Time to pull the plug on auto-renewed third party electric contracts!
AARP Connecticut has worked for over a 17 years to address and rectify the fraud, misleading advertising and unscrupulous practices that have plagued and undermined Connecticut’s deregulated third-party electric market place. This has frequently resembled a game of whack-a-mole with a new scheme or trick popping up every time AARP and other consumer advocates knock down a deceptive supplier tactic through legislation or a Public Utilities Regulatory Authority ruling.
Ratepayers in Connecticut pay the highest rates in the continental United States. Those entering third party electric supplier contracts to save money frequently find that what seems like a good deal initially turns into a costly mistake in the end. This is due to an anti-consumer provision of these supplier contracts that allows them to be auto-renewed at their conclusion.
These auto-renew provisions result in contracts that are frequently renewed at rates significantly higher than the utility standard service. According to an analysis by the Office of the Consumer Counsel over the past five years, ratepayers using third party suppliers versus the standard offer supply have spent over $274 million more, and the main culprit of this fact is the auto-renewed contact.
While AARP worked successfully with the Connecticut legislature to ban variable rate electric contracts in 2015, there are still more than 25,000 residential consumers on variable rate contracts. These are customers who had a variable rate contract that was “grandfathered” in and continue to be auto-renewed. The current law allows suppliers to automatically renew your contract, often at a much higher rate than the standard offer, without your affirmed consent.
Ratepayers, particularly our older and lower-income households, often find that they are locked into bad deals due to another anti-consumer provision of third party supplier contracts, the cancelation fee. While these fees are capped at $50, that is usually too much for many to afford. Most will continue to pay the third party rate that is higher than standard service, unable to scrape together the fee.
Suppliers will claim that ratepayers are notified with the new terms when their contract expires and before it goes into effect. This may be, but many people either miss the notice or do not understand it. Suppliers will say, “buyer beware.” Much like food and medicine, electricity is a necessity and “buyer beware” is not acceptable.
Suppliers will also claim that complaints against them are down in recent years, but they only tell you half of the story. Complaints may be down, but so are the number of ratepayers in the third party supplier market. In fact, despite Strong PURA enforcement of consumer protections, harm is still rampant and enforcement proceedings are still actively pursued.
Below is a list of some Connecticut Regulatory Proceedings:
1. Energy Plus: $4.5M Settlement, PURA Decision, June 11, 2014
2. North American Power: $2.6M Settlement, PURA Decision, Oct. 28, 2015
3. Public Power: $13k Civil Penalty, PURA Decision, Jan. 20, 2016
4. Palmco Power: $5M Settlement & 5-year Stay-out, PURA Decision, Aug. 16, 2017
5. Spark Energy, $900k Civil Penalty (pending), PURA Notice of Violation, Mar. 21, 2018
6. Choice Energy: $250k Civil Penalty, PURA Decision, June 13, 2018
7. Liberty Power: $57,475 Civil Penalty, PURA Decision, July 2, 2018
8. Spark Energy, $500k Settlement, PURA Decision, Nov. 6, 2019
9. Direct Energy: $1.5M Civil Penalty, PURA Decision, May 1, 2019
10. Liberty Power: $750k Settlement, PURA Decision, Oct. 30, 2019
11. PURA Decision in Docket No. 18-06-02, placing all hardship customers using suppliers onto standard service for the next two years; OCC analysis demonstrated $7.2M in overpayments by hardship customers participating in the retail choice market.
12. Abest Power: $60k Settlement & Permanent Stay-out, PURA Decision, Dec. 18, 2019
13. Clearview Energy: $9k Settlement, PURA Decision, Jan. 15, 2020
14. Think Energy: $21k Settlement, PURA Decision, Feb. 19, 2020
15. Discount Power: PURA Investigation into Marketing (pending)
16. Town Square Energy: PURA Investigation into Marketing (pending)
17. Spark Energy: PURA Investigation into Marketing, Billing, and Enrollment Practices (pending)
18. Public Power: PURA Investigation into Marketing (pending)
After nearly two decades of implementing legislative and regulatory policies meant to protect ratepayers, it is time to tell third-party suppliers that this is their last chance to clean up their act. We need to pass House Bill 6526, An Act Concerning Electric Suppliers, with the strong language that eliminates auto-renewed contacts and cancellation fees.
John Erlingheuser is Advocacy & Outreach Director for AARP Connecticut.
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