Senate President Calls for Ban on Variable Rate Contracts

Connecticut Senate President Martin M. Looney (D-New Haven) has called for a ban on variable rate electricity contracts.

Sen. Looney was joined at a press conference concerning SB 573 by the co-chairs of the General Assembly's Energy and Technology Committee, Sen. Paul Doyle (D-Wethersfield) and Rep. Lonnie Reed (D-Branford), the state's Consumer Counsel, Elin Katz, and representatives from AARP Connecticut

The filing of SB 573 to ban residential variable rates had been first reported by RetailEnergyX.com earlier this month

"Given new evidence that variable electric rates are being used to confuse consumers to change their supplier -- not give them an affordable deal -- I am now convinced that the responsible thing to do is to ban the use of variable rates for residential consumers," said State Rep. Lonnie Reed.

It may be "impossible" to make variable rate electric rates a fair deal for electric customers, which is why the state should prohibit the rates for residential customers, AARP said in written testimony

"In order for any retail market to actually work to the benefit of both buyers and sellers, there must be some access to information to allow for a rational decision about what produce or service best meets the needs of the individual consumer. That does not exist in the retail energy market today. Residential consumers have no knowledge of how the wholesale market works and the terms and conditions offered by suppliers for variable rate contracts do not provide the information necessary to allow for a fair bargain. It may almost be impossible in any event to provide that information to make these contracts a viable option," AARP said.

Despite various legislative actions last year to limit when variable rates could change and provide advance notice of rate changes, AARP said a complete ban was needed because, "buyers and sellers in this market operate without equal information or understanding of the risks and rewards associated with purchasing electricity generation supply under variable rate contracts."