Deregulation in New York State

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Status Report and VisionRetail Access Programs
in New York State
Ronald M. Cerniglia Director New York State
Public Service Commission Office of Retail Market
Development [phone] Ronald_Cerniglia_at_dps.s
tate.ny.us
Massachusetts Electric Restructuring
Roundtable January 28, 2005 Boston,
Massachusetts
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Why Competitive Energy Markets?

• Choice / Freedom
• Rational Economic Decisions
• Innovation in Products and Services
• Technology Deployment
• Environment

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Retail Access OverviewChallenges and
Opportunities

• California
• ENRON / Downturn of financial markets
• NYISO maturation
• Natural Gas Volatility
• Consumer Reports
• August 2003 Blackout
• Approximately 18 states / districts are
  actively implementing retail choice, 7 have
  delayed or suspended implementation, and 26 that
  are not presently active
• In 2003, ESCOs served gt 52,000 MWs, 7 of total
  demand, a 30 increase as compared to 2002
• One third of electricity load in the United
  States has the ability to choose a provider other
  than their local utility

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New York by the Numbers
There are approximately 6.5 million electric
accounts in New York State with a peak demand of
31,000 mWs
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There are approximately 4.5 million gas customers
in New York State with 510,000 MDTs
New York by the Numbers
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Retail Access in NY is Continuing to Make Steady
Progress (continued)

• There have been a number of positive benefits as
  a result of the restructuring of the energy
  industry in New York
• 8 billion in rate savings throughout the state
  since 1996
• 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
  ESCOs.
• Success in the small customer market,
  highlighted by Orange and Rockland's territory
  which has achieved migration levels of
  approximately 33 for electric and 37 for
  natural gas residential and small business
  customers.

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

• ESCO Community is growingThere are
  approximately 60 ESCOs providing electricity
  and/or gas to customers
• There are at least three ESCOs serving
  electricity and five ESCOs serving gas in every
  major service territory in NY. Most service
  territories have many more
• The Commission has approved competitive metering
  for commercial and industrial customers over 50
  kW and there are several pilots serving
  residential customers. There are 13 competitive
  metering providers (MSPs MDSPs) thus far in New
  York.
• A coordinated 290 million commitment to
  renewable energy, energy efficiency and demand
  reduction programs.

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

• Electric pricing offers range from fixed prices
  to variable (hourly)
• Larger electric loads can participate in the
  NYISO Demand Response programs
• The Commission has approved voluntary RTP rates
  for customers over 100 kW
• Value added services are beginning to be
  provided by ESCOs (e.g., green power, bundled
  electric/gas/oil service, energy efficiency,
  demand reduction, appliance service contracts)

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

• As of December 2004, the following percentage of
  electric customers have migrated to an ESCO
• 46 of large commercial / industrial customers
  (65 of load)
• 13 of small commercial / industrial customers
  (36 of load)
• 5 of residential customers (7 of load)
• Number and Percent of Migrated Customer Accounts
  by Utility
• Number Percent
• Orange Rockland 66,100 31
• RGE 72,000 21
• NYSEG 82,000 9
• NMPC 115,000 7
• Con Edison 111,000 4
• CHGE 2,000 1

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

• As of November 2004, the following percentage of
  gas customers have migrated to a marketer
• 100 of large non-residential customers
• 16 of small non-residential customers (35 of
  load)
• 7 of residential customers (14 of load)
• Number and Percent of Migrated Customer Accounts
  by Utility
• Number Percent
• OR 44,350 37
• Corning 3,290 23
• RGE 42,937 15
• NMPC 78,401 14
• NFG 53,907 10
• KeySpan (NY) 76,078 7
• KeySpan (LI) 31,191 6
• Con Edison 25,658 2
• NYSEG 5,147 2
• CHGE 1,235 2

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The Path to Our Vision for the Future

• Policy Statement issued August 25, 2004 outlined
  the Commission's end state vision of electric and
  gas retail markets and contained the following
• Vision
• The provision of safe, adequate, and reliable
  gas and electric service at just and reasonable
  prices is the primary goal. Competitive markets,
  where feasible, are the preferred means of
  promoting efficient services, and are well suited
  to deliver just and reasonable prices, while also
  providing customers with the benefit of greater
  choice, value, and innovation. Regulatory
  involvement will be tailored to reflect the
  competitiveness of the market

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The Path to Our Vision for the Future (continued)

• Policy Statement issued August 25, 2004 outlined
  the Commission's end state vision of retail
  markets and contained the following
  recommendations
• Statewide use of OR Switch Save (Power Switch)
  Program
• Utility purchase of ESCO accounts receivable
• Retail Auctions
• Market Match/Market Expo
• Aggregation Pilot Programs
• Coordinated Utility/ESCO/PSC Education and
  Marketing Campaigns
• Utility Portfolio Management and Pricing
• Monitoring the Market for Anti-Competitive
  Behavior

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Competitive Markets Methods to Foster Migration

• Switch and Save Program
• ESCO provides guaranteed savings (7) for two
  months for customers that sign up for the
  program.
• Utility customers contact utility call center
  representatives offer program. Customer is either
  assigned at random to a participating ESCO or can
  choose a participating ESCO directly.
• Utility handles enrollment and switching
• Easy way for ESCOs to acquire customers, but
  requires supportive utility mindset and call
  center readiness
• Has shown success mass market switching of
  almost 40
• Recommended state-wide implementation

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Competitive Markets Methods to Foster
Migration (continued)

• Utility Purchase of ESCO Accounts Receivable
• Critical element of Switch and Save Program, but
  may also be used on its own
• Utility purchases receivables at a discount
  agreed to by the parties
• Utility bills customer for ESCO
• ESCO receives payment from utility, minus
  discount
• ESCO avoids revised HEFPA requirements re
  shutoffs
• Reduces ESCO back office (customer care) and
  overhead costs

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Competitive Markets Methods to Foster
Migration (continued)

• Retail Auctions
• Customer or Load
• In blocks winning ESCOs provide a fixed price
  for one year at any time customer can return to
  IOU or go to another ESCO at year end, ESCO can
  make further arrangements with customer
• Pilots encouraged
• Companies must file detailed auction plan with
  Commission

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Competitive Markets Methods to Foster
Migration (continued)

• Market Match assists small commercial and
  industrial customers in receiving ESCO offers.
• Web-based system provides for the exchange of
  customer data (historical consumption, service
  class, NYISO zone) for customers interested in
  obtaining a commodity price solicitation from
  ESCOS
• Customer participation is voluntary and
  anonymous
• Market Expo - designed to bring ESCOs, business
  customers and the utility together in a physical
  setting to exchange customer data for those
  interested in obtaining a commodity price
  solicitation.
• Customer participation is voluntary
• Programs have shown success in fostering migration

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Competitive Markets Methods to Foster
Migration (continued)

• Aggregation Pilot Programs
• Affinity Groups
• Business Councils / Chambers of Commerce
• AARP
• Government Groups
• State Government Facilities
• County
• Local
• Low Income Customers

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Competitive Markets Methods to Foster
Migration (continued)

• Coordinated Utility/ESCO/DPS Education and
  Marketing Campaign
• NYPSC Competition Update Page (www.AskPSC.com)
• Slated for February 15
• Centralizes current PSC data in one place,
  including information on
• how to become an ESCO in NYS
• competition initiatives by service territory
• Migration statistics
• Links to utilities
• Power to Choose ESCO Comparison Chart
• Launched November 2004
• Provides electric and gas customers with
  comparison of utility vs. ESCO offerings
• ESCO participation is voluntary
• Updated Monthly

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New York State Consumer Education Efforts on
Competition and Green Power
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Competitive Markets Methods to Foster
Migration (continued)

• Utility Portfolio Management and Pricing
• More exposure to market-based rates through
  declining hedges
• Long term contracts only on a case by case basis
• No future fixed price commodity offers through
  utility
• Utility economic development rate discounts only
  on delivery portion of bill

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Competitive Markets Methods to Foster
Migration (continued)

• Monitoring the Market for Anti-Competitive
  Behavior
• Reduce anti-competitive barriers / level playing
  field
• IOUs/LDCs out of commodity market
• Market Monitoring via the Office of Retail Market
  Development
• Marketer Satisfaction Surveys (marketers rate
  utility)
• ESCO Ombudsman at each utility
• EDI, POR, HEFPA, pro-ration
• Align utilitys interests with the Commissions
• Migration incentives (20 - 50 per customer)
• Customer awareness of competitive markets
  incentives

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Retail Access Plan Filingsto Accelerate
Competition

• Central Hudson Gas and Electric Corporation
• Niagara Mohawk Power Corporation
• Orange and Rockland Utilities, Inc
• Plans will be reviewed by parties participating
  in a collaborative process
• Plans submitted thus far to be approved by the
  Commission in time to go into effect this Summer
• Remaining utility plans will be submitted by
  March

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