CT Watchdog: Electricity suppliers are focus of mounting complaints
Hoping to save money on his electric bill, Richard Yule of Avon switched from Connecticut Light & Power to North American Power, which offered a low teaser rate. By the time Yule figured out that he was paying a higher rate than the standard offer from CL&P, he had spent almost $300 more on electricity in a couple of months than if he had stayed with CL&P.
State Attorney General George Jepson says that his office and other state officials have had hundreds of complaints from consumers who feel they were taken advantage of by unscrupulous suppliers.
The situation has deteriorated to the point that Jepson and state Consumer Counsel Elin Swanson Katz have asked legislators in the upcoming session to pass bills that will protect consumers from incompetent and fraudulent suppliers. They are also approaching state utility regulators to make changes.
Jepsen, in a telephone interview with CtWatchdog, said two critical changes need to be made:
There is a need for transparency, Jepsen said. He and Katz want disclosures in monthly electric bills of exactly how much CL&P and The United Illuminating Co. are charging for electricity and how much is being charged by the customer's supplier.
And, he said, customers should be able to switch back to CL&P or to UI (which offer the standard rates in Connecticut) within 48 hours of a customer's request.
There are two main reasons why customers who switched from CL&P and UI are being financially hurt, Jepsen said.
The first issue, he said, is that among the more than 100 suppliers there are many that are small firms that don't have the competence to provide long-term stable prices. They are frequently forced to purchase electricity in the more volatile spot market instead of having a ready supply of long-term contracts. They also don't have the buying power - or economic muscle - to provide stable prices. Many shouldn't be in the business, he said.
"Some are just incompetent and that is being charitable," Jepsen said.
The other issue involves larger players who sucker in customers with low introductory "teaser" rates and then, when the customer is no longer paying attention to their prices, they jack them up, some more than 200 percent higher than the standard offers from UI and CL&P.
"You have companies that rely on consumer ignorance, and trapping consumers" in higher rates without any advance notice, Jepsen said.
Katz and Jepsen recently made public the names of 10 suppliers that were charging at least 17 cents per kilowatt hour, compared to the standard of about 9 cents. Some customers have been paying almost 25 cents per kilowatt hour.
"This is not buying doughnuts," Jepsen said. "This is expensive electricity" where monthly bills can be in the hundreds of dollars.
Discount Power, Choice Energy, Palmco Power, Starion Energy, Public Power, NextEra Energy, HOP Energy, Xoom Energy, Blue Pilot Energy and Perigee Energy were singled out by Jepsen and Katz.
Jepsen said that suppliers have "captive" customers because even when consumers discover they are being ripped off it takes them another billing cycle before they can switch back to CL&P and UI.
Instead of more than 100 suppliers, consumers would be better served if there were only a dozen or less larger suppliers providing electricity, Jepsen said.
Customers who wish to shop for a new supplier or to return to the utilities' standard service rate should visit www.ctenergyinfo.com or speak with an energy professional at Connecticut's toll-free Energy Information Line at 1-877-WISE-USE.
Yule said he tried to switch back to CL&P in the fall after discovering that he was paying a higher rate than the standard offer from CL&P.
But he said he got jerked around by North American Power and ended up paying $293 more than if he had stayed with CL&P.
I contacted North American Power on Yule's behalf and the company responded quickly.
"Upon receipt of your message, we were able to contact Richard, address his concerns, and resolve the issue. We apologized for the errors he encountered and are issuing him a refund in the amount of $292.99, per his request. We have also resubmitted the customer's cancellation request, and will issue a further refund, using the same formula, for the remaining billing cycles that the customer is on our service," Chad Klein, Director of Corporate Communications, said in an email to CtWatchdog.
"In New England, the issue has been two-fold - extremely cold weather, and a lack of adequate natural gas pipeline capacity to meet the increased demand in the winter months. Over the last several years, many electric generation facilities in the Northeast have moved to natural gas as a means to produce electricity due to its affordability (in normal months). In addition, more and more New England households have chosen to switch to natural gas for their heating needs - moving away from traditional heating oil," Klein said.
"... Because so many generation facilities now use natural gas to generate electricity, high natural gas prices means high electricity prices as well," he said.
Klein said his company "sent a notice to all of our CT customers currently on a variable rate at the beginning of the winter. This notice informed them of the forecasted increase, and encouraged them to contact us to discuss their options - which included moving to a fixed price plan to avoid the fluctuations this winter."
Yule said he was pleased with the company's response, but had a warning for consumers.
"I still believe that people have to be very careful with electric suppliers in general and there are many plans available that exist only to take advantage of customers who do not have time or knowledge to keep on top of these things."