IN CONNECTICUT, Eversource Energy has been running an ad campaign aimed at convincing customers to shop around for the best deal on electricity from competitive suppliers and not just settle for the so-called basic service the utility provides.
The campaign has had some success. Last winter, 90 percent of customers relied on basic service. Heading into this winter, the percentage is down to 70 percent.
In Massachusetts, Eversource isn’t running a similar campaign. A company spokesman said 70 percent of the company’s customers in eastern Massachusetts and 40 percent of the firm’s customers in western Massachusetts are already purchasing their electricity from a competitive supplier or a municipal aggregation plan, an option not available in Connecticut.
“We always encourage our customers in Massachusetts to compare the basic service rate and other available rates to choose the option that works best for them,” said the spokesman, William Hinkle.
But one of those options – the competitive supply market — could disappear if legislation pending on Beacon Hill wins approval.
Studies conducted by Attorney General Andrea Campbell and her predecessor Maura Healey say the competitive supply market is full of bad actors who have preyed on customers, signing them up for plans that end up costing more than basic service. Campbell released a report in May indicating customers of competitive suppliers paid $525 million more on their electric bills over the last six years than they would have paid if they just stuck with basic service provided by their utilities.
A group of competitive suppliers have banded together and countered with legislation that would clean up the competitive supply market and penalize any bad actors, but keep the option available for consumers. Under the banner of the Retail Energy Advancement League, they provided a briefing to lawmakers this morning in which they said Massachusetts residents could have saved $1.1 billion between November 2022 and April 2023 if all utility ratepayers had shopped for the best available deal.
The dueling reports grab one’s attention but probably oversimplify the situation. Part of the problem is people aren’t used to shopping around for electricity even though the option has been available for decades.
With basic service, sometimes called default service, utilities purchase electricity contracts on behalf of their customers twice a year, serving as middlemen who earn no profit on the transaction. For years, basic service worked well, offering steady, reliable rates.
But as the market for electricity has become more volatile recently, the twice-a-year approach has sometimes led to enormous spikes in basic service prices. Competitive suppliers and municipal aggregators, with far more flexibility in how and when they purchase electricity for their customers, have gained an advantage.
According to 2022 data, the electricity supply market in Massachusetts is split among three buckets – 2.4 million customers on basic service; 1 million on municipal aggregation, where a city or town purchases electricity on behalf of its residents; and 400,000 people purchasing power on their own through competitive suppliers.
The competitive suppliers say they have something to offer, particularly as states decarbonize and electricity becomes a more important aspect of daily life. They point to current promotions by some companies, including 100 percent green energy and free power for electric vehicle charging from 11 p.m. to 6 a.m.
“Strong consumer protections and smart regulation are the foundation of a healthy competitive retail market,” the companies said in a letter to lawmakers. “We request you consider evaluating the market for opportunities for improvement before considering market closure and the removal of competition and choice that benefit so many residents.”