NOTE: NYSEG is an electricity supplier in the State of New York. I am not affiliated with, nor do I represent, their organization. I use the term “NYSEG” solely as a search term for this post.
NYSEG – The Power of Choice
NYSEG. New York State Electric and Gas. Terms you’ve likely heard before. The citizens of New York have the power to choose. But what does that really mean?
Most of us take the electricity and gas we use every day for granted. We never stop to think about how much harder life would be if we didn’t have these utilities. We complain about energy prices, but thanks to deregulation, we have choices.
These options didn’t exist before the 1990s. Today, energy service companies (ESCO) face fierce competition. NYSEG consumers can compare electricity offers from their local energy suppliers before they sign up for service.
NYSEG – Before New York State Electric and Gas Companies Weren’t Regulated
In the early days, energy suppliers competed against each other as they tried to lure the same consumers. Intense competition discouraged cooperation among power companies, and the result was the construction of multiple duplicate distribution lines. The competition was fiercest in the major cities because more people who needed and wanted electricity lived there. Wealthy people flocked to urban areas where they could take advantage of amenities and services that big cities offer.
Throughout history, whenever NYSEG companies expanded existing power plants or built new, bigger, and more efficient facilities. The result of improved facilities was lower energy prices. The higher the demand for electricity, the greater the need for larger power plants and more of them.
As production costs got cheaper because of improved power plants, the base rate for service went up. In some ways, the situation created the best case scenario for everyone. Everyone had energy, and they could afford to pay for it. With regulatory oversight, utility prices dropped, and the availability of electricity increased, producing highly desirable economic growth.
The result was a financial windfall for both energy suppliers and their stockholders. The richer companies got, the greater their desire to expand and diversify. Many companies became large national holding businesses that oversaw the subsidiaries they bought to increase their wealth and power.
NYSEG – What Led Congress to Enact the Public Utility Holding Company Act (PUHCA) of 1935?
Throughout the 1920s and 1930s, it was common for the biggest utility companies to engage in shady business practices. Thanks to the development of complex pyramid-like business structures, holding companies had control over the utility segment of the structure. A few high-ranking investors had control over all the subsidiary companies within the structure.
By the early 1930s, smart wheelers and dealers at three holding companies controlled nearly half of the nation’s utility companies. What made things even worse was the fact that one company gained ownership of 130 utility companies.
Nothing could prevent subsidiaries of holding companies from jacking up prices, so branches of holding companies cheated each other. Subsidiaries were blind to what was going on because the extra charges hid in the regulated rates. Holding companies saw nothing wrong with using affiliates to avoid having to pay their debts. There was a legal separation between holding companies and their subsidiaries. This meant that the holding company wasn’t legally responsible for debts that their subsidiaries incurred.
Some financial and economic historians blame PUHCs for contributing to the 1929 Stock Market Crash. Their greed, abuse of power and willingness to throw subsidiaries under the bus contributed to the Great Depression. Many holding companies collapsed because of the Depression.
Utility companies used to be industry monopolies. Federal and state laws theoretically forced energy suppliers to comply with regulations. But that didn’t prevent large holding companies from engaging in unethical (if not illegal) business deals.
The PUHCA of 1935 was enacted so that the SEC had the legal authority to force holding companies to comply with regulations when they made non-utility-related business deals. A critical element of the law forced multi-national corporations to give the SEC detailed reports about financial and organizational structure changes.
NYSEG – Historical Events That Foreshadowed the Need for Utility Deregulation
The Northeast Blackout of 1965
At 5:27 PM on November 9, 1965, a blackout shut down electricity for 14 hours. The blackout affected parts of Canada and many states in the Northeastern part of the United States. The outage covered an 80,000 square mile area and impacted over 30 million people. 800,000 New York City subway riders were stranded. Air traffic control shut down, making it impossible for planes to land, so they spent the time circling destination airports.
A faulty relay switch on the Canadian side of Niagara Falls at the Sir Adam Beck Station triggered the blackout. A southern power surge overloaded the system. Affected states included New York, New Jersey, Connecticut, Massachusetts, Rhode Island, Vermont, and New Hampshire.
The Oil Embargo of the 1970s
Utility producers faced drastic changes in the aftermath of the 1970s oil embargo. Higher fuels costs drove operating expenses up for power plants. Energy suppliers passed their increased production costs to utility consumers. Energy customers suffered because of higher electricity costs.
The embargo forced energy companies to find other ways to get the raw materials they needed to produce electricity. They looked for domestic resources and discovered coal and uranium. Both of these substances cost more to produce, and naturally, the higher cost was passed on to energy consumers. Utility customers complained to the government. The government’s response was the imposition of more oversight with the goal of ensuring compliance with regulatory requirements.
What Deregulation Means For NYSEG Consumers
Deregulation changed the face of the utility market during the 1990s. Until then, New York State Electric and Gas customers got energy from their local providers. That’s the way energy services used to work throughout the country. The lack of competition meant that the government was actually sanctioning utility monopolies.
Deregulation broke up monopolies while introducing competition. Before deregulation, whenever someone moved into a new home or business, they’d contact the local company that served their area. The cost of raw materials (mostly, fossil fuels) continues to be a driving force behind rising and falling electricity costs.
Deregulation changed the way energy transmission and distribution worked. NYSEG consumers can now choose their Energy Services Company (ESCO) They get their service from the ESCO, but the local utility company continued to transmit and distribute energy as usual.
What You Need to Know About NYSEG Energy Services Companies
Energy Services Companies (or ESCOs) are third party entities that are eligible to sell electric and natural gas service to customers. The ESCO handles the billing, but the utility company that distributes energy continues to do so.
The New York State Department of Public Services vets companies through an application process. All of the state’s ESCOs undergo scrutiny before they are eligible to sell energy. The current setup is such that every ESCO in New York State faces two-way competition. First, companies are in competition with one another to outdo every other company through the best deals, offers, and incentives. Secondly, it isn’t enough to offer more than any other company. For utility suppliers, it is all about convincing energy consumers that you have the best rates, amenities and customer service.
Every ESCO that markets their company must comply with the Public Services Department’s Uniform Business Practices. Typical marketing methods include door-to-door solicitation, and calling business and residential energy consumer. Regardless of how an ESCO goes about marketing their service or enrolling customers, they have to give the customer a printed copy of the Consumer’s Bill of Rights. Representatives for each ESCO has to spell out what those customer rights are.
NYSEG – What to Consider Before Switching to New ESCO
- Make sure you know what your current supplier’s policy is for breaking a contract to switch to another ESCO. Many companies have an early termination penalty. Find out if you’ll have to pay other fees for breaking the contract.
- ESCOs that are eager to lure new customers may have provisions for paying termination fees to your existing supplier. They may also offer to pay a deposit if that’s required. Other incentives might include smart thermostats for more efficient temperature control. Some companies may provide a home maintenance service, giving you the convenience of preseason heating and cooling maintenance or repairs.
- Learn about how the company deals with customer service issues. Make sure the toll-free numbers are easy to find, and the hours when agents are available is clearly posted.
- Check the NY State Public Service Commission’s Residential Complain Scorecard for ESCOs. This may be the most accurate and valuable tool you’ll have to see what subscribers think of the company.
NYSEG – Use the New York Public Service Commission’s Power to Choose Webpage
The Power to Choose page is your key to finding ESCOs, plans, rates and additional offers for your zip code.
The search tool helps you find authorized ESCOs who offer electric service.
You’ll be able to compare electricity rates for fixed and variable plans and see what other products and services ESCOs in your area offer.
NYSEG – Combine Services and Save
What If You Could Combine Your Energy Services With the Internet, Digital and Wireless Phone Services, Home Automation & Security and Television?
There are so many companies out there that are trying to lure consumers into their services. The amount of confusion that arises is inevitable. New York State Electric and Gas consumers may have an alternative. ACN is an Energy Services Company (ESCO) that offers residential customers a one-stop shopping. ACN makes it possible to cut the cord with separate providers for Internet, phone, television and home security services.ESCO) that offers residential customers a one-stop shopping. ACN makes it possible to cut the cord with separate providers for Internet, phone, television and home security services.
ACN is unique among Energy Services Companies in that it gives customers the chance to build a home based business. You can make the world a better place as an ACN customer. By switching your service, you help a child get fed. Every time you pay the bill for your ACN connected services, more children get fed.
Contact us to find out more about ACN and all of our services. Let us tell you about our home business opportunities.
Thank you for reading our post about NYSEG and the power to choose. Please feel free to leave your comments below.