Two states are cracking down on competitive suppliers, with mixed results

Companies selling electricity supply directly to homeowners face a widely varying set of rules in each state.

But none have shown quite the appetite for restrictive new rules as New York, where the governor is trying to outlaw them, and Connecticut, which has nearly re-regulated them.

And what’s going on in each may hold lessons for Maine, where a Bangor Daily News investigation found customers would have saved about $20 million if they had stuck with the standard offer in 2013 and 2014.

Behind heated debates in New York and Connecticut lies the big question: Is consumer choice in electricity supply good for the average homeowner?

States like Maine that have dismantled electricity monopolies have generally answered “yes” to that question, but only under certain conditions. Those conditions are where New York has been the most aggressive.

New York Gov. Andrew Cuomo proposed rules requiring such suppliers either to beat the default electricity option for homes or offer 30 percent renewable electricity supply.

The state’s top court struck down that effort in July. But the fight isn’t over and regulators have vowed to keep the pressure on suppliers, passing separate rules prohibiting them from signing up customers in a state low-income electricity program.

In Maine, competitive suppliers can sign up participants in the taxpayer-supported Low-Income Assistance Program. It’s unknown how many such customers have migrated over to competitive suppliers.

Both changes in New York followed a regulatory audit that found customers were getting ripped off.

The industry has questioned the basis for that finding, the findings of regulators in Connecticut and the premise of a Bangor Daily News investigation that used public data to compare retail supply pricing to the default electricity option for homeowners.

Bryan Lee, a spokesman for the Retail Energy Supply Association, called such analyses “comparing apples and oranges,” as suppliers’ offerings vary and can include the cost of things such as donations to local nonprofits.

Lee said customers can compare offerings based on information from individual companies or from price comparisons such as the one Maine’s Office of the Public Advocate maintains for competitive electricity suppliers.

In Connecticut, John Erlingheuser, advocacy director for the state’s AARP, declines to call the industry “competitive,” a term written into Maine state law that he said is misleading, preferring the term “third-party suppliers.”

He said it’s a problem for customers if they can’t accurately compare retail supply offerings to the default price and said the “apples-to-orange” argument is a smokescreen. In some cases, he said, those value-added benefits from suppliers are entirely unrelated to electricity supply, including offerings like airline miles.

“You show me a single person who goes into the third-party market and says they’re going to switch because they’re going to get airline miles,” he said. “[Suppliers] can pretend that all they want, but that’s what they hide behind.”

Erlingheuser said some companies are behaving, but the abuses of some have led him to question the entire point of the market.

“We’ve taken a necessity and turned it into a commodity and expect people to be day traders with their utility bills,” Erlingheuser said.

The relative newness of the residential retail supply market has prompted new rules in Connecticut and Maine. For instance, suppliers selling in Maine need to send two notices to customers before re-enrolling them in another contract with different terms.

Consumer advocates in Maine said they’d prefer that requirement go one step further, requiring a “yes” rather than silence to count as consent.

In Connecticut, Erlingheuser said passage of new rules “certainly doesn’t hurt” but he expressed some pessimism about their potential to protect customers.

“For everything that we do to rein in a bad practice, they come up with a new one,” he said.

After Connecticut passed a law to cap contract termination fees at $50 — the current highest in Maine is $150 — he said providers started charging enrollment fees as high as $250.

His AARP chapter has lobbied on consumer protections for electricity customers since at least 2014, with concern that seniors were signing up for contracts and paying more for electricity than if they had done nothing at all. A survey his AARP chapter commissioned in that year found 82 percent of respondents over the age of 50 had received solicitations from competitive suppliers in the previous year.

Officials at Maine’s AARP chapter told the Bangor Daily News that they have not worked on issues related to competitive electricity providers or heard from their members about them.

Darren Fishell

About Darren Fishell

Darren is a Portland-based reporter for the Bangor Daily News writing about the Maine economy and business. He's interested in putting economic data in context and finding the stories behind the numbers.