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ELECTRICITY DEREGULATION
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Buying your electricity used to be as simple as flipping a light switch and writing a check to your local utility.
Not anymore, especially if you're a New York State Electric & Gas Corp. customer.
NYSEG customers have until the end of the year to pick an electricity supplier and a pricing plan for their service under the Binghamton-based utility's latest deregulation effort.
But for customers like Hollis Langdon, sifting through the more than half dozen different options and trying to figure out what's best for him can be difficult.
Should he sign up for a plan that promises a fixed price for his electricity, or one that goes up and down with the market price for power? Should he stick with NYSEG, or try one of the three other suppliers that are offering to sell him power?
"It's hard for a regular person like me to understand," the West Seneca resident said. "It's really confusing. For me, it would take a lawyer or a mathematician to figure out."
To try to get NYSEG's customers to embrace competition, the utility is in the midst of a $2.6 million campaign, funded with ratepayer money, that includes mailing enrollment kits to each of the company's roughly 800,000 customers and airing radio ads touting the options available to consumers.
NYSEG's customers have had the option of buying their electricity from another supplier for several years, but few have done it, with just 2.8 percent of the utility's residential consumers making the switch by last May, according to the latest statistics available from the State Public Service Commission. That's less than the 4.1 percent of Niagara Mohawk's residential customers who now are buying their electricity from another supplier.
NiMo customers are free to switch their electric service at any time, but unlike NYSEG customers, do not face any deadlines to make a decision. In fact, marketers have not been aggressively courting residential customers within NiMo's service territory because of the relatively slim profits they say they can earn from that market.
NYSEG's current effort, outlined in the utility's latest rate plan that was approved by the PSC in February, is the second phase of the transition to competition within its service territory, which covers a large swath of suburban Buffalo.
But unlike the relatively easy-to-understand programs promising set savings of 10 percent or so that natural gas marketers found to be quite popular with Western New Yorkers a few years ago, most of the options available to NYSEG customers are more complicated and harder for consumers to assess.
"It's a little more complex and confusing than the programs of the other utilities," said Russ Southard, vice president of Mirabito Gas & Electric, a Sidney, N.Y., energy marketer that is offering NYSEG customers plans with fixed and variable prices.
"This whole deregulation is still in its infancy," he said. "This is consumers' first run through, so they're not familiar with some of the terms."
For starters, customers have a choice about only a portion of their total electric bill. No matter what electricity supply option they choose, NYSEG will continue to deliver the power to their customers' homes within their service territory - a service that accounts for about half of a typical residential consumers' total bill.
In addition, all consumers will pay a transition charge of about 1.5 cents, which is the difference between the wholesale price of power and the price NYSEG pays under mandated long-term electricity contracts. The transition charge will vary, falling when wholesale power prices rise and going up when wholesale prices decline.
As a result, the actual cost of the electricity that consumers use accounts for only about 35 percent to 40 percent of a typical customers' total bill - and that's the only part of the bill that's open to competition and subject to choice.
Consequently, the savings that a typical customer can expect by switching suppliers amounts to $2 to $5 a month, depending on the plan and the amount of electricity used, marketers said.
"It's worthwhile," said Jonathan Gewirtz, a spokesman for Econnergy Energy Co., a Spring Valley, N.Y., energy marketer that is signing up customers in NYSEG's territory and also offers natural gas service for National Fuel Gas Co. customers.
"If somebody can save $30 to $40 (a year) on their gas and $30 to $40 on their electricity, hey, that's $60 to $80. It's nothing to sneeze at," he said.
Critics of the state's deregulation efforts, like the Public Utility Law Project and the American Association of Retired Persons, are recommending that consumers not switch to a marketer unless Gov. George Pataki signs a consumer protection bill that would make alternative suppliers subject to the same consumer rules that regulated utilities must follow. The bill, which was passed unanimously by the Assembly and Senate during June, has not been sent to the governor for action.
"The gain may not be worth the pain" if billing or collections problems arise, said Gerald A. Norlander, the executive director of the Public Utility Law Project, an advocacy group for low-income and elderly utility customers in Albany.