U.S. Sen. Richard Blumenthal, D-Conn., state Consumer Counsel Elin Swanson Katz and a number of consumer groups are calling for an end to the third-party residential electric market.
The market, which debuted in Connecticut in 2000, is part of a larger electric utility deregulation that proponents promised would yield savings on customer’s energy bills. With it, consumers are able to choose from a variety of third-party power suppliers or let the state’s electric distribution companies continue to buy electricity for customers, as they had prior to deregulation.
U.S. Sen. Richard Blumenthal, D-Conn., state Consumer Counsel Elin Swanson Katz and a number of consumer groups are calling for an end to the third-party residential electric market.
The market, which debuted in Connecticut in 2000, is part of a larger electric utility deregulation that proponents promised would yield savings on customer’s energy bills. With it, consumers are able to choose from a variety of third-party power suppliers or let the state’s electric distribution companies continue to buy electricity for customers, as they had prior to deregulation.
“Third-party electric suppliers rely on predatory sales tactics to trick folks into unwittingly signing up for contracts,” Katz said in a statement. “What’s more, our residents – especially those who are low-income, elderly, use English as a second language, and other vulnerable populations – are getting ripped off by these third-party suppliers, which often charge significantly higher rates than the electric utility default service. Enough is enough.”
“Consumers desperately need and deserve protection from abuses in the residential electric supply market,” Blumenthal said. “Ending this fraught market – so hazardous and harmful to consumer pocketbooks – should be a priority.”
One of the consumer groups calling on Connecticut lawmakers to put an end to the third-party electric supplier market is the Connecticut chapter of AARP. John Erlingheuser, AARP Connecticut’s advocacy director, said the process of selecting a third-party electric supplier is confusing and complex.
“Even if we could eradicate all of the deceptive suppliers and build a wall of consumer protections around the third-party market, ratepayers will still be stuck with contracts that cost more money than the traditional default standard electric service,” Erlingheuser said in a statement. “The process does not allow for an apples to apples comparison.”
An official with the Retail Energy Supply Association, a Pennsylvania-based national trade group representing third-party power suppliers, said ending Connecticut consumers’ rights to select third-party electric suppliers could cost homeowners millions of dollars in potential savings. Last month alone, Connecticut residential energy customers could have saved more than $14 million compared to standard offer rates, according to Matt White, president of the trade group.
“The state of Connecticut gave customers the power to choose their electric supplier 20 years ago,” White said. “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. Our analysis concludes that residential customers choosing competitive electricity suppliers could have saved millions in just the first month of this year, discrediting assertions that retail choice does not benefit Connecticut consumers.”
The analysis done for the group was conducted by Intelometry, a Houston-based retail energy systems and data provider that specializes in retail energy markets and operations. The analysis found there were 70 offers from third-party electricity provides that were cheaper than the standard offer price last month.
Guy Sharfman, managing director for Intelometry, said there were 141 retail supplier offers posted on Connecticut’s Official Rate Board.
White said that price is only one factor consumers consider when choosing electricity supppliers.
“From multi-year contracts that offer longer term price stability, to smart thermostats, and loyalty rewards, suppliers are routinely developing value-added products and services that allow customers to choose the products that meet their own individual needs. Important among these value-added products are green energy options,” he said.
The move to eliminate third-party suppliers in Connecticut comes after Massachusetts Attorney General Maura Healey introduced legislation in that state last month to end the residential retail choice market there. Healey has sought to eliminate third-party suppliers in Massachusetts since early last year.
Under the current standard offer system, new electric rates are established every six months using a procurement process that undergoes the scrutiny of state utility regulators.
Katz said that in addition to overcharging Connecticut consumers, third-party electric suppliers “do not bring meaningful employment to our state” as the jobs are often located outside of the state.
Even with new consumer protections put into place by Connecticut lawmakers in 2014 and the following year, the Public Utilities Regulatory Authority has been involved in numerous enforcement proceedings investigating the marketing practices of individual suppliers. PURA consumer protection enforcement proceedings have yielded more than $12.1 in settlements and regulators have imposed civil penalties against third-party electric suppliers for more than $1 million.
