What is an ESCO?
An ESCO, or Energy Service Company, is a business that supplies energy delivered by your utility and develops, installs, and finances projects designed to improve the energy efficiency and maintenance costs for facilities over a seven to 10 year time period. ESCOs generally act as project developers for a wide range of tasks and assume the technical and performance risk associated with the project. Typically, they offer the following services:
  • supplies natural gas and electricity;
  • develop, design, and finance energy efficiency projects;
  • install and maintain the energy efficient equipment involved;
  • measure, monitor, and verify the project's energy savings; and
  • assumes the risk that the project will save the amount of energy guaranteed.
These services are bundled into the project's cost and are repaid through the dollar savings generated.

ESCO projects are comprehensive, which means that the ESCO employs a wide array of cost-effective measures to achieve energy savings. These measures often include the following: high efficiency lighting, high efficiency heating and air conditioning, efficient motors and variable speed drives, and centralized energy management systems.

What sets ESCOs apart from other firms that offer energy efficiency, like consulting firms and equipment contractors, is the concept of performance-based contracting. When an ESCO undertakes a project, the company's compensation, and often the project's financing, is directly linked to the amount of energy that is actually saved.

Typically, the comprehensive energy efficiency retrofits inherent in ESCO projects require a large initial capital investment and offer a relatively long payback period. The customer's debt payments are tied to the energy savings offered under the project so that the customer pays for the capital improvement with the money that comes out of the difference between pre-installation and post-installation energy use and other costs. For this reason, ESCOs have led the effort to verify, rather than estimate energy savings. One of the most accurate means of measurement is the relatively new practice of metering, which is direct tracking of energy savings according to sanctioned engineering protocols.

Most performance-based energy efficiency projects include the maintenance of all or some portion of the new high-energy equipment over the life of the contract. The cost of this ongoing maintenance is folded into the overall cost of the project. Therefore, during the life of the contract, the customer receives the benefit of reduced maintenance costs, in addition to reduced energy costs. As an additional service in most contracts, the ESCO provides any specialized training needed so that the customer's maintenance staff can take over at the end of the contract period.

Another critical component of every energy efficiency projects is the education of customers about their own energy use patterns in order to develop an "energy efficiency partnership" between the ESCO and the customer. A primary purpose of this partnership is to help the customer understand how their energy use is related to the business that they conduct.

Included in the ancillary services provided in a typical performance-based energy efficiency contract are the removal and disposal of hazardous materials from the customer's facility. When, for example, existing fluorescent lighting equipment, ballasts that contain PCBs, and fluorescent light tubes that contain traces of mercury are replaced, the old equipment must be disposed of as hazardous waste.

In addition to the economic benefits realized by ESCO customers through energy and maintenance cost savings, this booming industry has had a profound effect on the U.S. economy. New jobs have been created, not only within the ESCOs, but though the use of contractors and through the many firms involved directly and indirectly in supporting energy efficiency projects. Since approximately one third of the money invested in ESCO projects is applied to labor costs, out of the estimated $20 billion of projects installed to date, approximately $7 billion has gone directly for labor employment.

Historically, the energy service industry is relatively young. Most U.S. ESCOs place the industry's origins in the late 1970s and early 1980s when energy prices rose dramatically following the 1973 Arab oil embargo and the Iranian Revolution in 1979. These events created the opportunity to make a business out of reducing customers' growing energy costs. The future for ESCOs and for their customers is bright as there is an increasingly global need to implement energy efficiency projects on a widespread basis.
ESCO FAQs

Q: What are Energy Service Companies?
A: (ESCO) Energy Service Companies (ESCOs) can be small companies or large corporations offering electricity, natural gas, or other energy services and products. ESCOs register with the Public Service Commission (PSC) and compete to sell you their services. No matter which energy supplier you choose, your utility company will continue to deliver the energy to your home or business and will respond to service emergencies.

Q: How do I enroll?
A: Contact Platinum Plus and hear what we have to offer. Our representative will ask for your utility account number to obtain your usage history and, with your agreement, enroll you in the program. You are not automatically enrolled when you ask questions or even agree to be enrolled. We may do a credit check before accepting you as a customer. You will be notified by mail when you are officially switched. According to the PSC, verbally agreeing to switch to an ESCO may constitute an enforceable agreement. Communicate this to all decision making members in your household or business to prevent erroneous switching.

Q: Once I enroll with Platinum Plus, how soon will my service begin?
A: In the case of electric service, Platinum Plus will begin supplying your electric service on your next meter reading date, as long as you enroll 15 days prior to the date.

In the case of gas service, if you enroll by the 15th of any month, Platinum Plus will begin supplying your gas by the first calendar day of the following month.

Q: How will I be billed for service if I choose Platinum Plus for my energy supply?
A: Currently we are offering only one billing option:

• Utility combined one bill from the utility which includes Platinum Plus supply and utility delivery charges

When you first enroll with an electric ESCO, your billing will remain on cycle. Gas is a little different. Gas suppliers operate on a calendar monthly basis, beginning on the first of the month. When you initially enroll with a gas ESCO, in addition to the bill from your new supplier, you may receive a one-time separate bill that ends the supply relationship with your former ESCO or utility. This bill will show your final balance from that company as of the last day of the previous month.

Q: How will I know if I am saving money?
A: If you buy energy from Platinum Plus, an ESCO, the New York State sales tax on the delivery portion of your bill has been eliminated effective September 2003. Your utility won't charge for switching your account to Platinum Plus, an ESCO. That translates to an automatic savings in addition to our discounted delivery fees.

Energy savings should always be calculated over the long-term. It might take a year or more to get a realistic picture of the savings based upon seasonality, market conditions, and weather factors.

Q: If I switch to another supplier, can I decide later to switch to another supplier or back to the utility again?
A: Of course, however, you should consider the terms and conditions of your agreement with Platinum Plus if you decide to switch.

If, for any reason, you are not happy with your choice of Platinum Plus, supplier of natural gas and electricity, you can switch to another supplier or back to the utility. In the case of natural gas service, if you switch back to the utility, you must remain with the utility for one year before switching to another ESCO.

Q: Is there a fee if I switch to an ESCO or back to the utility?
A: There is no switching fee charged by the utility when switching from the utility to an ESCO. If an ESCO stops doing business with you, there is no utility switching fee to switch to another ESCO or if you return to the utility. There is no utility switching fee when switching from one ESCO to another or to return to the utility. Your service will never be interrupted.

You should discuss the terms and conditions of your agreement with your energy supplier if you decide to switch. Other ESCO-imposed fees may apply.

Q: If I am served by an ESCO, may I still contact the PSC if I have a complaint with my service?
A: Because the delivery portion of your bill will continue to be regulated by the PSC, you can continue to register complaints with the PSC if you have a delivery service issue. The PSC requires all ESCOs to offer convenient complaint-handling procedures and clear information on switching. You may contact the PSC to register a complaint if you have a problem with your ESCO. The PSC will not resolve your complaint but will track complaints and may take action against companies with high complaint levels. Call (888) NYS-PSC8 (888-697-7728), or visit the PSC Web site at www.dps.state.ny.us and click on "Consumer Assistance".

Q: Can I earn an incentive payment when I switch?
A: Platinum Plus may provide monetary incentives or other offers when you enroll. Be sure to ask about available offers when you're considering enrollment.