Electric deregulation is fast becoming a reality in New York. Adhering to the historic 1996 decision of the New York State Public Service Commission (PSC), utility companies throughout the state such as Con Edison, LILCO, Central Hudson and Niagara Mohawk are on schedule in opening up electric supply choices for their customers, beginning with pilot programs, says Edward Collins, a spokesperson for the PSC. Changes to the state's electric market will allow customers at last to choose their suppliers of electricity.
In the past, consumers were confined to buying energy from only one source: their local utility company. With deregulation, they will eventually be able to shop among the new Energy Service Companies (ESCOs) that will compete for their business by supplying alternative sources of energy. However, the delivery of electricity - and the rates charged - will remain in the hands of the local utility and continue to be regulated by the PSC. "The commission was concerned about safety and reliability, therefore we will regulate the transmission and distribution system," Collins explains. In effect, the split between supply and delivery means that consumers will be able to make purchasing choices that affect one quarter of their overall electric bill: 25 percent of electric costs are supply-based, while 75 percent are delivery-based.
Phases of Deregulation
June 1, 1998 marked the start of the first phase of Con Edison's pilot program toward electric deregulation. Entitled "Retail Choice," the program drew 75,794 volunteer customers from New York City and Westchester County representing 1,555 megawatts (MW) of electric load who were interested in having their energy supplied by an ESCO instead of Con Edison. Program enrollment for phase one exceeded Con Edison's expectations and in keeping with the company's plan, only 62,000 customers, representing 1,000 MW, were enrolled after having been chosen through lottery draw. The remaining volunteers received preference during enrollment for the second phase, which opened in April 1999 and will last until June 2000.
Residential and small commercial customers can still enroll in phase two of Retail Choice, which opened another 1,000 MW of usage to competition and could double the number of customers choosing alternate suppliers of electricity. At this juncture, large commercial customers cannot enroll until the next phase, scheduled to begin April 2000.