Attorney General's Emergency Price Gouging Regulation Ostensibly Applies To Retail Energy Suppliers, Current Pricing

Price Is "Unconscionably High" If "Gross Disparity" Exists Versus Similar Product (Default Service)

March 20, 2020

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Reporting by Paul Ring • ring@energychoicematters.com

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Massachusetts Attorney General Maura Healey announced today that the AG's office has filed an emergency regulation to prohibit price gouging of essential products and services during the COVID-19 public health emergency, with the language of such regulation ostensibly encompassing retail electric and natural gas suppliers and the potential current pricing of some suppliers

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The amendment to regulation 940 CMR 3:18, filed today with the Massachusetts Secretary of State’s Office and effective immediately, prohibits price gouging of goods and services necessary for public health and safety during a declared statewide or national emergency. There is no explicit definition for such services necessary for public health and safety, and, ostensibly, electricity and natural gas supply are necessary for public health and safety

Specifically, under the new regulations, "It shall be an unfair or deceptive act or practice, during any declared statewide or national emergency, for any business at any point in the chain of distribution or manufacture to sell or offer to sell to any consumer or to any other business any goods or services necessary for the health, safety or welfare of the public for an amount that represents an unconscionably high price."

The regulation states that a price is "unconscionably high" if:

(a) there is gross disparity between the price charged or offered and

        1. the price at which the same good or service was sold or offered for sale by the business in the usual course of business immediately prior to the onset of the declared statewide or national emergency, or

        2. the price at which the same or similar product is readily obtainable from other businesses; and

(b) the disparity is not substantially attributable to increased prices charged by the business’s suppliers or increased costs due to an abnormal market disruption

The language defining an unconscionably high price as one with a "gross disparity" versus the price at which the same or similar product is readily obtainable from other businesses ostensibly would ensnare any retail energy rates that are substantially higher than default service without any value-add (e.g. renewable), such as variable electric rates that are priced by some suppliers at 14-15 cents per kWh in environments where default service is 8-10 cents per kWh (a 50%-75% disparity)

See the regulation here

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