Consumer advocates have a way to protect members of the public from those bait-and-switch marketing pitches from third-party electric suppliers: Pass a law that puts them out of business.
State Consumer Counsel Elin Swanson Katz on Monday joined U.S. Sen. Richard Blumenthal, members of the local AARP and the Connecticut Citizen Action Group in urging the state to reverse its deregulated energy system. Currently, consumers can choose between their region’s major utility, usually Eversource or United Illuminating, or from a long list of third-party electricity suppliers.
“After millions and millions of taxpayer and ratepayer dollars spent trying to police this market, we have failed,” Katz said. “We continue to see widespread and persistent marketing abuses by suppliers — abuses such as pretending to be from Eversource or United Illuminating and telling consumers they have to switch, lying about the cost of the utility standard offer rate, and consumers who don’t consent being slammed and switched.”
Katz said her office found that from 2015 through 2018, state consumers who used third-party electric suppliers paid roughly $200 million more than residents on standard service. The consumer counsel said among ending a retail choice electric market, a proposed bill would also look to create two new standard offer choices involving renewable energy and time-based options.
One of the nation’s largest third-party energy suppliers sees such legislation as limiting consumer choice. “Consumers get to look at the offers we put out there that include things that the utilities don’t provide and decide,” said Chris Kallaher, the senior director of government regulatory affairs for Direct Energy. The company sells power to residential customers in Connecticut, Illinois, New Jersey, New York, Ohio, Pennsylvania and Texas. “Who is AARP or the consumer counsel to second guess what consumers clearly want?” Kallaher asked.
The Retail Energy Supply Association, a national trade group representing third-party suppliers, said an analysis conducted by Intelometry shows Connecticut energy customers could have saved more than $14 million in January by choosing competitive electric suppliers. The analysis found of the 141 retail supplier offers posted on the state’s rate board, 70 from third-party suppliers were cheaper than the corresponding standard service.
The General Assembly has already passed laws requiring greater transparency in the retail electric market and banning variable rates – the low teasers that some retailers used to get customers, only to quickly raise their rate. Comparison shopping is now possible on the official rate board at the state’s Energize Connecticut web site.
John Erlingheuser, AARP’s Connecticut Advocacy Director, said the third-party suppliers have found workarounds for the consumer protection laws the state has passed, like creating fixed tiered contracts, enrollment fees, and other charges.
“Let’s put all of the abusive, deceptive, corrupt practices aside, if they were all angels, people would still be getting ripped off because the market is just too impossible to navigate and understand,” Erlingheuser said.
Lee Vormelker, a 69-year-old AARP member from Gales Ferry, said he does not use a third-party supplier.
“It’s one of those things –what do regular human beings do when they are faced with something this complex? It’s not easy and you have to be pretty knowledgeable to discern picking through the details of when it’s good for you and not good for you,” Vormelker said.