular bill, others will send a separate bill every month. Contract terms also vary among the different suppliers as do the cost per kilowatt hour figures.

To encourage the adoption of the free market, a $.004 credit per kilowatt hour is applied to the bill of any consumer who switches to one of the new companies.

The Transition Charge

The final charge that is outlined in the new market is a transition charge. This charge has led to more than a little bit of confusion for consumers.

As the cost per kilowatt hour supply charge drops, the transition charge increases. According to the Public Service Commission’s web site, this charge has always been in effect to reflect “the cost of existing long term electric supply contracts and applies to all NYSEG delivery customers.” It also serves to even out sudden changes in supply cost that may occur.

Making the Change

Come January 1, 2003, the new free market takes effect for NYSEG customers. By that time, the choice of supplier should have been made. If no choice is made, NYSEG will switch the customer to its fixed price plan, generally recognized as the option with the most guaranteed expense since it will not drop if supply costs decrease.

Depending on the agreement reached with another supplier, customers may be allowed to change suppliers without penalty at any time. Some contracts do have early termination fees. NYSEG considers the standard contract, no matter the package or supplier, as two years.

The Future

Free market energy does not have the best public image. The dealings of the now-defunct Enron in the deregulated California energy economy raised many doubts as to the viability of the idea. As is true with any free market, however, every region is different.

Consumer protection in New York varies from that in California, as do many other factors. Only time will tell how successful, or how unsuccessful, the new energy market will be on the East Coast.

Many factors over the next decade will impact the overall price of energy. For now, the initial choice of supplier is up to the consumer.