The New York State Public Service Commission voted last week to accept Central Hudson Gas & Electric Corporation's plan to accelerate the development of competitive retail electric and gas markets in Central Hudson's territory. As part of the Retail Access Plan, Central Hudson has agreed to implement a customer choice program that will provide guaranteed, introductory savings to customers who choose to buy their electricity or natural gas from a competitive energy services company (ESCO).

"Central Hudson's retail access plan is an example of what can be achieved when parties work together toward a common goal, and it is consistent with the policies adopted by this commission last August," said Commission Chairman William M. Flynn. "Robust retail energy competition provides consumers with a variety of price and service options, along with consumer protections and safe and reliable energy service. Central Hudson's retail access program will ensure that New York's competitive energy markets continue to grow."

Central Hudson's Plan was filed in response to the commission's August 2004 statement of policy on competitive markets. In that statement, the commission further refined its goals for, and vision of, the future of competitive retail energy markets in New York State. In addition to identifying best practices that can help foster development of competition in the electric and natural gas markets, the commission directed the state's nine largest electric and natural gas utilities to develop individual plans to further develop the retail market.

As part of its plan, Central Hudson has agreed to implement a customer choice program that will be modeled after the successful "Power Switch" retail access program that has been in place for several years in the territory of Orange and Rockland Utilities, Inc. (O&R). As a result of O&R's "Power Switch" retail access program, approximately 37% of the company's residential customers are purchasing natural gas from an alternative supplier, and 33% of residential customers have chosen to purchase their electricity from an ESCO. O&R reports that only about 1% of the customers that have participated in the program have returned to the utility for commodity service.

Under Central Hudson's new program, customers contacting the utility will be asked if they want to enroll with a participating ESCO for an introductory period, with a guarantee of a percentage discount from the utility's commodity service. If a customer agrees, Central Hudson's personnel will either enroll the willing customer with the participating ESCO of the customer's choice, or, if the customer does not express an interest in enrolling with a particular ESCO, participating ESCOs will be assigned on a rotating basis. Before the end of the introductory period, the customer and the ESCO must make a mutually agreeable pricing arrangement to continue the ESCO commodity service. Customers who enroll in the program retain the option of returning to Central Hudson's commodity service. Before implementing its new customer choice initiative, Central Hudson will expand its consumer outreach and education programs further so that consumers are informed about developments in the competitive market and their opportunities to purchase gas and electricity from ESCOs. For example, in January, the company mailed bill inserts to its largest commercial and industrial customers seeking permission for ESCOs to contact them with information about their price and service options. Additionally, Central Hudson plans to improve the quality of the retail access information provided on its Web site so that it is a more effective tool for both customers and ESCOs. Finally, under the terms of the Retail Access Plan, the company will periodically evaluate customer service needs and work collaboratively with interested parties to develop additional means of communication to respond to customers' needs and raise awareness of competitive options in its service territory.

Other provisions of Central Hudson's Retail Access Plan include the continuation of a "Market Match" program that will provide opportunities for ESCOs and commercial customers with a peak demand of 250 kW or more to exchange information and facilitate market development. "Market Match" programs for both electricity and natural gas were included in the Commission's list of best practices for promoting retail access. The plan also calls for the continuation of the company's "Market Expo" program that provides opportunities for ESCOs to meet and exchange information with Central Hudson's business customers. These programs have demonstrated their effectiveness in connecting commercial customers to ESCOs and the service options and value they can offer.