New Analysis Reveals Flaws in Recent Maryland OPC and The Abell Foundation Reports on Retail Energy Market Independent Study Finds Electric Suppliers Could Have Saved Maryland Consumers More Than $203 Million in 2018

January 22, 2019

Maryland

Independent Study Finds Electric Suppliers Could Have Saved Maryland Consumers More Than $203 Million in 2018

(BALTIMORE) January 22, 2019 - The Retail Energy Supply Association (RESA), the nation’s leading trade association representing competitive retail energy suppliers, today released an analysis that calls into question recent reports by the Maryland Office of People’s Counsel (OPC) and The Abell Foundation. The analysis concludes that residential customers choosing competitive electricity suppliers could have saved more than $203 million in all of 2018, discrediting assertions that retail choice does not benefit Marylanders—as both reports claim.

The RESA analysis, conducted by Intelometry, Inc., a systems and data provider that specializes in retail energy markets and operations, demonstrates that the OPC report:

  • Was incomplete and misleading. It not only omits critical information regarding the Maryland Utility Price to Compare (PTC), it also provides false information on the differences between the utility PTC and retail supplier offers, and on the number of retail offers falling below the PTC;
  • Made inappropriate assumptions about why customers choose a retail supplier;
  • Was based on flawed analytics, providing a false comparison of a monthly utility rate with 12-month supplier prices;
  • Ignored the many value-added products and services available to Maryland consumers; and
  • Could ultimately hurt Maryland consumers financially if policies were made based on its findings.

Further, the RESA analysis demonstrates that the Abell Foundation report:

  • Cited unsound, unproven conclusions found within the OPC report;
  • Presented a distorted picture of Maryland’s retail electric supply industry by using data derived from inadequate customer samples over an insufficient period of time. The report claimed more than 400,000 residential customers use retail suppliers, yet only 40 customers, or 0.01%, were analyzed.
  • Reviewed customer billing data for a single month, even though the utility Price to Compare can change from month-to-month while retail supplier contracts can remain fixed for up to 36 months;
  • Made inappropriate assumptions about why customers choose a retail supplier;
  • Did not take into account any value-added products and services; and
  • Could also ultimately hurt consumers financially if policies were made based on its findings.

“Electricity choice has been operating well for consumers across the country -- including those in states such as Texas and Pennsylvania -- and Maryland is no different,” said Matt White, President of RESA. “Maryland was one of the first states in the country to restructure its electric power industry and has since made incredible strides in expanding retail competition, while at the same time protecting consumers. Making any policy decisions based on any report that relies on piecemeal data and employs questionable analytical methods would not only be a step in the wrong direction, it would hurt electric consumers.”

A RESA analysis of the retail energy market in Maryland reveals that retail electric supply companies routinely offered dozens of price plans below the Maryland standard offer service rate:

  • First quarter 2018 (January – March)
  • 390 offers below Maryland Utility Price to Compare
  • Q1 potential market savings = $64,108,019
  • Second quarter 2018 (April - June)
  • Q2 potential market savings = $41,742,300
  • 295 offers below Maryland Utility Price to Compare
  • Third quarter 2018 (July – September)
  • Q3 potential market savings = $45,510,225
  • 192 offers below Maryland Utility Price to Compare
  • Fourth quarter 2018 (October- December)
  • 367 offers below Maryland Utility Price to Compare
  • Q4 potential market savings = $52,242,026

“The Intelometry Maryland Market Saving Report illustrates that informed consumers can save money on their electricity bills simply by actively shopping,” said Guy Sharfman, Managing Director for Intelometry, Inc. “In just the fourth quarter of 2018, the report shows that well over 300 retail supplier offers posted on the Maryland Public Service Commission’s website were lower than the corresponding utility price to compare. These figures are in line with previous quarters that also showed large savings opportunities.”

Federal data from the Energy Information Administration also shows that, when accounting for inflation, Maryland residential electricity prices have decreased by 9.7 percent since 2008. In states that remained a monopoly, prices increased by 9.3 percent.

“RESA is extremely troubled by the OPC and Abell Foundation reports and the manner in which their information was derived,” said White. “The reports omit critical information about the Maryland Utility Price to Compare (PTC) and inflate its benefits, provides misleading information on the number of retail offers falling below the PTC and ultimately derives a false conclusion about consumer loss.”

The OPC and Abell Foundation reports also fail to consider many things, including the differences in the types of products offered by competitive electric and natural gas suppliers, as well as the basic idea of why customers choose one product over another.

“Price is only one factor consumers look at when choosing electricity,” White added. “From multi-year contracts that offer longer term price stability, to smart thermostats and other incentives like gift cards and loyalty rewards, suppliers are routinely innovating and developing value-added products and services that allow customers to choose the products that meet their individual needs. Important among these value-added products are green energy options that allow customers to express their environmental preferences through their electricity purchases as an example.”

The OPC report rightly indicates that retail choice enjoys popular support in Maryland, growing approximately 20 percent from 2001 to 2018. Enforcing existing consumer protection laws – which the PSC has repeatedly updated to reflect the needs of the evolving retail marketplace – and continuing consumer education efforts can effectively address many of the concerns raised in both reports and ensure a fair and well-functioning competitive market that benefits all residential consumers.

ABOUT RESA

The Retail Energy Supply Association is a broad and diverse group of retail energy suppliers who share the common vision that competitive retail energy markets deliver a more efficient, customer-oriented outcome than a regulated utility structure. RESA is devoted to working with all stakeholders to promote vibrant and sustainable competitive retail energy markets for residential, commercial and industrial consumers.

 

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About RESA

Together with our members, we play a critical role in educating key stakeholders and are active in support of or opposition to bills that affect competitive electricity markets, consumers, and RESA initiated legislation.

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