Deceptive marketing, overpriced contracts, and greenwashing harm consumers in states with retail electric supply markets
Ample data consistently show that the sale of non-utility (or “competitive”) electric supply to individual residential customers is a bad deal for consumers.
The Wall Street Journal concluded that households combined have overpaid by $1 Billion per year for non-utility electric supply, compared to what these customers would have paid their utility companies.
Data from Connecticut, Illinois, Maine, Maryland, Massachusetts, and New York confirm that families pay far too much when they sign up for alternative electric supply instead of sticking with their utility companies.
Deceptive marketing is often used to trick consumers into signing up for contracts with a low introductory rate. When this teaser rate expires, consumers may be locked into a contract with high prices for electricity, outsized termination fees, and automatic enrollment provisions that make it hard to get out of the contracts. Low-income consumers are disproportionately harmed. Occasional market changes such as this winter’s price spikes do not change the overall trend.
Greenwashing is common, but supply contracts that purport to offer renewable energy tend to be similarly overpriced and deceptive, marking up the price of renewable energy credits (RECs) that may be of low quality.
For more information, please contact Jenifer Bosco, Senior Attorney, National Consumer Law Center, [email protected], 617-542-8010.
Sources:
Wall Street Journal, Deregulation Aimed to Lower Home-Power Bills. For Many, It Didn’t. (March 8, 2021)
OCC Fact Sheet: Electric Supplier Market, November 2021 through October 2022 (Dec. 9, 2022), available at https://portal.ct.gov/-/media/OCC/Fact-sheet-electric-supplier-market-October-2022.pdf
Annual Report to the General Assembly, the Governor, and the Illinois Commerce Commission, Submitted pursuant to Section 20-110
of the Illinois Public Utilities Act, Office of Retail Market Development, Illinois Commerce Commission, Revised August 2021 (Aug. 26, 2021)
Reform of Electricity Supply: CEP-Served Residential Retail Electric Market (Prepared by Susan M. Baldwin and Timothy E. Howington on behalf of Maine Office of Public Advocate per 2021 P.L. ch.164 (LD 318)), February 1, 2023, available at https://www.maine.gov/meopa/reports-and-testimony/retail-supply-stakeholder-group
Maryland’s Residential Electric and Gas Supply Markets: Where Do We Go from Here?, Maryland Office of the People’s Counsel (Nov. 2018)
Mass. Office of the Attorney General, Are Consumers Benefiting from Competition? An Analysis of the Individual Residential Electric Supply Market in Massachusetts: 2021 Update (March 2021)
State of New York Public Service Commission, In the Matter of Eligibility Criteria for Energy Service Companies, Case 15-M-0127, et al., Initial Brief of the New York Department of Public Service Staff, at 2 (March 30, 2018)