Consumer Advocate advises electric customers: Buyer beware!

Today I received a media inquiry from a reporter in Boston, reading:

"I'm working on a story about competitive/alternative electricity suppliers for residential customers in Massachusetts and am hoping to include some information about other states that allow this. 

"Here in Mass, as I'm sure you know, the Attorney General's office has consistently found [via exhaustive research conducted by consultant Susan Baldwin] that third party suppliers don't provide cheaper rates and that vulnerable populations (lower income residents, older adults, non-native English speakers) are disproportionately harmed by these companies. It sounds like it's been a problem in Connecticut too, and I believe the state recently returned all lower income residents to basic supply and enacted stricter rules to try to safeguard residents. 

"What's the situation like in New Hampshire? Do these companies prey on vulnerable populations and use deceptive marketing practices? Are residents who sign up saving money? Has there been any effort at the state level to fix the problem or ban these companies?"

I took some time to compose a thoughtful reply and I thought, perhaps, that others might benefit from reading my responses to these interesting questions.  So, here's a slightly edited version of my message back to the reporter:

I am familiar with the studies that consultant Susan Baldwin has undertaken in Massachusetts and, most recently, in Maine.  We don’t have the resources here to undertake such an effort but we have many of the same retail electricity suppliers that do business in our neighboring states.  I am not so naïve as to think that any of these companies acquire virtue merely by crossing the border from Massachusetts or Maine into New Hampshire.

You asked: “Do these companies prey on vulnerable populations and use deceptive marketing practices?”  Of course they do.  Or, at least, some of them do.  In the nearly 22 years that retail choice has been available in New Hampshire, we have learned that in the ordinary course individual residential customers are not very attractive to competitive suppliers.  The accounts are just too small and too difficult to manage.  So, generally, the only companies that have aggressively pursued residential accounts are those that feed in the benthic zone of the retail electric economy.

You also asked:  “Are residents who sign up saving money?”  Yes, some of them do.  But many of them don’t.  In my opinion, to save money a customer must vigilantly monitor her choice of competitive suppliers.  Often the competitive suppliers offer attractive teaser rates, hoping customers will not notice when they are automatically flipped to a different and more expensive rate a few months later.  Is that a “deceptive marketing practice”?  Probably not because the details are always in the fine print, available to those customers who are savvy enough to read everything.

Competitive energy suppliers are getting their wholesale energy from the same places that our utilities acquire default energy service.  So, just as the utilities have been forced to impose drastic increases in default energy service prices over the past two years, so too must the competitive suppliers find ways to extract more money from their customers.  There is no secret sauce that makes relying on competitive supply inherently more consumer-favorable than using default energy service.

To date our office has not joined our counterparts in Massachusetts and Maine by calling for an end to retail choice for residential customers.  Economic freedom is, I think, more firmly enshrined in the public policy of New Hampshire than it is in the public policy of our neighbors.  But even more importantly from our perspective is the impending arrival of community power aggregation.  Beginning later this year – perhaps even in the next few months – many Granite Staters will find that their town or city has become their energy supplier (though they may opt out and return to the utility’s default service).  I have high hopes that these municipal aggregation programs, simply by combining the buying power of lots of small customers, will finally give residential customers something to show for their having paid billions (via stranded cost charges) for electric industry restructuring.

Even after community power aggregation becomes widespread, there will always be some customers taking default energy service from their utility.  We will not forget our obligation to advance the interests of those customers.

Meanwhile, as of the end of 2022, 81 percent of Eversource’s residential customers in New Hampshire were still taking default service even though lower rates are available from competitive suppliers.  A vibrant competitive economy in electric suppliers for Granite Staters has not materialized – or, at least, it hasn’t materialized except for the bigger commercial and industrial customers.  The Public Utilities Commission has so far required the utilities to use a deliberately clueless approach to buying default service energy at wholesale – by simply putting the whole load out to bid every six months and taking what comes in over the transom.  That isn’t working anymore, so both the PUC and the Legislature are considering reforms.  We are actively engaged in all such discussions.

The materials and comments that utilities, competitive suppliers, and others have recently filed with the PUC on this subject are well worth a read for those who want to learn more about this important topic.