“Contrary to the recent allegations against competitive suppliers, we should be focusing on the utility side of the equation.”
Earlier this year, the Connecticut Office of Consumer Counsel (OCC) called for the end of the third-party residential energy supply market in the state, sending ripples throughout the state’s energy market. The OCC alleges that third-party suppliers have overcharged Connecticut consumers two hundred million dollars over the last four years. The arguments underlying the OCC’s negative portrayal of the third-party residential energy supply market overlook and/or misinterpret a number of significant factors that strongly argue in support of the value of third-party supplier offerings to consumers.
Contrary to the recent allegations against competitive suppliers, we should be focusing on the utility side of the equation. There is evidence that customers served by third party electric suppliers have been forced to pay millions of dollars more than they should have for utility products and services that they never actually requested nor received. What makes these comparisons so misleading is that consumers have already contracted for and are actually paying for unwanted utility commodity-related services that they have been purchasing from competitive third-party suppliers for years.
In addition, and ironically, independent quantitative reports comparing 14 states open for retail energy competition to the 36 states that are not open for competition shows savings by consumers in competitive states of over $340 billion between 2008 and 2018.1
If electric competition in Connecticut appears to not be working, it is most likely because the utilities are significantly misallocating utility costs resulting in their “Price to Compare” (PTC) being artificially lower when compared to competitive market prices. This presents an appearance that consumers are paying more, when in reality, they are actually paying twice for many utility cost-based services that they have requested the utility to stop providing.
New, independent studies will be discussed and debated at NEM’s upcoming 22nd Annual National Energy Restructuring Conference to be held in Washington, DC on April 10-11, 2019.2
The Consumer Counsel’s analysis also overlooks a steep increase in prices that Connecticut residents will pay to utilities. That increase could total $87 million over the six months that the higher rates are in effect. That is a very significant increase that is being felt by the seventy five percent of Connecticut electricity customers not being served by third-party suppliers.
A recent examination of the Energize Connecticut website for comparing energy supplier offerings within the state reveals that there are a total of seventy-nine fixed-term offers throughout the two main utility areas in the state that are less than the default service rate. The lowest offers are fifteen percent and twenty two percent, respectively, below the current utility rate, while the average rates are eight percent and eleven percent below.
A published recent study prepared for an industry trial group concluded that there were seventy offers available in January that were lower than the default service rate. Perhaps most significantly, the study found that consumers, if they had pursued these offers, would have saved more than $14 million in January alone over their default service rates.
Eliminating the third-party energy supply market in Connecticut for residential consumers will remove these opportunities for consumers to save on their energy bills.
Instead of closing competitive markets, it is my opinion, as well as many in the industry, that monopolies should be prohibited from competing in otherwise competitive markets, nationwide.
1 Perryman Group study for Florida Energy Freedom.
2 Agenda for NEM’s upcoming 22nd Annual National Energy Restructuring Conference
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