In 1998, to help lower people’s energy bills, lawmakers in Connecticut created a new policy to allow the state’s residents to buy power from businesses in competition with their local electric companies. Today, about 25,000 people in the state get their power from competitive suppliers. But if the rationale for this controversial effort was to save folks money, then this deregulation policy has failed.
According to an analysis by Connecticut’s Office of the Consumer Counsel, over the past five years, ratepayers using third party suppliers have spent over $274 million more on power than if they had stuck with the local energy company for their electricity.
In response to this outrageous transfer of wealth, Gov. Ned Lamont recently signed legislation that tries to make it harder for these competitive suppliers to rip people off. But rather than try to stymie these bad actors cheating people in Connecticut, wouldn’t it make more sense to just ban competitive suppliers all together?
This is why my organization is calling on the Connecticut General Assembly to once and for all pass legislation to end competitive supply.
Understand, one of the worst aspects of deregulation is that the companies offering competition to the local electric companies are often using “illegal and deceptive” sales tactics to take advantage of the least sophisticated customers. This deceitful marketing typically offers a promise of savings, but locks customers into unfavorable agreements that mean they pay more for electricity than if they had stayed with their local power company.
This is why John Erlingheuser, Advocacy Director of the American Association of Retired People (AARP) in Connecticut, recently penned an op-ed opposing competitive supply. He spoke out against a tactic that competitive suppliers use to cheat people called “auto-renew.” Essentially, this policy is a bait and switch, because competitive suppliers sign you up for power at a reduced rate to entice you in, and then auto-renew you to keep getting power from them for a higher rate than charged by the local electric company.
This problem of competitive suppliers taking advantage of low-income customers has gotten so bad, that last year during the height of the COVID-19 pandemic, the Public Utilities Regulatory Authority, working in conjunction with other state agencies including the Attorney General’s office, released a statement that “a third party electric supplier is targeting low-income customers, claiming that Eversource Energy plans on increasing their charges as a result of COVID-19.” This was completely false and an egregious attempt to overcharge their customers.
For full disclosure, I work for an organization that is made up of consumer advocates, electric utilities, former lawmakers, Democrats and Republicans, and organized labor committed to exposing the risks of deregulation.
The facts are clear: deregulation allows competitive energy suppliers to overcharge their customers and take advantage of low-income families by saddling them with higher electric bills. The General Assembly should end competitive supply once and for all.
Gary Meltz is the Executive Director of Power for Tomorrow.