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New York State Electric & Gas Corp. residential customers seeking alternative choices in a deregulated market are finding they don't really have much of a choice after all.
Four of the six energy companies listed as alternative residential electric suppliers on NYSEG's "Voice your Choice" Web site are not enrolling NYSEG customers. The reason, they say: The regulatory environment still makes it too difficult for the companies to compete with the giant utility.
Customers who failed to elect an alternative during the first phase or selection late last year can still switch through the end of this month, if they choose, without penalty or charges.
NYSEG still controls the infrastructure and delivery of electricity, which accounts for a substantial percentage of billing. The billing item open for competition -- the electricity itself -- offers too small a profit to make it worthwhile, especially for residential business where volumes are small and margins low, according to alternative suppliers.
"You're talking tenths of a cent (per kilowatt hour). That's what the game is with electricity," said Russ Southard, vice president of marketing for Mirabito Gas & Electric, one of the companies no longer enrolling NYSEG residential customers. "It got so we couldn't be competitive. We couldn't show residents any savings."
Econnergy, an electric company based in Spring Valley, and Agway Energy, based in Syracuse, are two remaining alternatives.
Econnergy reopened enrollment after the first of the year as regulations entered a new phase, allowing companies to compete against market rather than fixed prices, said Jonathan Gewirtz, a spokesman for Econnergy, which serves 250,000 customers.
"Basically, we have a two-year period to beat the market. It's a moving target, but that is what we face," Gewirtz said. While that still might not be enough incentive for small companies, Econnergy executives think they have enough savings to customers.
"To compete against a fixed number that is not a reflection of the market place is impossible," he said. It was especially hard when the price of energy soared over the winter -- a circumstance that contributed to the decision by several companies to discontinue their NYSEG enrollment.
Agway finds it worthwhile to offer electricity to NYSEG customers as part of a larger package, said Terry McInerney, director of sales.
"We're not just looking at a single product and saying, 'Can we make money off this?' That's not our objective. We are looking to make a little bit of money (with electric), but we want to sell them other products."
Those include different sources of energy and hardware, such as heaters, air conditioners and related services.
David C. Flanagan, a spokesman for the state Public Service Commission, said he anticipates Agway's approach will be the way competition will develop.
"We expect as competition develops that companies will be competitive on more than the price of the commodity," he said. "It's still very much a transition, and it will take time."
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