Long Island Electric Choice under Review

Most New York consumers and businesses have enjoyed the opportunity to choose their electricity provider for more than 15 years. Competition from Energy Service Companies (ESCOs) has fostered innovation, and increased consumer awareness on important issues like energy conservation.  Electric choice, however, has not materialized for customers on Long Island.

By most measures, the New York electric choice market is doing very well.

• There were 77 ESCOs each serving at least 1000 customers in the state as of December 2014.
• As of May 2015, 58.7% of total customer load had switched to ESCOs.
• The May 2015 customer migration report also showed that over 22% of all residential customer accounts have switched from the utility to ESCOs.

The Long Island Power Authority (LIPA), however, has almost no ESCOs marketing in its service territory and an insignificant number of customers switching to those few ESCOs.

Changes in Electricity Choice

In January 2015, the Retail Energy Supply Association (RESA) petitioned LIPA to investigate this market anomaly and identify measures to correct it. RESA pointed out that the natural gas choice market in Long Island is very successful in terms of active marketers and customer switching.  RESA characterized the inability of Long Island consumers and businesses to access competitively priced electricity as economically harmful.

Almost a year later, there appears to be some action consistent with RESA’s petition. On December 31, 2015, the New York State Department of Public Service (DPS) opened public statement hearings on the Long Island electricity market.  The DPS stated that its fundamental role is to ensure that all New York customers have access to reliable electric service at the lowest possible costs.  It also acknowledged that customers in the LIPA service area face barriers that have prevented electric competition from developing.

Electricity Market Comparisons

DPS seeks to investigate customer benefits from electric choice and examine what reforms may be needed to achieve them. The DPS announcement outlines a number of questions for which it is specifically seeking comments to aid its inquiry.  One question seeks comments on best practices from other markets such as Texas and the United Kingdom.  It is interesting that the DPS would be open to insights from market structures fundamentally different from what is already working well in New York outside of Long Island.  This broad scope indicates that a solution for Long Island may not fit within the confines of the existing New York market structure.

Comments to DPS are due by April 1, 2016. It will be interesting to see if this process can finally bring electric choice to Long Island consumers.