Group: LIPA prevents competition

A group representing more than 20 electric service companies seeking access to the Long Island market is accusing LIPA of having "stymied" competition despite a state deregulation mandate 16 years ago.

The Retail Energy Supply Association made wide-reaching accusations in a 15-page filing with the state Department of Public Service as part of a recently mandated management audit of the Long Island Power Authority.

"Unlike the rest of New York State, meaningful competitive choice for all consumers on Long Island does not presently exist," the filing said. Were it allowed, the group said, competition would "greatly enhance the efficiency of LIPA's operations and the provision of electric commodity service to consumers."

LIPA, citing the pending state audit, declined to comment on the filing.

The group accuses LIPA of creating structural hurdles to competition, and of failing to make its customers aware of the competitive alternatives.

LIPA in 1999 launched a program called Long Island Choice, opening some 400 megawatts of power for competitors, later adding 800 megawatts -- enough to power more than 100,000 homes. Provisions for competing electric service companies, or ESCOs, came with state deregulation of the system by the Public Service Commission in 1996.

"The ESCO community wants to be out on Long Island," said Jay Kooper, director of regulatory affairs for Hess Corp., one of three companies that operates here. "We think we have an array of products Long Islanders can find value in." But, he added, LIPA "has been relatively resistant or certainly not inclined to" encourage competition.

Where they have proper competitive structures in a market, ESCOs can offer lower rates, stabilized pricing and more renewable energy, said John Holtz, director of Eastern U.S. energy markets for Green Mountain Energy Co., an ESCO, and chairman of RESA's New York arm. But with LIPA, rates aren't driven by market forces, making competition untenable. Also, Long Island ESCO customers receive two bills -- one from LIPA and one from the ESCO -- and companies don't have access to customer data, Holtz said.

The group, in its filing, contended that the utility's LI Choice program "offers little in the way of choices for Long Island consumers and lags far behind the successes that have been achieved in the rest of the state."

Only one company, People's Power & Gas, offers residential electric service on Long Island, and three, including Hess, offer commercial electric service, according to LIPA's website.

Even with those, the retail group said, competition remains "basically nonexistent" in LIPA territory, while electric service companies across the rest of the state make up around half of the market.In addition, the group said, around 52 percent of natural gas service on Long Island is supplied from service companies that compete with KeySpan/National Grid.

The group said many electric service companies want to enter the Long Island market, but "have been stymied by a combination of systemic structural deficiencies" in the LIPA program.

It requested that the state Public Service Department audit the LIPA program, and consider several pricing measures that would encourage competition.

The group also accused LIPA of failing to alert customers to the option of competition. "Currently, however, LIPA does not engage in any material outreach and education effort to advise customers of the existence of the program," it contended.

More information about the program can be found on LIPA's website atlipower.org/commercial/lichoice/

The filing by the Retail Energy Supply Association is atdocuments.dps.ny.gov/public/Common/ViewDoc.aspx?DocRefId={9DD22762-03FC-440B-933D-45FE217BBA87}