BILL NUMBER:  S5289

 TITLE OF BILL :  An act to amend the public service law, in relation
to limiting authority for retail wheeling or delivery of natural gas
not purchased from the electric or gas corporation delivering it to
non-residential customers

 PURPOSE :

The bill limits the sale of electricity or natural gas by entities
other than utility corporations, which deliver it to non-residential
customers only.

 SUMMARY OF PROVISIONS :

Sections 1 and 2 of the bill amend the public service law §§ 66 - 12b
(b) and 66 - d relating to authorization of retail wheeling of
electricity and contract carriage of natural gas purchased from
sources other than the delivering utility to clarify that such retail
wheeling or contract carriage shall be allowed only with respect to
non-residential customers.

Section 3 provides for an immediate effective date.

 JUSTIFICATION :

              

In the physical world, it is impossible to separate electricity or
natural gas sales from the wires or mains of the utility that actually
provides the service. For nearly twenty years, the New York public
service commission has promoted, at great expense, the separate sale
of electricity and natural gas to residential and non-residential
customers by entities other than the utility corporations actually
providing the services, through financial contracts with "energy
services companies."

Despite state and in some areas local sales tax preferences, the
commission's effort to unbundle and separate the retail sale of
commodity gas or electricity did not succeed in lowering prices or
improving services for residential customers. Rather, the introduction
of new intermediaries selling utility services door to door or through
high-pressure telephone sales techniques increased transaction costs
that did not outweigh any gain in economic efficiency, and generally
increased costs for end users.  Consequently, despite illusory
promises of savings, residential customers who switch to energy
services companies for contracts to buy electricity or natural gas
have paid more, not less for the service.

The advent of many poorly supervised new entities selling natural gas
and electricity led to predatory, high-pressure telephone and door-to
door sales tactics, "slamming", excessive charges, and other abuse of
residential customers, many of whom are vulnerable, elderly, and
low-income. Despite large numbers of complaints to utilities, elected
officials and the public service commission, the commission is unable
to assure the provision of service by the alternative providers on
terms that are just and reasonable, and on better economic terms for
residential customers than traditional full service from the
distribution utility companies.

The commission's undue emphasis upon individual customer "shopping"
from a myriad of retail providers diverts attention to real solutions
to New York's high prices for utility services, and diverts customer
attention and awareness from increased efficiency and conservation.
Also, commission promotion of unbundled services and handling of
thousands of complaints arising from sales tactics and excessive rates
and charges or alternative retail sellers diverts limited commission

resources from improving its regulation of rates, charges, and
services of the utilities.

 LEGISLATIVE HISTORY :

2015-16 - S.7326 - Referred to Energy and Telecommunications/A.9652 -
Referred to Energy

 FISCAL IMPLICATIONS :

Increase in sales tax revenues to school districts and local
governments that tax residential utility service when customers of
energy services companies revert to full utility service, due to the
effective end of a sales tax exemption of utility delivery service to
residential customers who switched to an energy services company
(ESCO) for commodity purchases.

See Division of Budget 2016-17 Report on Tax Expenditures, p. 106.

 EFFECTIVE DATE :
This act shall take effect immediately.