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My Record Journal – Third-party energy suppliers say state’s open market keeps rates down

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As regulators and advocacy groups call for Connecticut to revisit its decision to deregulate its energy market, third-party suppliers say they have helped customers save money. In particular, Chris Kallaher, director of government and regulatory affairs for Direct Energy, said the presence of third-party energy suppliers has forced Eversource and United Illuminating to keep their rates down. 

“You should be looking at where would we be if we had left things where we were,” he said during a recent interview for the “Morning Record” podcast. Kallaher said states that continue to regulate competition have seen energy prices rise faster than Connecticut has since the state opened its market 20 years ago. 

State Consumer Council Elin Swanson Katz is calling on the legislature to revisit that decision and again ban third-party energy suppliers. She said the market has been rife with practices that harm consumers, including deceptive and aggressive marketing techniques. 

“After millions and millions of taxpayer and ratepayer dollars spent trying to police this market, we have failed,” Katz said during press conference earlier this month. Katz also said that her office found consumers who switched to third-party suppliers have paid $200 million more from 2015 through 2018 than they would have on the so-called standard offer from Eversource or UI. 

The Retail Energy Supply Association said in a press release that, contrary to Katz’s findings, its customers have saved more than $14 million over the first month of the year. 

“The State of Connecticut gave customers the power to choose their electric supplier 20 years ago,” association President Matt White said in a statement. “For the OCC to attempt to arbitrarily unplug customer choice would short-circuit Connecticut energy customers of potential savings, cleaner energy, energy management tools and other benefits of the competitive market.” Kallaher said third-party energy suppliers believe the market would be better run if the legislature instead adopted some of its recommendations, including allowing companies to issue their own bills. 

“Obviously, we’re not going to want our customers getting confused if they’re getting a Direct Energy bill, and no other suppliers will, either,” he said. Kallaher said the state should make it easier for customers to change, making the market similar to shopping for a cellphone. 

Does Connecticut need to regulate its energy market? 

Katz has supporters in her push for regulation, including the AARP and Len Suzio, the former state senator from Meriden who recently complained of his suppliers’ billing practices. The Public Utilities Regulatory Authority fined Spark Energy $900,000 after finding the company gave inaccurate rate information on its bills to customers, including Suzio.

Suzio said he wants the legislature to allow PURA to order companies to pay restitution, as well as to hold a public hearing for other possibilities. “Unless we have a more aggressive regulation to prevent the abuses, having the free market isn’t really working out for the benefit of the consumers,” said Suzio, typically a supporter of open markets. 

AARP,  meanwhile, has said some third-party energy suppliers have used marketing practices that especially prey upon the elderly and other vulnerable demographics. Kallaher said the state has already banned some practices, notably variable pricing. He said third-party energy suppliers agree on the need to crack down on bad actors, but he believes PURA already has the ability to do so.