An ESCO is an Energy Service Company, or an energy supplier. Energy suppliers were enabled by deregulation and provide competitive alternatives to customers for the purchase of natural gas and electricity supply. This competition has helped to keep utility supply costs low over the years. In order to become an ESCO, applications must be filed and approvals must be granted by federal and state regulatory authorities and local utilities. Prior to serving customers, ESCO’s must undergo extensive testing to ensure that customers are enrolled and billed properly and that the natural gas and electricity supply procurement process is functioning properly. Depending on the state, ESCO’s must abide by established codes of conduct which are the same level of customer service that utilities are held to.
ESCO’s offer competitive rates to the local utilities for supply of natural gas and electricity. Switching to an ESCO is easy and fast. Once a customer agrees to have its natural gas or electricity supplied by the ESCO, a series of electronic notifications takes place between the utility and the ESCO. The utility will notify the customer to confirm agreement to switch to an ESCO and customers still receive their monthly bills from the utility.
Your current utility will still deliver electricity to your home or business through its existing transmission and distribution system. You will still call your utility if your power goes out, or if you have an emergency situation.The differences are that the supply section contains the notation that supply is provided by the named ESCO and that the customer generally receives savings off the rates charged by utilities. Customers can also receive additional savings in certain states. In New York for example, customers switching to an ESCO do not pay sales tax on the delivery portion of their utility bills and receive marketing discounts from the utility upon switching.
ESCO’s have been successful in providing alternatives and savings to customers over the years and have been successful in building their base of customers. The most recent reporting data showed that 20% of New York’s Residential and 30% of its Small Commercial customers had switched to an ESCO. In New Jersey 5% of the Residential and 15% of Commercial customers were served by an ESCO.