Despite New Con Ed Plan, Landlords Still Prefer NY ESCOs

Despite New Con Ed Plan, Landlords Still Prefer NY ESCOs

Beginning this May, Con Ed will expand their hourly package plans to buildings that are using over 500 kilowatts. Mandatory Hourly Pricing, as it is called by Con Ed has been available since 2007 to some of the largest buildings in New York in an effort to motivate the owners to use less power during peak times by showing them the savings at other times of the day.

But the program has not been gaining as many consumers as hoped. Only a small percentage of owners that were eligible actually signed up for the program, and a reported 330 out of the potential 1,200 have signed to join the program in May. Why is the program not being received as well as expected? The answer may be ESCO.

ESCO is short for Energy Service Company. While Con Ed serves as a delivery system, there are options available for consumers who want a different supplier for their gas. Over a decade ago before deregulation, New Yorkers had to buy their gas direct from their local Utility Company, which essentially functioned as a monopoly. Now the consumer has the ability to choose who will supply their commodity, and continue to receive service from their energy company.

In a New York times article, Edward M. Fallon, president of the Building Owners and Managers Association of Greater New York said that Con Ed's plan "doesn't seem to make sense for the New York market." He also mentioned that most of his organization's members chose to buy fixed rate contracts from energy service companies.

These energy service companies actively compete on prices. Most landlords and homeowners do not want to "ride the market" and be exposed to daily rates that may change drastically. These owners tend to buy fixed rates from a New York ESCO who can offer fixed rates and conduct assessments on the variable of pricing such as weather, commodity prices and data about New York's aging power grid, on their own.

However, Experts say that over the next few years, hourly pricing and its variants will be a huge part of the market. ESCO's are likely to offer these services as well. But it is their competitive plans that makes them a more appealing choice for many owners. This trend is worth keeping an eye on. It is interesting to see how hourly rates may affect energy service companies in New York, but it seems that with a competitive spirit ESCO's are already on the right track.

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