Discount Power? Or 200 Watt Problems?

Seven On Your Side
September 11, 2008 3:05:37 PM PDT
More than six hundred thousand residents of New York City and Westchester have switched their utilities to an ESCO, an acronym for energy service company. Since deregulation, ten years ago, there are about fifty ESCOs selling energy as an alternative to ConEd. But now consumer advocates are saying there's a growing chorus of unhappy ESCO customers. "I think it's awful." Student Ben Buttolph is down on IDT Energy. He says one of their salesmen came to his door and deceived him. "He said 'I'm with ConEd and I'm offering a discount to customers who have paid consistently on time for the last two years.'"

Ben says he never knew he was talking to a salesman from IDT Energy, one of the energy service companies that offers discount service. He says the IDT salesman also promised him monthly savings of seven percent.

But, a look at the IDT contract tells a slightly different story. On the front it promises up to 7 percent savings. But the fine print on the back says this savings is guaranteed for only 2 months. After the first two months the rate is variable.

"We have found that consumers are being misled believing that it is Con-Ed or regulated entity when it is not," said Mindy Bockstein of New York's Consumer Protection Board.

She says complaints about energy service companies have increased. New York's Public Service Commission received more than 200 complaints on IDT Energy in last year alone. The PSC says more than 100 complaints have been received regarding IDT Energy for the first 7 months of this year.

But the biggest problem according to consumer advocates? ESCO contracts that lock you in. "They are no longer dealing with a regulated utility," said Mindy. "And they (consumers) may face hundreds and hundreds of dollars of termination fees."

"Our policy is: they (IDT Energy customers) can switch back to their utility, no penalty, no cost whatsoever," said IDT CEO, Jim Courter.

IDT's contract is month to month, with no termination fee. Courter also says he's tried to make salesman misrepresentations a thing of the past. That's why IDT salesman wear identification badges. "It says IDT Energy," said Mr. Courter. "I am not a utility employee."

IDT's salesmen also work on commission. And the company's CEO says they have disciplined the salesman who called on Ben. "The sales person was suspended,retrained," Courter said. "And if he does something, anything that irritates a customer, he'll be fired."

The Consumer Protection Board is working to make ESCOs eliminate all termination fees and allow a longer grace period for consumers to opt out of contracts. The key for consumers is to read the ESCO contract carefully and make sure you know what you're signing. As for Ben, IDT Energy allowed him out of his contract after he complained.

STORY BY: Eyewitness News reporter Tappy Phllips
WEB PRODUCED BY: Steve Livingstone