State regulators crack down on aggressive energy marketing

BY The Associated Press

Wednesday, October 15, 2008 11:28 PM EDT

ALBANY — As cold weather approaches and New Yorkers’ thoughts turn to heating costs, state utility regulators are aiming to rein in aggressive marketing by energy suppliers.
Member of the state Public Service Commission adopted new rules Wednesday for independent energy service companies, or ESCOs, that sell electricity and natural gas to their own customers but deliver it through local utilities’ lines. Consumer protection agencies asked PSC regulators in December to crack down on ESCOs after a flood of complaints about door-to-door sales people misrepresenting themselves and lying about the actual savings customers would get by signing up for their deals.

The independent suppliers have operated in New York for more than a decade under a state energy policy meant to keep costs competitive. They’ve made the most headway among commercial customers.

Nearly three quarters of the energy used by large commercial customers, and more than half used by small and medium commercial customers, comes from independent suppliers, said Jay Kooper, the New York chairman for the Retail Energy Supply Association, a group of companies that support market competition.

Meanwhile, just 17 percent of the energy in New York households comes from independent suppliers. The New York State Consumer Protection Board and the New York City Department of Consumer Affairs asked utilities regulators to establish new rules after a flurry of complaints in summer and fall of 2007.

Those complaints included allegations of “slamming” — meaning service was changed without the customer’s permission — sales people misrepresenting themselves as local utility company employees and promises of savings that never materialized.

There are about 75 ESCOs doing business in the state, most of which are ethical and honest, Kooper said.

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