The best consumer protection of all is real competition
Over the years, many lawmakers and state regulators have imposed a myriad of policies, rules and regulations designed to protect electricity customers. While they created these with the best of intentions, they often miss the mark. Buying electricity, like subscribing to a mobile phone service or choosing between cable or streaming packages, can often be confusing. Mandatory disclosure documents, telephone verification of the customer’s decision by third parties, use of utility account numbers, mandatory rescission periods, confidentiality protection of consumer usage data and other efforts to regulate the sales and enrollment process are all intended to make the transaction clear to the customer and avoid enrollments without informed consent. Efforts to regulate the process, however, come at the cost of customer convenience. In exerting more control over the sales and enrollment process, state authorities often mistake the burden of this control as falling entirely on the supplier without appreciating the time and effort imposed on the consumer. This process, which was intended to help customers make informed decisions and ultimately help lower monthly costs, has deterred customers from periodically revisiting their supply options.
The irony is palpable. While seeking to help consumers make better decisions and realize lower prices, the overregulation has discouraged customers from periodically revisiting their supply decision. Once a customer has experienced the initial switching process, they may be very reluctant to do so again. From tracking down the 11-digit account number to taking a telephone quiz from a third-party verifier, followed by waiting a month or longer for the enrollment to be processed, followed by receiving a pile of paperwork in the mailbox all encourage customers to “stick with what they have” rather than go through the entire process again, even if doing so means saving money.
Imagine one day when buying electricity is as simple as purchasing something from Amazon’s online marketplace. Since everyone knows their phone number and home address by heart, versus what their 11-digit utility account number is, wouldn’t it be easier to enroll with your phone number and tie it to your address? Certainly, your internet service or cable subscription operates this way. Why can’t your electricity also be one? How many questions do you really want to answer for the second time before you can once again switch your power supply? These inconvenient annoyances effectively inhibit rather than encourage periodic comparison shopping by consumers to take advantage of switching.
Fortunately, things are not too complicated to fix. Virtually every other subscription industry has found a way. What’s required is a new perspective from state officials. The best way to protect customers is not to burden their purchasing decisions, but to hand control and responsibility back to the consumer by developing streamlined sales and enrollment processes, as well as an effortless handoff between the suppliers and the distribution companies. Switching providers is the most powerful way that a customer can express dissatisfaction with a supplier, and the best way we can all protect consumers is to make that process easier rather than harder for the customer.