AG Report Says Massachusetts Residential Customers Paid $100 Million More On Retail Supplier Service Versus Default Service In Most Recent Year

May 2, 2023

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Copyright 2010-21 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

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Massachusetts Attorney General Andrea Joy Campbell released a report that, as stated by the AG's office, "found that in the last six years, individual residential customers who received their electric supply from competitive suppliers paid $525 million more on their electric bills than they would have paid if they stayed with their utility companies."

"Overall, the approximately 430,000 individual residential customers in the state who are currently enrolled with competitive suppliers on average lost $231 a year -- the highest average annual loss reported by the AG’s Office to date," the AG's office said

The report's most recent year is 2020-21. In that year, the report found that shopping customers paid $99.5 million more than default service, in aggregate

For the 2020-21 year, the report says that data, "shows that low-income participants in the individual residential electric supply market typically pay more each month for electricity than do non-low-income consumers in the individual residential electric supply market, and when averaged over the twelve months, low-income consumers paid a premium of $0.03523 per kWh, 14 percent more than the $0.03089 per kWh premium paid by non-low-income consumers of competitive suppliers."

Across all incomes, the average premium for a residential shopping customer versus basic service was $0.0316 per kWh for 2020-21, the report states

"Fewer than one in five bills issued to Massachusetts consumers served by an individual residential supplier included supply rates that were lower than the basic service rates charged through their electric distribution companies," the report states

"Forty-two suppliers, serving 88 percent of the individual residential electric supply customer base, each provided customers with net losses on average. These 'net-loss' suppliers account for $101.5 million in consumer loss. By contrast, ten individual residential suppliers, serving only 12 percent of the individual residential electric supply customer base, each provided customers with net gains on average, totaling only $2.1 million in net gains in total. Moreover, the per-customer net savings that these suppliers provided were small. The average annual savings per consumer was $40.36, and the average rate (weighted by kWh) paid by this group of consumers was $0.1048 per kWh. By comparison, the average loss per consumer (for the approximate 88 percent of the total individual residential supplier customer base who experienced net losses), expressed on an annual basis, was $267.67, and the average rate paid by this group of consumers was $0.1454 per kWh," the report states

The report includes, with the identity of each supplier redacted, the ten suppliers who charged the highest average premium over basic service during the 2020–2021 study period

The report said that the data, "shows that two suppliers charged, on average, over $0.06 per kWh more than the corresponding electric distribution company rate, six suppliers charged over $0.05 per kWh more than the corresponding electric distribution company rate, and all ten suppliers charged, on average, greater than $0.04 per kWh more than the corresponding electric distribution company rate."

"This report once again sounds the alarm on competitive electric supply companies that pitch consumers on the idea of cheaper electricity bills, while they charge higher rates that drain millions from our communities," said AG Campbell. "We know this injustice hits communities of color and low-income communities the hardest, and my office will continue to draw attention to these predatory actions and advocate for legislation that will protect our residents."

"Today’s report highlights the urgent need to pass legislation that AG Campbell, Senator Brendan Crighton and Representative Frank Moran filed earlier this year that will ban these companies from signing up new individual residential customers in Massachusetts," the AG's office said

The AG's office said that report showed that:

• "Low-income customers in Massachusetts are nearly twice as likely to sign up with individual competitive electric suppliers and that they are also charged higher rates than non-low-income customers."

• "Assuming 600 kWh/month usage, an average non-low-income customer lost $222 per year while the average low-income customer lost $254 per year, during the study period."

• "Low-income customers collectively lost over $20 million on net in higher rates and monthly fees, during the study period"

• "The continuation of consumer losses is disproportionately borne by residents in zip codes with a higher concentration of low-income and residents of color in many of the state’s Gateway Cities, including Springfield, Worcester, Fall River and Lowell."

Link to report

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