Stakeholders submitted comments to the New York PSC yesterday regarding a continuation of the PSC's retail market investigation, focused specifically on facilitating value-added energy services.

Aside from RESA calling for PSC oversight of marketing vendors and brokers (covered by EnergyChoiceMatters.com here), we did not find anything particularly newsworthy or novel in the comments, but we did find these comments from Infinite Energy concerning supplier-consolidated billing, called Consolidated ESCO Billing or CEB, of interest:

"Many of the problems experienced in New York have been significantly reduced if not outright eliminated in other markets precisely due to CEB and accelerated switching times. The same customer who is unlikely to notice unauthorized switches, high charges, or other misbehavior on a Consolidated Utility Bill ('CUB'), will immediately scrutinize a CEB should such an invoice be unexpected (slamming) or excessive (cramming). What is known as a 'slam' in New York, an often difficult experience for customers given two-month switching times and high bills, becomes a much more innocuous 'inadvertent gain' in markets such as Texas where switch times have shrunk from days to hours and where suppliers who commit inadvertent gains must recompense the affected customer," Infinite Energy said.

"Direct billing by ESCOs would also address many of the Commission's recent financial and customer protection concerns. Once New York ESCOs become responsible for the collection of their customers' delivery charges – as they are in Georgia and Texas – the benefits and innovation of competition become necessary and sufficient conditions of each ESCO's success. As discussed at length in the Commission's Retail Access Order, the current practice by which utilities purchase ESCO receivables has created an untenable situation in which ESCOs are distanced from their customers. This distance allows bad behavior in the form of excessive charges and a reliance on the utility's system-wide bad debt rate, resulting in unjust profiteering and inappropriate transfer of risk. Sufficient ESCOs have succumbed to the temptation of aggressively marketing to low-income customers, pitching products with no significant or long-term value or savings, and providing renewal service on insufficiently hedged and thus intolerably volatile variable rates because of the guaranteed purchase of receivables ('POR') by the utilities, which in essence arbitrages the bad debt rate of the utility versus the actual customer base of the ESCO. Even excluding those who market aggressively, it appears that at least some ESCOs fail to hedge sufficiently, to secure supply as well as they should, or to provide appropriate products to their customers, for the simple reason that their risk is passed to the utility and from there to rate payers through CUB/POR," Infinite Energy said.

"This bad behavior is not necessarily intentional. It is, however, unsurprising. The lack of a centralized, mandatory, well-known, and accessible market-place, the lack of apples-to-apples comparability between utility and ESCO rates, the clandestine 'piggybacking' made possible by CUB, the guaranteed payment of ESCO charges, the relative ease of market entry by companies which may not have the financial strength and operational backing to operate safely and efficiently as an ESCO, and the lack of mechanisms for enforcement and application of penalties – all these factors contribute to an environment where parasitic behavior is inevitable. The market must be restructured in such a manner where cooperative and competitive behavior is beneficial for all parties," Infinite Energy said.

"Respectfully, the CUB/POR experiment has not only failed, it has undermined the very market it was designed to facilitate. Allowing the dual billing and CEB models to exist alongside CUB is insufficient as a curative, as is creating ever more complex rules which must be incorporated into each utility's proprietary billing system at great expense. Implementing CEB in a manner where ESCOs become responsible for direct billing of utility charges will ensure that only those ESCOs with the financial and operational integrity to properly compete and serve the citizens of New York will be able to do so," Infinite Energy said.

"Unfortunately, the greatest opposition to this necessary transition [to CEB] has come from vocal segments of the ESCO community. Since the beginnings of New York's restructuring, it has been repeated to the point of tacit acceptance that requiring ESCOs to bill their own charges using their own or a 3rd party's billing systems would be a barrier to market entry. The time has long since passed for Infinite Energy and others to go on record stating that this belief is not only false but harmful to the market and to consumers. While it can require significant capital to build, buy, or outsource a billing system, of all the basic requirements reasonably expected of an Energy Services Company, the ability to calculate and deliver accurate and timely invoices should be the first and most fundamental. By requiring the utilities to provide this service, the market has opened itself to a large number of players which do little more than move captive rate payers from utility supply to non-utility supply, without providing significant value. Worse, under the current CUB/POR program, essentially guaranteed receivables without either regulatory oversight or competitive pressure leads to abuse, stagnation, and minimal investment. The citizens and business of New York deserve better," Infinite Energy said.

Infinite's full comments, as well as comments from other stakeholders, can be found on the PSC's website.

What do you think of Infinite comments, or other positions from stakeholders? Let us know below