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ESCOs Developed as Part Of NY State’s Ongoing Energy Initiatives

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July 2, 2015

 | By Robert Kimmel |

            Energy Service Companies, more generally known as ESCOs, started when New York State began deregulating utilities in the late 1990s. The State Public Utility Commission uncoupled the major sources of energy, utilities such as Consolidated Edison, from being the only suppliers of electricity and gas, and their function as deliverers of those commodities.               

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           Consumers had a choice. They could buy from an alternate supplier. Energy would be delivered using the existing infrastructure, but bought from an ESCO. The utilities would continue to charge for the delivery through their networks and grids of wires and pipelines. For consumers who chose an ESCO, bills would continue to come from the utilities for delivery, with supplies charged by the ESCO.

          One of the aims was to lower the cost of energy supplies. Electricity prices in New York are among the highest in the nation, about 50% more than the national average.  ConEd  does not generate its energy supplies. Nor do ESCOs. They buy them.  The point was that while supplying energy was not a profit-maker for the utility, ESCOs could still come up with a better deal by buying their bulk energy supplies in the open market. (There would be less volatility in costs and consumers could make better deals by selecting a competitive supplier.

         Consumers, on average, are paying less for their energy supplies.  Estimates place the number of customers buying their energy supplies from ESCOs in New York State at more than one million. That represents less than a third of the residential and  businesses that deal with utilities. There are some 70 plus ESCOs in the State providing energy supplies. Consumers should carefully check and compare the details of any contract with an ESCO or with other such suppliers.

         If, however, the Villages go along with the Town of Greenburgh, in cooperation with Sustainable Westchester, in taking part in Community Choice Aggregation, an ESCO will be selected for all to buy supplies from, with price reductions presumably secured by bulk purchase of electricity and gas.  Residents and small businesses in the Villages can opt out of that choice and either remain with ConEd or another ESCO if they wish.   

         New York State is moving along a path it has labeled “Reforming the Energy Vision” (REV).  The State’s Public Utility Commission initiated the project in April 2014 as an effort to educate consumers about energy choices, develop efficiency in energy markets, produce cleaner energy, and create diverse resources for the generation of energy such as solar and fuel cell production, potentially on a more local level, or even having the consumers as collective sources. It is asking the utilities to submit proposals as to how they might best tie together those sources. Making energy more affordable is another target of REV.                

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