New York electricity choices demystified

By FRITZ MAYER

NEW YORK STATE — Thanks to the ongoing deregulation of the energy industry in the state, New Yorkers now have a choice: customers can decide which company they want to purchase electricity from. In our area, customers may choose from 60 plans offered by 13 companies¾but the choice must be made by 7:00 p.m. on Friday, December 29. Any customer who does not make a choice will automatically be enrolled in the “default supply option” with New York State Electricity and Gas (NYSEG).

Michael Hastrich, the executive director of Cornell Cooperative Extension of Chemung County, has been analyzing the system, and he says it is unnecessarily complicated, “and the people who made it should be fired.”

Still, even if a customer chooses to do nothing, the most a customer will lose, according to Hastrich, is about $60 per year. Because the savings between plans are not very large, the vast majority of customers in the NYSEG service area have wound up in the default plan over the past two years.

According to the New York State Public Service Commission (PUC), only eight percent of electricity users have opted to buy their electricity from a company other than NYSEG.

Hastrich advocates that more people should consider buying energy from alternative suppliers because theoretically that will bring more competition into the market resulting in lower electric rates.

The state calls these alternative companies energy service companies (ESCOs).

Here’s how the system works.

NYSEG will continue to get a large portion of customer’s electricity payments because the company will still maintain the wires and it will deliver the power. But if you choose to buy your electricity from an ESCO, that company will be buying power in the energy market for you. It will sell that electricity to you with several different billing options: fixed price, variable price, or a blend of fixed and variable prices. It will also offer those choices with a green energy option, meaning energy generated by renewable means such as wind or hydropower. In the fixed price plans, the prices are locked in for all of 2007.

The most basic question is, of course, which plan is best. To save the most money, Hastrich advises that a basic rule of thumb is that buying your electricity from any company other than NYSEG is likely to save you two or three dollars a month, with the exception of companies that offer green-only plans. He also said signing up with a variable cost plan is likely to save an additional two or three dollars per month. The fixed priced plans offer security, and price spikes won’t affect the cost. However, over the past two years, which is how long the program has existed, customers with variable plans have received a better deal.

On the website www.energyguide.com, the current monthly costs for a typical home in a given zip code are listed for the various plans offered.

The highest price is $85 per month from a company called Community Energy. It’s a fixed-cost plan that provides electricity that is generated 100 percent by wind power. If a customer commits to this plan, he or she can leave after a month and there is no fee for moving to another company.

Another fixed-priced plan in the middle of the price range comes from Entergetix, Inc. The current monthly cost is $76. The electricity purchased comes from 50 percent green sources. The commitment is only for a month, however there is a $35 fee if the customer leaves the plan before the end of 2007.

A company called Energy Cooperative of NY Inc. offers the lowest price on the chart with a current monthly fee of $64. This plan contains no green or renewable energy and has a variable price, which will change from month to month. There is no fee for leaving the plan at any time.

Again, there are 60 plans on the chart. A few don’t have prices attached to them because they are new this year. All of the prices listed represent prices at December 2006 levels. For fixed price costs beginning in January, a prospective customer must contact the companies through the phone or by email.

The price on variable cost plans will change from month to month. There may be unforeseen events in the near future that will sharply drive up the price of electricity. For instance if the reactors at the Indian Point nuclear facility, which supply about 30 percent of the electricity for New York City, were forced to shut down, the prices statewide might spike upward, and customers with variable-priced plans would not be protected from that spike.

Even so, Hastrich said customers would probably be better off with variable rate plans.

Once a customer decides on an energy plan, the customer can contact the company by phone or on the internet to sign up. The customer will need to supply his or her point of distribution (POD) number, which is located on the right side of the top of page three of the customer’s electric bill.

More information can be found at www.dps.state.ny.us, but the most comprehensive information concerning costs and plan comparisons will be found at www.energyguide.com.