AUGUSTA — Hoping to provide more information to consumers about the price they pay for electricity, state Sen. Nate Libby is pushing a measure to give greater protection to people who may be paying too much.
“This bill is a big deal,” the Lewiston Democrat said. “It will help customers be better informed about their choices for electricity and prevent them from being trapped in bad deals.”
The Legislature’s Energy, Utilities and Technology Committee gave the proposal its unanimous backing last week. The bill heads next to the Senate, where Libby is the assistant minority leader.
Though some utility companies complained the measure is unnecessary and likely to add administrative costs, the acting director of the Governor’s Energy Office, Angela Monroe, said her office generally supports Libby’s approach.
Among its provisions, the bill would require electricity providers to disclose whether their rate is higher than the standard offer available to everyone, send out renewal notices and only renew a contract if a customer explicitly agrees.
“These rules will put Maine on the leading edge of the country for protecting consumers and preventing abusive practices in the consumer electricity market,” Public Advocate Tim Schneider said in a prepared statement.
Joel Harrington, who handles government relations for Central Maine Power, said the sentiments behind Libby’s effort to help small consumers are well-founded.
But, he told the committee, asking utilities that provide electrical service and bill customers to add complicated price comparisons will “create at least $1 million in programming challenges and implementation costs that are currently not in rates, not to mention the fact that we currently do not have access to contract terms” with third-party providers.
“Capturing this information” from other energy providers and “storing it at the customer account level and displaying it on customer bills would entail significant effort and expense,” he said.
In a recent radio address, Libby said that Maine buys electricity at “a competitive rate on behalf of its residents, businesses and other consumers” that is available to everyone.
“It is negotiated to guarantee the best deal for Mainers, regardless of where they live,” he said.
Two decades ago, Maine followed a national trend to deregulate the energy supply market in a bid to improve competition and open the door to lower prices. For some, it’s worked out well. For others, not so much.
Libby said that consumers who abandoned the state-negotiated “standard offer” thought they would see savings. In reality, he said, “Maine consumers were charged far more.”
“About one-third of Mainers opted to sign up for services from competitive electricity providers,” he said, and many tell stories that “paint a picture of an industry out of control.”
“Customers were locked into expensive contracts that had been renewed without their knowledge. They found it impossible to obtain even basic information about these contracts, such as expiration dates,” Libby said.
“And many Mainers had difficulty finding the information they needed to compare the rates between competitive electricity providers and the standard offer,” he said. “Additionally, many consumers may not know how to find the standard offer rate, making them easy marks for predatory marketing or sales pitches.”
Electricity deregulation is a controversial topic in many states, where promises of reductions in bills rarely happened for anyone other than big companies that could use their clout to negotiate better deals.
But it’s not clear that ordinary consumers have suffered overall.
Daniel Allegretti, vice president for state government affairs with Exelon Corp., told lawmakers that Maine’s electricity bills are closer to the national norm following two decades of deregulation than they used to be. While most everyone’s bills have gone up, had Maine’s charges continued to be as much above the average as they used to be, Mainers would have shelled out nearly $3 billion in extra costs over time.
Testifying on behalf of Constellation New Energy, Allegretti said that simply looking at prices paid isn’t the whole story because some consumers chose longer-term contracts that may be beneficial over a longer period while others bought specialty offers such as purchasing options that rely solely on renewable sources.
Libby’s bill doesn’t prevent consumers from making those choices. It would just lay out clearly what the extra costs are for people who might not be aware of what their choices actually cost.
Eric Bryant, senior counsel for the public advocate, told legislators that retail competition for electricity “was supposed to unlock customer choice” with suppliers offering innovative options for renewable energy or policies tailored to someone’s particular needs.
He said that’s happened for Maine’s large commercial and industrial users “who have used the competitive market and partnered with competitive suppliers to lower their prices and manage risk.”
But, Bryant said, “Options for residential and small business customers have been much more limited. Suppliers mostly offer simple, fixed rates with the required minimum percentage of renewables, a product essentially identical to the standard offer, often at a higher price.”
Other states that have looked into similar programs, including New York and Connecticut, have found that residential customers who signed up with competitive providers rather than taking the standard offer wound up paying substantially more for their electricity.
Bryant said Maine would benefit from a similar analysis because “we do not really know how many residential and small-business customers are actually taking advantage of retail choice and choosing products that are different from the standard offer.”
Barbara Alexander of Winthrop, who has represented consumers in the energy market for decades, said the reasons for encouraging a retail market for electricity supply are twofold: It could offer a lower price or provide a different product that some might prefer.
But, Alexander said, neither option has consistently emerged in any state, including Maine.
She said she supports Libby’s measure but called on lawmakers to go even further and simply abolish retail competition for electricity.
If customers are “paying more and not offered meaningful choice,” Bryant said, “it would be reasonable to conclude that this market is not providing value and is simply a trap for the unwary and ill-informed. If so, the Legislature would be justified in ending retail competition for residential and small-business customers.”