It makes no sense to eliminate the competitive electricity market

Regulate it better, sure, but don't get rid of it

THIS PAST YEAR has not been kind to Massachusetts electric ratepayers—at least some of them.

For customers who do not shop and choose their own energy provider, the average residential rate hike in National Grid’s service area was more than $110 per month this past winter, a 64 percent increase. In Eversource’s service area, rates spiked 42 percent. It was all part of the single largest electric rate increase in recent memory and marked the Commonwealth as having one of the highest “default” rates—the term used for consumers who do not shop for electricity supply— in the nation

Thankfully, there was a relief valve for customers facing this rate shock. Massachusetts allows electricity customers to shop for an alternative provider, and this winter all 32 of the residential competitive rate plans listed on were cheaper than National Grid’s Basic Service rate. In fact, if all National Grid customers had shopped and entered a contract with even the average competitive offering last winter (let alone the cheapest one), those customers would have saved more than $329 million. It’s close to a billion dollars in savings if we include Eversource and Unitil 

These numbers are not hypothetical. All of our customers did make a choice when they entrusted us to be their supplier. Massachusetts residential customers of our largest brand, Direct Energy, have saved $15.4 million compared to utility pricing since December of last year, when utility prices began their blow-out.

So you can understand why I am scratching my head that Massachusetts is considering eliminating the competitive electric market altogether. If passed, the new law would take away your ability to shop for cheaper electric rates at the very time you need more affordable energy options, not less. 

Eliminating electricity competition won’t help “regulate” the market; it would hitch everyone to the same monopoly wagon. Eliminating competition would mean fewer affordable options for customers struggling with high costs driven by the region’s dependency on natural gas. It would abolish 100 percent renewable options for customers willing to pay a bit more to support carbon reduction. It would smother the innovations that will be possible now that utilities are finally making investments in grid modernization. In short, it would be a huge step in the wrong direction, at precisely the wrong time.

The move to eliminate customer choice is being driven, in part, by reports issued by the Massachusetts Attorney General’s Office. The cost savings we cited above are from this past winter. By contrast, the AG’s studies are outdated, with the most recent year being 2021. That’s missing the whole ballgame. Decisions should be based on the latest information, not years-old data from a world that looked a lot different. 

Finally, there is no surge in consumer complaints that warrants the drastic action being considered by the Legislature. The Attorney General’s own data shows that the number of complaints filed against competitive suppliers is down 77 percent from 2018 to 2022 and are comparable to those levied against the largest utilities. 

There are, though, ways to make the market more consumer-friendlyJust like in any industry, bad actors in the competitive supply industry should be punished or removed. Dodgy companies should have their licenses revoked. It’s that simple. This may require additional enforcement efforts. A state Office of Retail Market Oversight, funded by competitive suppliers, should be created, increasing the ability to enforce regulations and provide greater transparency for consumers.

The law establishing the competitive electric market hasn’t been updated since it passed more than 25 years ago. It’s time to amend the law, not end it. It’s time to improve consumer choice, not eliminate it. If we do, we can protect Massachusetts consumers while continuing to offer them the choices they want and deserve. 

Travis Kavulla is vice president of regulatory affairs at NRG Energy.