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.
The main problem is the design of the EnergizeCT Comparison Tool. If the “Default” tool settings only presented “Fixed Rate Plans” with “No Fees or Penalties” consumers could easily compare and select the lowest priced alternative without exposure to misleading and confusing more costly alternatives. The current tools design allows inclusion of variable rate plans and others with significant Fees and Penalties as the default. A properly designed Comparison Tool built around “Fixed Rates Plans Only” would eliminate a lot of the deception, confusion and risk of inadvertly selecting a more costly variable rate plan.
Finally, Eversource has never provided the lowest cost fixed rate plan ever, since inception of EnergizeCT. That is reason enough, not to award it a monopoly on power generation rates.
Deregulation of electric supply has not provided the benefits touted when first proposed. The reality is that there are a fixed number of generators and the difference in rates charged consumers depends on the suppliers’ deals with the generator. The system is too ripe for less than honorable pricing schemes.
Further, fixed-price contract duration (the more attractive the rate, the shorter the term) is a gamble by the supplier that the consumer will forget, the term will expire, and a much higher rate will then kick in.
Ultimately the same result will evolve as happened in the telecom industry: Initially many suppliers, followed by mergers & acquisitions, leading to a consolidation resulting in just a few major suppliers.
Savings & benefits to the consumer: Zilch.
Time spent shopping rates: Excessive.
Clear understanding of the real cost to the consumer: Very limited.
NO NO NO!!!! Don’t put us at the mercy of the United Illuminating company or Eversource With their outrageous rates! What PURA needs to do is educate the consumer! The burden is on them to keep track of their alternate supplier by looking at their monthly bill and seeing when their contract expires! It’s not rocket science! We pay enough for everything in this state we don’t need to add electricity to that also!
Customers have selected misleading and more expensive electricity supplier plans solely due to the poor design of the EnergizeCT Rate Comparison Tool. By default, it includes complex, confusing and more costly variable rate plans as part of the default plan list. If the tool were modified to exclude all variable rate plans and those with extraneous fees and penalties and only display comparable fixed rate plans only, many of the issues would be eliminated. Additionally, Eversource has never provided the lowest cost fixed rate plan since inception. This is reason enough not to give them a monopoly on electricity generation. This is a very bad idea!
This is a difficult issue. I am sure many people are confused by all the rate plans, but they should not be. The rates and terms are all laid out on https://www.energizect.com/compare-energy-suppliers and by a link to it on the utility website. Those who do not use the internet should be sticking with the utility standard offer. If they don’t want to bother with choosing a new plan every 6 or 12 months they should also stick with the utility standard offer and ignore what other companies offer. I am an elderly person, and I chose not to buy the cheapest power available, but to buy 100% renewable wind power from other states.
Once a year I review the available plans and select one of the lowest cost 100% renewable rates, which is often less than the utility standard offer (currently only 27.5% renewable sourced). This is not that difficulty to do; you just have to pay attention to your electric bill to know what your generation rate is, and what the other companies are offering. Every time we shop we make choices about what product we choose to buy. If you don’t want to bother to learn about the products you buy, you could end up disappointed with your choice.
In this case, you not only have the freedom to choose what you want, but you can always opt for the “safe” standard offer from the utility. Our utility does not offer 100% renewable power, which is important to us, so I want the freedom to choose a supplier who does. I think advocates like AARP should counsel their members to take the utility’s standard offer, unless they are so concerned about our climate crisis that they want to buy only renewable power. If they don’t want to bother understanding the rather simple choices required when choosing an alternative power supplier (contract length, % renewable, early cancelation fee if any & cost per kWh), then the utility standard offer is always a safe choice. And all of those “overpayments” cited in the article do not reflect the choice I and others knowingly made NOT to buy the cheapest power available, but to pay MORE in order to get CLEAN POWER. In my opinion every citizen has a moral obligation, to actively work to minimize their electric use, and to reduce their carbon emissions by buying clean power… even if it costs a little more. We can’t keep pretending that our electric power use is not impacting the climate and causing extreme weather damage and suffering all over the nation and the world.
Eliminating alternative suppliers doesn’t fix the problem; it only eliminates competition. Clean up the mess and offer viable, honest supply alternatives to the consumer. I know the process works commercially because my company has purchased alternative electricity for years.
I will simply state that Choice is always a good thing that brings about competition in the marketplace.
By law Eversource must posts their rates every 6 months. So that means you take 5 minutes to compare their rates vs others every Dec and June. On Energizect.com – select “Fixed Offers”, “No Cancellation fee”, “no enrollment fee” and “no monthly fee”. Look for a 6 or 12 month term.
Then save money. I just did it right now and found 13 offers lower than Eversources’s rates.
Folks, it’s that easy. What these people want is government to protect them from themselves because they don’t want to take 5 minutes to be responsible and educate themselves on their choices.
If CT residents gave up an extra $200 million then it is simply because they don’t understand what they are doing and should probably just stick with their default supplier. The rest of us enjoy saving $120-$150 per year!