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Protecting Customers from Sharp Spikes in Utility Bills Is Goal of Three-Bill Package

Legislative effort meant to stop unscrupulous third-party suppliers from passing on higher energy and gas costs to consumers

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Consumers might be better protected from unexpected spikes in their utility bills if they choose to switch gas or electric suppliers under a legislative package being pushed by the Legislature.

The three-bill package, now headed to the full Senate for a vote, is designed to protect customers from unscrupulous suppliers who promise savings on their utility bills that they might not deliver.

The legislation was spurred by events nearly two years ago when customers who had switched energy suppliers were socked with huge hikes in their monthly bills, largely because an unusually frigid winter sent natural-gas prices soaring.

Some energy suppliers had not locked in prices for the natural gas that their customers use to heat homes, costs they passed on to those customers. As a result, unhappy consumers flooded state regulators with complaints about the increases.

Many customers were unaware that their bills were allowed to fluctuate under so-called variable-price contracts.

The issue also led to a civil complaint against three energy suppliers by the state attorney general’s office, accusing them of defrauding customers by promising them they would save money on their utility bills, when, in fact, prices skyrocketed.

To try and guard against that, the package of legislation aims to establish requirements and contract standards for gas and electric suppliers asking customers to switch from their incumbent utilities.

“Consumers are currently navigating an unregulated third-party utilities market,’’ said Assemblyman Tim Eustace (D-Bergen), a sponsor. “There needs to be more transparency in the process. We need consumers to make their own choices with clear rules and regulations in place to guard residents who enter into these contracts with suppliers.’’

Among other things, a bill (A-3849) would require the state Board of Public Utilities to post on its website direct links to electric and gas suppliers to make it possible for customers to compare prices from various alternative energy suppliers.

“Too often, consumers are the victim of higher costs when signing up for electric or gas services,’’ said Sen. Shirley Turner (D-Mercer) who sponsored the legislation in the upper house. “By providing a one-stop shop where customers can compare price rates and choose from a number of service providers, residents will have the opportunity to choose the best provider and the most affordable rates.’’

Another bill in the package seeks to address a common complaint among those customers who want to opt out of their contract with an alternative energy supplier -- it now takes too long to switch back to their incumbent utility.

Under the second bill in the package (A-3850), the BPU would establish procedures allowing a customer to switch providers, as long as the utility receives an enrollment notice from the supplier no later than 20 days before the next scheduled meter reading for the switch to be effective on that date.

The final bill in the package (A-3851) would require the state agency to establish contract standards between customers and suppliers. Those standards would include explanation of fixed-rate contracts (in which prices cannot change) and variable-rate contracts (in which price fluctuations may occur).

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