Electricity supplier gets attack on AG wrong

It’s time to pull the plug on this predatory industry

THIS WINTER, residential customers should be wary of competitive electric suppliers taking advantage of rising electric bills to lure new customers. We have all heard the stories of these predatory suppliers, and many of us have experienced their high-pressure sales tactics – on the phone, at the door, through a mailer – promising cheaper electricity.

Unfortunately, these promises are usually scams. In fact, our office found that, over a five-year period, Massachusetts’ individual residential customers on competitive electric supply suffered $426 million in net losses over what they would have paid their utility for basic service. The results are even more severe for low-income customers, who are twice as likely to be targeted and switched to competitive electric supply and pay higher rates on average when they do.

The competitive electric supply industry has never claimed that our office’s calculations of customers’ financial losses are wrong. Indeed, in the November 14 opinion piece, “Unitil settlement proves Healey wrong,” Dan Allegretti on behalf of the Retail Energy Supply Association, makes no attempt to defend the industry’s terrible record. Instead, the industry continues to grasp at straws.

The Retail Energy Supply Association claims that efforts by Unitil and my team to mitigate the impact of a basic service rate increase somehow proves that it would be “spectacularly wrong” to end the competitive supply market for individual residential customers. The basis for this claim?  The association states: “Unitil customers who chose their own supplier [are] getting a better deal this winter.” Notably missing is any evidence to back-up this speculative statement; indeed, the association’s members prefer to keep secret the rates that they are actually charging their customers.

We know from our own reports and investigations that any potential savings realized by residents on competitive electric supply are short-lived, if they exist at all. We have shown time and time again that customers are much better off staying on their utility’s “basic service” rate. These rates do not include any utility profits and are overseen by state regulators.

The recent mitigation of Unitil’s winter basic service rate is a prime example of the protections afforded to basic service customers. The deferral of customer costs that my team negotiated and that the Department of Public Utilities approved was designed to avoid what would have been substantial “rate shock” from a proposed 75 percent increase in supply costs for Unitil’s customers.

These costs are the result of increases in global natural gas prices and Unitil’s atypical procurement process intended to avoid costs created by the uncertain launch date of the city of Fitchburg’s municipal aggregation plan. As a result of the deferral, Unitil will charge customers basic service rates this winter similar to those charged to National Grid and Eversource customers, rather than the one-time price spike. Unfortunately, the Department of Public Utilities does not have similar authority to minimize unreasonable rate impacts from competitive electric supply charges.

We know that the competitive supply market was created with good intentions—to provide residential customers with lower electricity prices. However, it has failed to deliver in Massachusetts during its decades-long existence, and it is high time to pull the plug. That is why Attorney General Maura Healey has co-sponsored legislation to prohibit competitive suppliers from signing up new residential customers and will continue to sound the alarm when it comes to preventing our most vulnerable residents – particularly low-income residents and communities of color – from being stuck with higher rates.

Meet the Author

Nathan Forster

Chief, energy and telecommunications division, Attorney General's office
As Allegretti so aptly states in his commentary, “selective snapshot comparisons of historic prices are not the proper way to assess the value of electric choice. The big picture is what matters.”  We could not agree more. The big picture here is that Massachusetts customers have lost $426 million to suppliers in the last five years, that our most vulnerable residents suffer a disproportionate share of that harm, and that an end to the electric supply market for individual residential customers is long overdue.

Nathan Forster is the chief of Massachusetts Attorney General Maura Healey’s energy and telecommunications division.