The Codcast: Two firms say Healey goes too far

Attorney General Maura Healey wants to shut down the companies that sell electricity to residential customers in Massachusetts, but officials with two of the firms say the answer to any problems with their industry isn’t less competition but more.

Chris Kallaher, senior director for government and regulatory affairs at Direct Energy, and Ed Brolin, director and assistant general manager of Just Energy, said on this week’s Codcast that the attorney general is overreacting.

Healey said a study conducted for her office indicated that roughly 50 firms sell electricity to about 20 percent of the state’s residential electricity customers. She said the firms engage in deceptive sales practices, target low income and elderly customers, and over a two-year period charged $177 million more for electricity than the basic service offered by the state’s utilities.

Instead of calling for reforms or more consumer education, Healey said she wanted to shut down the companies. The unusual solution is getting serious attention. Gov. Charlie Baker said he wanted more time to study Healey’s proposal and the Legislature indicated it plans to hold a hearing to determine the correct course of action.

Kallaher said retreating from the type of competition ushered in by electricity deregulation 20 years ago would be a mistake. He said Healey’s study was flawed and basic service – where utilities buy electricity for customers who don’t choose a competitive supplier – was not a good point of comparison.

“If the utility had to operate basic service as a free-standing business, just taking in revenue from the rates they charge basic service customers, they would go out of business, probably in a couple of months,” Kallaher said.

Both Kallaher and Brolin said it would make more sense to shut down basic service, which they said would encourage more competition and prompt customers to shop for electricity the same way they shop for internet, cable, and phone service. “Consumers are not being encouraged to shop enough,” said Kallaher.

Brolin said the point of competition isn’t always to lower prices. “It’s not just about price,” he said. “It’s about choice.”

He noted the companies selling electricity offer many types of products. Some are focused on price, while others offer electricity from all-renewable sources or provide points to loyal customers that can be redeemed for gift cards or energy-saving products.

All of the current offers from Direct Energy and Just Energy listed on a state website have prices that are currently lower than the basic service cost. But the contracts offered by the companies last anywhere from 12 to 36 months, while the basic service price changes every six months, and typically goes down in the summer months.

The day before her press conference Healey announced a $5 million settlement with Viridian Energy, which was accused of engaging in deceptive sales practices. In December 2014, the attorney general’s office reached a similar  $4 million settlement with Just Energy.

“The settlement that Just Energy entered into with the attorney general’s office in Massachusetts is a really good example of how surgical activity as opposed to draconian and heavy handed and doing away entirely with a competitive marketplace effectively works,” Brolin said. “We entered into assurance of discontinuance of various practices with the attorney general and since then have had zero issues. For the last number of years, we have had a monitor regularly looking at our activity in the Commonwealth and we have had zero complaints along those lines.”

BRUCE MOHL


BEACON HILL

State Auditor Suzanne Bump says the state is breaking its promises to regional schools. (CommonWealth)

A federal judge upheld the Massachusetts assault weapons ban and said Attorney General Maura Healey’s restrictions on copycat sales were also legal. (State House News)

Ken Driscoll of Solect Energy says a tweak is needed to Gov. Charlie Baker’s clean peak standard. (CommonWealth)

Howie Carr continues his tirade against the patronage-laden ways of Lt. Gov. Karyn Polito. (Boston Herald)

A Herald editorial applauds Baker for largely keeping his campaign promise to end housing homeless families in motels.

When it comes to public records, the State Police seem to be all about delay. (CommonWealth)

MUNICIPAL/REGIONAL MATTERS

A nearly $5 million Gloucester home owned by Steve DeFillippo (the CEO of Davio’s Restaurants) and James Rudolph catches fire and burns to the ground. (Gloucester Times)

The Extreme Model Railroad and Contemporary Architecture Museum in North Adams being designed by Frank Gehry takes another major step forward. (Berkshire Eagle)

At least five openly transgender women are planning to run in next Monday’s Boston Marathon. Some experts say they will enjoy an unfair physiologic advantage over other women runners; some say that, with hormone treatments transgender women take, that’s not true. (Boston Herald).

WASHINGTON/NATIONAL/INTERNATIONAL

Angela Bovill of Ascentria Care Alliance says anti-immigrant policies are a threat to the nation. (CommonWealth)

Keller@Large wonders if Sen. Elizabeth Warren’s uncertain future (2020 or not 2020?) is hampering her legislative efforts in draw no bipartisan supports for her bills.

ELECTIONS

At separate sessions last week at Emerson College, US Rep. Michael Capuano and his Democratic primary challenger, Ayanna Pressley, showcased a theme that emerged as soon as Pressley announced her insurgent bid: They largely agree on the big issues of the day. (Boston Globe)

BUSINESS/ECONOMY

Some 87 million Facebook users will find out today if they were swept up in the Cambridge Analytica data mining. (New York Times)

EDUCATION

Lowell High School, which once had a dropout rate twice as big as the state average, is now below the state average. (Lowell Sun)

Attorney General Maura Healey says her office will examine the abrupt closure of Mt. Ida College in Newton, which has been absorbed by the University of Massachusetts Amherst. (Boston Globe)

Richard Doherty of the Association for Independent Colleges and Universities in Massachusetts says Congress is leading the way on financial aid. (CommonWealth)

HEALTH/HEALTH CARE

State officials at the last minute eased price restrictions on the massive Beth Israel-Lahey merger. (CommonWealth)

The Department of Public Health says it does not have the power to prevent Steward Health Care from closing the maternity ward at Taunton’s Morton Hospital. (Taunton Gazette)

Changing the equation: A addiction treatment startup focuses on long-term outcomes in a business that often claims unwarranted success based on patients completing a one-month treatment program. (Boston Globe)

Deni Carise of Recovery Centers of America offers a way to deal with the opioid epidemic — eliminate the stigma, treat the person. (CommonWealth)

TRANSPORTATION

The MBTA and Keolis launch a first-of-its-kind advertising campaign to attract leisure travelers and reverse commuters. (CommonWealth)

It turns out the former operator of the MBTA commuter rail system was aware of the horrific driving record of the son of a Boston judge, which included twice having his license suspended for drunken driving, when it hired him to be a locomotive engineer. (Boston Globe)

Low-income people have more access to cars today, which could be having a negative impact on transit ridership. (Governing)

ENERGY/ENVIRONMENT

Peter Rothstein of the Northeast Clean Energy Council urges state officials to go bigger with offshore wind procurement and to select more than one supplier. (CommonWealth)

The Cape Cod Times launches an editorial series on the trashing of the Cape along with the rest of the state, saying litter is overwhelming the efforts to clean up the roads and highways.

Paul Lipke of Health Care Without Harm says hospitals are leading the way on climate resiliency. (CommonWealth)

CASINOS/MARIJUANA

Rumors are heating up that Wynn Resorts may look to unload its partially-completed casino in Everett as the state gambling commission mounts an investigation of its suitability to retain the license in the wake of sexual harassment and assault allegations leveled at its former CEO, Steve Wynn. (Boston Globe)

East Bridgewater joins the growing rolls of communities banning recreational marijuana after voters narrowly approved a referendum in Saturday’s election. (The Enterprise)

Farmers in Truro and Wellfleet are applying for a cooperative license to grow marijuana but are chafing at community efforts to ban recreational pot. (Cape Cod Times)

CRIMINAL JUSTICE/COURTS

A Wareham drug dealer was sentenced to six to eight years in prison after he was convicted of manslaughter for selling heroin to a 25-year-old woman who overdosed. (The Enterprise)

Bernard Sigh, brother-in-law of former governor Deval Patrick, was arrested in Milton Friday for allegedly violating an abuse prevention order. (Patriot Ledger)