They come to our neighborhoods in vans and in cars. They spread out across the blocks and, one by one, they knock on doors. Or they call. And call. And call. They knock on our doors and call when we are eating or sleeping, or trying to spend time with our families. They are called retail Energy Service Companies, or ESCOs, and they make their money by getting people—often by deception—to switch their energy service provider.
The ESCO sales pitch varies, but it usually contains a promise to save you money on your energy bills. Sometimes they say they are from the “energy company,” or they even pretend to be from your local utility, which is not true. Sometimes they say a new law requires you to get electric or gas service from them, which is also not true. Sometimes they say a recent law has given you competition and choice, and if you will just show them your bills, they will tell you how to save money. You show them your bills, only to find out later that they switched your account to their company—without your permission.
The knocking on your door, the calls from anonymous phone numbers, the untruths told to get your business and the false promises to save you money are the characteristics of ESCOs. Additionally, based on an analysis of thousands of complaints obtained from the state regulator, the Public Service Commission, and from the Public Utility Law Project of New York, ESCOs focus these high-pressure and often deceptive sales tactics in ZIP codes containing large numbers of low-income and fixed-income households, the disabled, seniors and customers with English fluency challenges.
According to the PSC’s most recent numbers, hundreds of thousands of low-income households across upstate and downstate New York are under siege and being overcharged by the ESCOs. In New York City, PULP found that in 2015-2016, more than 90 percent of ESCO customers paid more for service than if they had not been hoodwinked into leaving—or transferred against their will (i.e., “slammed”) from—their usual utility service. PULP also found that between 2012 and 2014, 64 percent of the complaints in New York City cited overcharging, 32 percent concerned “slamming” and an additional 31 percent contained allegations of fraud.
In February 2016, the PSC and Governor Cuomo took strong steps to reform the ESCO market by requiring them to actually save retail and small commercial consumers money on their bills—and to put that promise in writing or be barred from serving those customers. Instead of keeping their industry’s promises, however, the ESCOs sued to block the PSC’s reforms, claiming that their industry would suffer irreparable harm by actually having to deliver on their claims, and that the possible harm to their industry outweighed the real harm being inflicted by ESCOs.
On June 30 of this year, after 18 months of ESCOs fighting in court rather than cease to charge excessive prices, Justice Zwack of State Supreme Court delivered a strong decision protecting consumers, stating “that the ESCO market is in need of immediate reform to protect low-income consumers …”