Governor Hochul Signs Legislation to Protect Consumers from Surprise Price Increases in Energy Bills

 

Legislation (A.703-A/S.683-A) Ensures Energy Service Companies Obtain Consent from Customers Prior to Any Price Increases

Underscores Commitment to Protect New Yorkers and Address Energy Affordability

 Governor Kathy Hochul today signed legislation to protect consumers from surprise price increases to their energy bills. Legislation (A.703-A/S.683-A) requires energy service companies to obtain the consent of the customer before any material price increases, underscoring Governor Hochul’s commitment to protecting New Yorkers and addressing energy affordability.

“Every New Yorker deserves affordable energy and I am proud to sign this legislation that puts consumers first,” Governor Hochul said. “My administration continues to take action to make energy more affordable in New York State, and with this legislation we are taking a significant step toward protecting consumers from surprise price increases to their energy bills."

Legislation (A.703-A/S.683-A) is intended to protect ESCO customers from surprise price increases to their energy bills. It amends the General Business Law to declare a change in the price or type of price for an energy service to be a “material” change which would require the consent of the customer. The bill also includes a provision that the energy provider shall disclose information about the current price of services, any proposed price changes, distribution prices, and where the customer may view their past bills if there is to be a material change.

An ESCO is an entity eligible to sell electricity and/or natural gas to customers using the transmission or distribution system of a utility. Approximately 1.6 million customers, including 900,000 electric and 700,000 gas customers, receive their energy supply from an ESCO, as compared to the more 7.2 million electric customers and approximately 4 million natural gas customers who receive their supply from a traditional utility.

Utility supply and ESCO supply pricing does fluctuate with global commodity prices, and the Public Service Commission regularly reports on supply price forecasts prior to winter heating and summer cooling seasons, and the Commission also requires utilities to have robust communication with their customers about price forecasts. This legislation helps provide additional PSC oversight of ESCO supply pricing to protect and educate customers.

There are 154 ESCOs currently operating in New York.

The Public Service Commission, the utility regulator in New York, has long been critical of certain ESCOs, particularly regarding prices. Every ESCO in New York must comply with the New York Uniform Business Practices guidelines and with all applicable orders from the Public Service Commission to maintain its eligibility to operate in New York. Among other requirements, ESCOs must file annual compliance reports by January 31 each year. Failure to comply with the rules could result in losing the ability to operate in New York. In 2019, the Commission forbade ESCOs from placing customers into variable-rate supply contracts at many multiples of the utilities’ supply prices, by requiring that future variable-rate contracts be no more than 5 percent higher than the prior 12 months’ average cost for the commodity. This new law will further reinforce consumer protections related to affordable prices and requires ESCOs to increase the transparency of the process under which an ESCO contract with a customer changes.