Home BusinessMarket ‘Risky’ energy retail market deterring consumers | News

‘Risky’ energy retail market deterring consumers | News

by Clarence Jones

Retail energy choice has been touted as a way for consumers to save money on their energy bills, but industry experts are warning that the promise of savings may not always be delivered. The concern revolves around unscrupulous suppliers who engage in deceptive practices and lock residents into unfavorable contracts.

This issue was recently brought to the attention of the state House Consumer Protection, Technology, and Utilities Committee, which is currently considering a bill aimed at protecting consumers from such practices in the retail energy market. The bill, introduced by Rep. Kyle Mullins, would require suppliers to undergo training and pass tests in order to operate within the state.

The problem of deceptive practices in the retail energy market is not a new one. In 2014, the Pennsylvania Public Utility Commission fined utility suppliers for engaging in “slamming” tactics during an extreme freeze caused by a rare “polar vortex.” Customers reported exorbitant electricity and heating bills due to provisions in their contracts that triggered variable rate pricing.

While measures were introduced to prevent slamming, some utility providers have since found other ways to exploit the market. Consumer Advocate Patrick Cicero testified during the committee hearing that residential consumers have not fared well in the electricity marketplace, paying over a billion dollars more than they would have with default service.

This lack of trust in the retail energy market has resulted in a majority of consumers sticking with their default energy supplier, estimated to be around 70%. Consumer advocates argue that suspicion and confusion generated by bad actors are major factors contributing to this low participation rate.

The Retail Energy Supply Association (RESA) supports the bill and efforts to discourage bad actors from operating in the state. They are aware of the scrutiny under which the industry operates and commend the majority of players in the energy industry for their responsible approach.

The legislation is not intended to restrict reputable retail energy companies that provide energy services to consumers. It aims to address the 2% of suppliers responsible for deceptive practices and causing harm, as highlighted by Rep. Craig Williams. Temporary contractors often misrepresent themselves as employees of default energy suppliers to persuade consumers to switch providers.

While some of the issues stem from consumer choice, such as opting for more expensive green energy, other factors contribute to the cost burden. Consumers often pay higher rates when their contracts expire or fail to consistently shop for the best energy rates, as noted by Tony Cusati, director of regulatory affairs for IGS Energy.

During the hearing, Cicero proposed measures to mitigate predatory pricing, including legislation that would prohibit variable rate contracts for residential consumers. Industry leaders like IGS already offer fixed-rate contracts, while others employ sales-driven contractors to encourage consumers to switch providers for short-term savings.

Concerns regarding the cost of training and education for suppliers, as well as the resources needed to enforce the bill if passed, remain unanswered. Proponents of the bill suggest that participating suppliers bear the cost, while others, like Rep. Williams, question whether more punitive measures should be considered.

In summary, the retail energy market in Pennsylvania is facing criticism due to deceptive practices by some suppliers. The proposed bill aims to protect consumers from such practices, but questions regarding implementation and enforcement need to be addressed. Despite this concern, there are still reputable retail energy companies providing services to consumers, and efforts are being made to ensure their practices do not come under scrutiny.

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