Long Island Commercial Electricity 2026: Escaping PSEG's Power Supply Charge
Long Island businesses face extreme Winter 2026 electricity price volatility due to physical transmission bottlenecks isolating NYISO Zone K from the rest of the New York grid. Consequently, PSEG Long Island's variable "Power Supply Charge" passes pure wholesale market spikes directly to commercial ratepayers. However, since Long Island is deregulated, businesses can mitigate this basis risk by locking in fixed-rate supply agreements through third-party Energy Service Companies (ESCOs).
Executive Procurement Impact
- →The Power Supply Charge Menace: It is not a fixed utility rate. It is a direct pass-through of NYISO Zone K wholesale clearing prices. If deep-freeze conditions hit the Northeast, commercial invoices can easily spike 30-50% in a single billing cycle.
- →Zone K Basis Risk: Long Island exists as a physical peninsula with limited underwater interconnections to mainland generating capacity (like the Y-49 cable). When localized demand peaks, Long Island cannot efficiently import cheap upstate power.
- →The Solution (ESCO Hegding): Unlike full-monopoly markets, businesses in Nassau and Suffolk counties have energy choice. You can uncouple your supply rate from PSEG's generation costs and lock it in up to 36 months in advance.
Understanding the Default Utility Arrangement
By default, PSEG Long Island serves a dual role for commercial businesses that have not actively shopped for electricity. They act as both the delivery entity (maintaining the poles and wires) and the default supply entity (procuring the actual electrons generated at power plants).
When acting as the supplier, PSEG-LI does not guarantee a price. Instead, they purchase power on the real-time or day-ahead wholesale market managed by the New York Independent System Operator (NYISO) and pass those exact costs down to the user through the Power Supply Charge.
In stable market conditions, this pass-through is manageable. But moving into 2026, the underlying fundamentals of the Northeast grid are increasingly precarious.
The Zone K Basis Problem
The NYISO grid is broken into distinct locational pricing zones. Long Island is Zone K.
Because Long Island is geographically restricted, it relies on older, less-efficient "peaker" plants and complex underwater transmission cables (like the Cross-Sound Cable to Connecticut and Neptune Cable to New Jersey) to keep the lights on during high demand. This creates severe basis risk—the difference in price between Zone K and the rest of the state. During intense summer heatwaves or polar vortex winter events, Zone K prices can skyrocket independently of mainland New York.
Commercial entities that remain on the default utility rate are 100% exposed to these localized Zone K wholesale spikes.
Taking Control with Retail Energy Choice
The singular defense mechanism for Long Island manufacturers, retail hubs, and commercial real estate is to exercise their right to energy choice.
Selecting a third-party supplier removes your business from the volatile Power Supply Charge pool. Once under contract, PSEG-LI still delivers your power seamlessly (and responds to power outages just as they always have), but the rate you pay for the actual electricity is dictated by your fixed, negotiated ESCO contract rather than the whims of the NYISO spot market.
Source: NYISO 2026 Operations Data and Long Island Power Authority Tariff Analysis.
Uncouple Your Rate from NYISO Volatility
Lock in a fixed, predictable supply rate and shield your Long Island facility from the severe basis spikes brewing for Winter 2026.