Time to put an end to whack-a-mole electricity sellers

Attorney General Maura Healey’s office issued a new report on Thursday indicating that consumers who signed on with competitive electricity suppliers between July 2017 and June 2018 paid $76.2 million more than if they remained with their existing service carrier. An earlier report reached similar conclusions. Healey has filed legislation that would bar competitive suppliers from contracting with new residential customers after January 1.

 

WHEN CHRISTINE RECEIVED a knock on her door in Longmeadow several years ago, she opened it to find salespeople for a competitive electric supplier on her doorstep. The salespeople promised her that if she switched to their company’s service, she’d have a lower monthly electric bill. She bought their sales pitch and agreed to sign up. At first her new rates seemed reasonable, but not long after, she noticed that her bills were soaring. It turned out the company was charging her almost double what she paid on her utility’s basic service plan.

Christine isn’t alone. More than 500,000 residential customers statewide have been lured in by so-called “competitive” electric suppliers seeking to contract directly with residents in Massachusetts.

We’ve all seen these companies in action. They go door to door, send letters in the mail, and call over and over with promises of cheaper electricity or a locked-in low rate that they claim will save you money. In the last four years, we’ve received more than 1,000 complaints from residents, reporting aggressive sales tactics and outright deception, and last year we decided to take a closer look at what these companies were doing.

The results are troubling. All across Massachusetts, hundreds of thousands of residents aren’t paying less with these suppliers, they’re paying more. In fact, they’re paying a lot more. A report issued by my office in 2018 found that, between July 2015 and June 2017, Massachusetts electricity customers overpaid for electricity by $176.8 million. Today we’re issuing a supplemental report that shows the trend continued into 2018, bringing the total three-year net losses to $253 million.

When you dive in deeper, the numbers look even worse. Our investigation shows that low-income customers, particularly those in Massachusetts Gateway Cities are being hit particularly hard by this industry. Residents of Brockton, Fall River, Lawrence, Lowell, Lynn, New Bedford, Quincy, Springfield, and Worcester have all suffered some of the largest losses. Participation among African-American households is significantly higher than for the rest of the state. In Lawrence, the residents who signed up are shelling out an extra $18, on average, per month to competitive electric suppliers. In Worcester, 17,786 families forked over an extra $259,315 in just one-month last year.

As the state’s ratepayer advocate, I believe that all electric customers should have access to the best products and prices. When the state opened up the market to competitive supply in 1997, it was heralded as an experiment to introduce new products and better pricing for customers. Since then, we’ve seen a lot of successes. Large-scale users of electricity – like manufacturers, hospitals, universities, and office parks – have been able to negotiate power purchase contracts that create budget predictability and savings. Cities and towns have solicited bids from electric suppliers to provide cheaper, cleaner power for their entire municipality, creating a new option for thousands of individual families. As of this year, over 120 cities and towns in Massachusetts provide electricity to their residents through their municipal aggregation programs. Dozens more are in the process of setting up municipal aggregation programs—including Boston and Worcester. These are examples of competition that’s working.

But individual, house-to-house sales have been a failure. They have given rise to an ever-changing list of whack-a-mole companies that use high-pressure sales tactics and deception to make a quick buck on the backs of customers trying to save money. The only defenders of these practices are the companies themselves.

Now that we know the cost, it’s time to fix the problem. This year, my office has co-sponsored legislation (H.311 and S.195) with Rep. Frank Moran of Lawrence and Sen. James Welch of West Springfield that would keep the competition that’s working, while shutting down the part that’s broken, by eliminating the individual sales that have overcharged our residents by more than $250 million. I’m proud to be joined in these efforts by a growing number of mayors and legislators from across the state.

This year, in Massachusetts, we have a chance to stand up for customers like Christine, and a fair, stronger energy market.

Maura Healey is the attorney general of Massachusetts.