status report and vision: retail access programs in new york state

Status Report and Vision:Status Report and Vision:Retail Access Programs in Retail Access Programs in New York StateNew York State

Ronald M. CernigliaRonald M. CernigliaDirectorDirectorNew York State Public Service CommissionNew York State Public Service CommissionOffice of Retail Market DevelopmentOffice of Retail Market Development

(518) 474-1540(518) [email protected][email protected]

Massachusetts Electric Restructuring RoundtableMassachusetts Electric Restructuring Roundtable

January 28, 2005January 28, 2005Boston, MassachusettsBoston, Massachusetts

2

Why Competitive Energy Why Competitive Energy Markets?Markets?

• Choice / FreedomChoice / Freedom

• Rational Economic DecisionsRational Economic Decisions

• Innovation in Products and ServicesInnovation in Products and Services

• Technology DeploymentTechnology Deployment

• Environment Environment

3

Retail Access OverviewRetail Access OverviewChallenges and OpportunitiesChallenges and Opportunities

• CaliforniaCalifornia• ENRON / Downturn of financial marketsENRON / Downturn of financial markets• NYISO maturation NYISO maturation • Natural Gas VolatilityNatural Gas Volatility• Consumer ReportsConsumer Reports• August 2003 BlackoutAugust 2003 Blackout

• Approximately 18 states / districts are actively implementing retail Approximately 18 states / districts are actively implementing retail choice, 7 have delayed or suspended implementation, and 26 that are choice, 7 have delayed or suspended implementation, and 26 that are not presently activenot presently active

• In 2003, ESCOs served In 2003, ESCOs served > > 52,000 MWs, 7% of total demand, a 30% 52,000 MWs, 7% of total demand, a 30% increase as compared to 2002increase as compared to 2002

• One third of electricity load in the United States has the ability to choose One third of electricity load in the United States has the ability to choose a provider other than their local utilitya provider other than their local utility

4

New York by the NumbersNew York by the Numbers

There are approximately 6.5 million electric accounts in There are approximately 6.5 million electric accounts in New York State with a peak demand of 31,000 mWsNew York State with a peak demand of 31,000 mWs

5

There are approximately 4.5 million gas There are approximately 4.5 million gas customers in New York State with 510,000 MDTscustomers in New York State with 510,000 MDTs

New York by the NumbersNew York by the Numbers

6

Retail Access in NY is Continuing Retail Access in NY is Continuing to Make Steady Progress to Make Steady Progress (continued)(continued)

There have been a number of positive benefits as a result of the There have been a number of positive benefits as a result of the restructuring of the energy industry in New Yorkrestructuring of the energy industry in New York

• $8 billion in rate savings throughout the state since 1996$8 billion in rate savings throughout the state since 1996

• Nearly 100% of the state's largest gas customers and 65% of the large Nearly 100% of the state's largest gas customers and 65% of the large time-of-use commercial and industrial electricity load being supplied by time-of-use commercial and industrial electricity load being supplied by ESCOs.ESCOs.

• Success in the small customer market, highlighted by Orange and Success in the small customer market, highlighted by Orange and Rockland's territory which has achieved migration levels of approximately Rockland's territory which has achieved migration levels of approximately 33% for electric and 37% for natural gas residential and small business 33% for electric and 37% for natural gas residential and small business customers.customers.

7


• ESCO Community is growing…There are approximately 60 ESCOs ESCO Community is growing…There are approximately 60 ESCOs providing electricity and/or gas to customersproviding electricity and/or gas to customers

• There are at least three ESCOs serving electricity and five ESCOs There are at least three ESCOs serving electricity and five ESCOs serving gas in every major service territory in NY. Most service territories serving gas in every major service territory in NY. Most service territories have many morehave many more

•The Commission has approved competitive metering for commercial and The Commission has approved competitive metering for commercial and industrial customers over 50 kW and there are several pilots serving industrial customers over 50 kW and there are several pilots serving residential customers. There are 13 competitive metering providers residential customers. There are 13 competitive metering providers (MSPs & MDSPs) thus far in New York.(MSPs & MDSPs) thus far in New York.

• A coordinated $290 million commitment to renewable energy, energy A coordinated $290 million commitment to renewable energy, energy efficiency and demand reduction programs. efficiency and demand reduction programs.

8

• Electric pricing offers range from fixed prices to variable (hourly) Electric pricing offers range from fixed prices to variable (hourly)

• Larger electric loads can participate in the NYISO Demand Response Larger electric loads can participate in the NYISO Demand Response programs programs

• The Commission has approved voluntary RTP rates for customers over The Commission has approved voluntary RTP rates for customers over 100 kW100 kW

• Value added services are beginning to be provided by ESCOs (e.g., Value added services are beginning to be provided by ESCOs (e.g., green power, bundled electric/gas/oil service, energy efficiency, demand green power, bundled electric/gas/oil service, energy efficiency, demand reduction, appliance service contractsreduction, appliance service contracts))


9

Retail Access in NY is Continuing Retail Access in NY is Continuing to Make Steady Progress to Make Steady Progress

(Electric)(Electric)As of December 2004, the following percentage of electric customers As of December 2004, the following percentage of electric customers have migrated to an ESCO:have migrated to an ESCO:

• 46% of large commercial / industrial customers (65% of load)46% of large commercial / industrial customers (65% of load)• 13% of small commercial / industrial customers (36% of load) 13% of small commercial / industrial customers (36% of load) • 5% of residential customers (7% of load) 5% of residential customers (7% of load)

Number and Percent of Migrated Customer Accounts by UtilityNumber and Percent of Migrated Customer Accounts by Utility

NumberNumber PercentPercent Orange & Rockland Orange & Rockland 66,100 66,100 31 31 RG&E RG&E 72,000* 72,000* 21 21 NYSEGNYSEG 82,000* 82,000* 9 9 NMPC NMPC 115,000 115,000 7 7 Con Edison Con Edison 111,000 111,000 4 4 CHG&E CHG&E 2,000 2,000 1 1

10

Retail Access in NY is Continuing Retail Access in NY is Continuing to Make Steady Progress (Gas)to Make Steady Progress (Gas)

As of November 2004, the following percentage of gas customers have As of November 2004, the following percentage of gas customers have migrated to a marketer:migrated to a marketer:

•100% of large non-residential customers 100% of large non-residential customers •16% of small non-residential customers (35% of load)16% of small non-residential customers (35% of load)• 7% of residential customers (14% of load)7% of residential customers (14% of load)

Number and Percent of Migrated Customer Accounts by UtilityNumber and Percent of Migrated Customer Accounts by UtilityNumberNumber PercentPercent

O&R O&R 44,35044,350 3737 CorningCorning 3,290 3,290 2323 RG&E RG&E 42,93742,937 1515 NMPC NMPC 78,401 78,401 1414 NFG NFG 53,907 53,907 1010 KeySpan (NY) KeySpan (NY) 76,078 76,078 7 7 KeySpan (LI) KeySpan (LI) 31,191 31,191 6 6 Con Edison Con Edison 25,658 25,658 2 2 NYSEGNYSEG 5,147 5,147 2 2 CHG&ECHG&E 1,235 1,235 2 2

11

• Policy Statement issued August 25, 2004 outlined the Policy Statement issued August 25, 2004 outlined the Commission's end state vision of electric and gas retail markets Commission's end state vision of electric and gas retail markets and contained the following:and contained the following:

• VisionVision• ““The provision of safe, adequate, and reliable gas and electric The provision of safe, adequate, and reliable gas and electric

service at just and reasonable prices is the primary goal. service at just and reasonable prices is the primary goal. Competitive markets, where feasible, are the preferred Competitive markets, where feasible, are the preferred means of promoting efficient services, and are well suited means of promoting efficient services, and are well suited to deliver just and reasonable prices, while also providing to deliver just and reasonable prices, while also providing customers with the benefit of greater choice, value, and customers with the benefit of greater choice, value, and innovation.innovation. Regulatory involvement will be tailored to reflect Regulatory involvement will be tailored to reflect the competitiveness of the market”the competitiveness of the market”

The Path to Our Vision for the The Path to Our Vision for the FutureFuture

12

• Policy Statement issued August 25, 2004 outlined the Policy Statement issued August 25, 2004 outlined the Commission's end state vision of retail markets and contained the Commission's end state vision of retail markets and contained the following recommendations:following recommendations:

• Statewide use of O&R Switch & Save (Power Switch) Program Statewide use of O&R Switch & Save (Power Switch) Program • Utility purchase of ESCO accounts receivable Utility purchase of ESCO accounts receivable • Retail AuctionsRetail Auctions• Market Match/Market ExpoMarket Match/Market Expo• Aggregation Pilot Programs Aggregation Pilot Programs • Coordinated Utility/ESCO/PSC Education and Marketing Coordinated Utility/ESCO/PSC Education and Marketing

CampaignsCampaigns• Utility Portfolio Management and PricingUtility Portfolio Management and Pricing• Monitoring the Market for Anti-Competitive BehaviorMonitoring the Market for Anti-Competitive Behavior

The Path to Our Vision for the The Path to Our Vision for the Future Future (continued)(continued)

13

• Switch and Save ProgramSwitch and Save Program • ESCO provides guaranteed savings (7%) for two months for ESCO provides guaranteed savings (7%) for two months for

customers that sign up for the program. customers that sign up for the program. • Utility customers contact utility call center; representatives offer Utility customers contact utility call center; representatives offer

program. Customer is either assigned at random to a program. Customer is either assigned at random to a participating ESCO or can choose a participating ESCO directly. participating ESCO or can choose a participating ESCO directly.

• Utility handles enrollment and switchingUtility handles enrollment and switching• Easy way for ESCOs to acquire customers, but requires Easy way for ESCOs to acquire customers, but requires

supportive utility mindset and call center readinesssupportive utility mindset and call center readiness• Has shown success – mass market switching of almost 40%Has shown success – mass market switching of almost 40%• Recommended state-wide implementationRecommended state-wide implementation

Competitive Markets: Methods to Competitive Markets: Methods to Foster MigrationFoster Migration

14

• Utility Purchase of ESCO Accounts ReceivableUtility Purchase of ESCO Accounts Receivable • Critical element of Switch and Save Program, but may also be Critical element of Switch and Save Program, but may also be

used on its ownused on its own• Utility purchases receivables at a discount agreed to by the Utility purchases receivables at a discount agreed to by the

partiesparties• Utility bills customer for ESCOUtility bills customer for ESCO• ESCO receives payment from utility, minus discountESCO receives payment from utility, minus discount• ESCO avoids revised HEFPA requirements re: shutoffsESCO avoids revised HEFPA requirements re: shutoffs• Reduces ESCO back office (customer care) and overhead Reduces ESCO back office (customer care) and overhead

costscosts

Competitive Markets: Methods to Competitive Markets: Methods to Foster Migration Foster Migration (continued)(continued)

15

• Retail AuctionsRetail Auctions• Customer or LoadCustomer or Load

• In blocks – winning ESCOs provide a fixed price for one In blocks – winning ESCOs provide a fixed price for one year; at any time customer can return to IOU or go to year; at any time customer can return to IOU or go to another ESCO; at year end, ESCO can make further another ESCO; at year end, ESCO can make further arrangements with customer;arrangements with customer;

• Pilots encouragedPilots encouraged

• Companies must file detailed auction plan with CommissionCompanies must file detailed auction plan with Commission


16

• Market Match Market Match – assists small commercial and industrial customers – assists small commercial and industrial customers in receiving ESCO offers. in receiving ESCO offers. • Web-based system provides for the exchange of customer data Web-based system provides for the exchange of customer data

(historical consumption, service class, NYISO zone) for (historical consumption, service class, NYISO zone) for customers interested in obtaining a commodity price solicitation customers interested in obtaining a commodity price solicitation from ESCOS; from ESCOS;

• Customer participation is voluntary and anonymous; Customer participation is voluntary and anonymous;

• Market Expo Market Expo - designed to bring ESCOs, business customers and - designed to bring ESCOs, business customers and the utility together in a physical setting to exchange customer data the utility together in a physical setting to exchange customer data for those interested in obtaining a commodity price solicitation.for those interested in obtaining a commodity price solicitation.• Customer participation is voluntary; Customer participation is voluntary;

• Programs have shown success in fostering migrationPrograms have shown success in fostering migration


17

• Aggregation Pilot ProgramsAggregation Pilot Programs

• Affinity GroupsAffinity Groups• Business Councils / Chambers of CommerceBusiness Councils / Chambers of Commerce• AARPAARP

• Government GroupsGovernment Groups• State Government FacilitiesState Government Facilities• CountyCounty• LocalLocal

• Low Income CustomersLow Income Customers


18

• Coordinated Utility/ESCO/DPS Education and Marketing CampaignCoordinated Utility/ESCO/DPS Education and Marketing Campaign

• NYPSC Competition Update PageNYPSC Competition Update Page ((www.AskPSC.comwww.AskPSC.com))• Slated for February 15Slated for February 15• Centralizes current PSC data in one place, including information on:Centralizes current PSC data in one place, including information on:

how to become an ESCO in NYShow to become an ESCO in NYS competition initiatives by service territorycompetition initiatives by service territory Migration statisticsMigration statistics Links to utilitiesLinks to utilities

• Power to Choose ESCO Comparison ChartPower to Choose ESCO Comparison Chart Launched November 2004Launched November 2004 Provides electric and gas customers with comparison of utility vs. Provides electric and gas customers with comparison of utility vs.

ESCO offeringsESCO offerings ESCO participation is voluntaryESCO participation is voluntary Updated MonthlyUpdated Monthly


http://www.askpsc.com/

19

New York State Consumer Education Efforts on Competition and Green Power

http://www.askpsc.com/campaigns/?action=viewCampaign&id=1047

20

• Utility Portfolio Management and PricingUtility Portfolio Management and Pricing

• More exposure to market-based rates through declining hedgesMore exposure to market-based rates through declining hedges

• Long term contracts only on a case by case basisLong term contracts only on a case by case basis

• No future fixed price commodity offers through utilityNo future fixed price commodity offers through utility

• Utility economic development rate discounts only on delivery Utility economic development rate discounts only on delivery portion of billportion of bill


21

• Monitoring the Market for Anti-CompetitiveMonitoring the Market for Anti-Competitive BehaviorBehavior• Reduce anti-competitive barriers / level playing fieldReduce anti-competitive barriers / level playing field• IOUs/LDCs out of commodity marketIOUs/LDCs out of commodity market

• Market Monitoring via the Office of Retail Market DevelopmentMarket Monitoring via the Office of Retail Market Development• Marketer Satisfaction Surveys (marketers rate utility)Marketer Satisfaction Surveys (marketers rate utility)• ESCO Ombudsman at each utilityESCO Ombudsman at each utility• EDI, POR, HEFPA, pro-rationEDI, POR, HEFPA, pro-ration

• Align utility’s interests with the Commission’sAlign utility’s interests with the Commission’s• Migration incentives ($20 - $50 per customer)Migration incentives ($20 - $50 per customer)• Customer awareness of competitive markets incentives Customer awareness of competitive markets incentives


22

• Central Hudson Gas and Electric CorporationCentral Hudson Gas and Electric Corporation• Niagara Mohawk Power CorporationNiagara Mohawk Power Corporation• Orange and Rockland Utilities, IncOrange and Rockland Utilities, Inc

• Plans will be reviewed by parties participating in a collaborative Plans will be reviewed by parties participating in a collaborative process;process;

• Plans submitted thus far to be approved by the Commission in Plans submitted thus far to be approved by the Commission in time to go into effect this Summertime to go into effect this Summer

• Remaining utility plans will be submitted by MarchRemaining utility plans will be submitted by March

Retail Access Plan FilingsRetail Access Plan Filingsto Accelerate Competitionto Accelerate Competition

status report and vision: retail access programs in new york state

Documents

new york stateronald

mdtsnew york

pptnew york

residential customers

industrial customers

states largest gas customers

retail access programs

electricity andor gas