In New York State retail suppliers are known as ESCOs (Energy Service Companies). The current state of the wholesale and retail energy markets in New York can be traced to restructuring of the industry that dates to the 1970s, current restructuring efforts, and the importance of bottlenecks - or physical constraints on the transmission of power from production sites to significant load centers (such as New York City and portions of Long Island). During the energy crisis of the 1970s, restructuring in New York was heavily impacted by federal legislation known as PURPA, which attempted to encourage new sources of electricity generation by forcing utilities to purchase power from qualifying facilities built by non-utility actors. Legislation evolved from an overestimation of the avoided cost of energy projections that lead to an excess of PURPA generation facilities. The glut of "Qualified PURPA Facilities" increased the cost of energy to the point that many large users were threatening to leave the utility system, or leave the state entirely. This led the NY Public Service Commission (PSC) to consider deregulation. A collaborative process headed by an Administrative Law Judge lead to Opinion Number 96-12, issued in May 1996. This report contained a vision statement including retail competition (the ability of large and ultimately small customers to choose their electricity generation supplier) and generation divestiture by the formerly integrated regulated suppliers.
Following the issuance of 96-12 the utilities were told to file new rates. While the utilities sued the PSC by arguing that the Commission did not have the authority to order retail access and divestiture, the court ruled that the PSC's actions were legal, as the utilities were not ordered to divest or to open to retail access, but only to make new rate filings. Ultimately, the utilities complied with the "vision" or retail access and filed rate plans that included retail access and divestiture. Unlike uniform restructurings like those enacted in other states such as Massachusetts, each utility in NY state filed its own rate case. As rate case was handled by different judges and settled with different parties, which has lead to a lack of uniformity among utilities in New York. The lack of a firm legal basis for divestiture has also lead to relatively slow regulatory proceedings, as most issues are resolved through settlement. Following the restructuring settlement the utilities agreed to dissolve the New York Power Pool and created the NY Independent System Operator. The NYISO began operating the wholesale market system on December 1999, with the goal of open access to the transmission system for market participants.
Currently Patriot Energy works with customers as an aggregator combining the energy needs of businesses in the Consolidated Edison (ConEd) service territory through non-exclusive relationships with several ESCOs. All ConEd customers, be they large or small users of electricity, can switch to an ESCO to supply the generation portion of their electricity. ConEd will continue to distribute the electricity, and provide services such as meter reading. Your generation, or energy, will be provided by the ESCO. A customers needs and specific contract terms can be discussed with a Patriot Energy representative. However, there is one advantage to switching to an ESCO, regardless of contract terms. If you buy energy from an ESCO, the New York State sales tax on the delivery portion of your bill will be cut by 75% (post-September of 2002), and will be eliminated completely in September, 2003. And, ConEd cannot charge for switching your account to an ESCO or for switching back to ConEd if the contract with the ESCO ends.
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