Mass. AG Says Analysis Of Additional Year Of Data Shows Further Consumer Losses Of $76 Million For Residential Customers On Competitive Supply
If Choice Remains, AG Seeks Warning That Suppliers Typically Do Not Provide Overall Savings
Recommends Posting Of Historic, Charged Rates
Requirement For Guaranteed Savings For Low-Income Customers
March 11, 2019 Email This Story Copyright 2010-19 EnergyChoiceMatters.com
Reporting by Paul Ring • firstname.lastname@example.org
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The Massachusetts Office of the Attorney General (AGO) said in comments to the DPU that the AG has analyzed an additional year (July 2017 – June 2018) of data and found that, in this third year, Massachusetts residential customers on competitive supply suffered consumer losses of $76.2 million versus what such customers would have paid for basic service from their utilities during such term
The AGO's analysis of data for July 2017 – June 2018 will be produced in a forthcoming supplemental report, the AGO said.
As first reported by EnergyChoiceMatters.com, the AGO released a report last year in which the AGO found that, between July 2015 and June 2017, residential consumers paid $176.8 million more for competitive supply than they would have paid for basic service from their utilities.
The three-year total of consumer losses for residential customers on competitive supply is $253 million, the AGO said.
"In many instances, consumer losses can be attributed to competitive electric supplier bait and switch tactics," the AGO said
As previously reported, the AGO is supporting legislation to ban individual residential electric choice (outside of municipal aggregations). To the extent individual residential customers retain eligibility for choice, the AGO offered various recommendations to the DPU to protect customers, as the AGO filed comments in a DPU investigation reviewing the retail energy market, the opening of which had been first reported by EnergyChoiceMatters.com (see story here).
Among other things, the AGO recommended a "consumer advisory" be included on the DPU's retail shopping website and rate board
Such consumer advisory, the AGO said, could include "cautionary language," such as that consumers should be aware that, "suppliers typically do not provide overall savings."
The AGO also recommended that the DPU publish all actual, historic rates charged by the supplier on the DPU shopping website
"Publicly-filed, historical rate information can help mitigate the losses caused by the
individual residential electric supply market: it will help consumers more fully understand what
they can expect from suppliers; it will increase transparency and accountability, discouraging
suppliers from charging exorbitant prices; and it will allow for a more transparent market as the
participants will know the rates ultimately charged by their competitors. Although the
Department’s Website currently provides various offers by competitive suppliers, the listing of
these offers is not sufficient, on its own, to provide consumers with robust and complete
information about the types of rates a consumer should expect if he or she elects to enter the
individual residential electric supply market.
For instance, while it is not uncommon to find offers on the Department’s website that
are initially lower than the current basic service price, this initial comparison does not accurately
represent the typical customer experience over the length of his or her contract. Rather, it is a
common occurrence that initial customer savings translate into long-term customer losses. In
each state where an analysis has been conducted based on the rates actually charged to
consumers in the competitive supply market, the findings show that consumers have lost tens of
millions of dollars per year as compared to the utility’s basic service rate," the AGO said
The AGO urged the DPU to examine the impact of electric choice on various residential hardship programs, including the amount of subsidies via discounts required and arrearages forgiven, due to higher competitive supply rates versus basic service
"As the AGO Report details,
36 percent of all low-income ratepayers receive competitive supply -- 101,935 households out of
285,267 low-income households in EDC territories. Low-income households tend to pay
higher rates -- 17 percent higher, on average -- than non-low-income households. Overall,
between July 2016 and June 2017, the AGO found that households receiving a low-income rate
paid $23.6 million more to competitive electric suppliers than they would have paid for basic
service. On a more granular level, analysis of specific suppliers found that low-income customers of one supplier paid, on average, $541 more per year than if they had purchased basic
service," the AGO said
The AGO further said that the DPU should implement greater protections for low-income ratepayers.
"Protections for low-income ratepayers could include rules that require suppliers to provide guaranteed savings as compared to the fixed basic service rate to any low-income ratepayer who signs up to receive individual competitive electric supply," the AGO said