New York state is tightening the rules on independent energy retailers who promise big savings to consumers who switch from traditional utilities.
Gov. Andrew Cuomo announced Tuesday that the state will require the companies to guarantee savings for residential and small business customers. The rules wouldn’t apply to energy companies that derive at least 30 percent of their electricity from renewable sources.
In addition, new rules are designed to prevent aggressive marketing efforts by companies that make unwanted calls or visits to consumers.
“We have zero tolerance for these unscrupulous companies, whose business model is to prey on ratepayers with promises of lower energy costs only to deliver skyrocketing bills,” Cuomo said in a statement. “These actions will root out these bad actors and protect New Yorkers from these unfair and dishonest tactics.”
The businesses, a sector known as energy service companies, compete with traditional utilities to supply electricity and natural gas and related services like energy efficiency. Some offer fixed rates to help consumers deal with high seasonal demand; others incorporate greater amounts of renewable energy in their portfolios.
Some 200 such companies are now operating in New York, providing services to more than 20 percent of the state’s residential and small-business customers. State officials said that while many do a good job, regulations should be tightened to ensure they follow through on promises to consumers.
A state review of the companies’ performances found several instances in which energy retailers were charging two or three times what the standard utility was charging. One Finger Lakes company was found to be billing customers eight times what the local Rochester utility charged.
“That’s not just and reasonable,” said Audrey Zibelman, chairwoman of the state’s Public Service Commission, which approved the new rules Tuesday. “It’s simply intolerable.”
In December, Texas-based Ambit Energy, one of the largest energy services companies in the state, agreed to refund nearly $1 million to customers after the state investigated complaints about its billing practices.