Bill Aims to Slam Telemarketers’ Claims About Cheaper Power

Some third-party suppliers are wooing utility customers with misleading come-ons about pricing and savings

With complaints about telemarketers “slamming” electricity customers rising, lawmakers are pushing a bill that would crack down on electricity suppliers making false claims to potential customers and would limit how many calls they could make to a household.

The effort comes at a time when many power suppliers are trying to convince consumers to switch from their traditional utility to get their electricity at a cheaper price, an opportunity largely driven by historically low natural gas prices.

The phone campaigns are working: As of April, 16 percent of the state’s 3.3 million electric customers, more than a half-million, switched to what the industry jargon calls third-party suppliers. That is up from the 9 percent of residential customers who had switched suppliers in May 2011.

New Jersey broke up its electric monopolies in 1999, allowing customers to shop for cheaper suppliers for the first time. If customers failed to shop, they would remain with their incumbent electric utility, which virtually all did because the third-party suppliers had a difficulty beating the price offered by the four utilities.

That has all changed with the steep drop in the past few years in natural gas prices, which typically establish how much it costs to generate electricity. It also has stepped up efforts by suppliers and telemarketers to aggressively court new customers.

“We’ve seen a growing problem of consumers getting slammed by these calls, many of which appear to include false and misleading claims,’’ Assemblyman Daniel Benson (D-Mercer), a sponsor of the bill (A-3422).

The legislation has cleared the Assembly Telecommunications and Utilities Committee with the support of licensed retail third-party suppliers, who say they too are frustrated by the rising number of complaints.

“We don’t quite know who these telemarketers are,’’ said Jay Kooper, representing the Retail Energy Supply Association, saying, unlike his company Hess and other third-party suppliers, they are not regulated by the New Jersey Board of Public Utilities. “It’s an absolute source of frustration to us.’’

Besides imposing fines ranging from $10,000 to $25,000 for making false or misleading claims to a potential customer, the bill also would limit a telemarketer or supplier from initiating contact with a potential customer via telephone to no more than once per calendar year if they do not have an existing business relationship with the household.

“Residents deserve the peace and quiet of their homes, not one call after another from companies that they have no business relationship with,’’ said Angel Fuentes (D-Camden). “This is a reasonable and common sense bill to protect consumers.’’

Kooper noted his members are already subject to fines from the BPU since they are licensed by the agency, but telemarketers are not.

That led Benson to criticize the agency for not resolving the slamming issue, a problem he hopes will be resolved by his bill. “It’s giving the BPU the direction where they need to go,’’ he said.

The slamming issue has emerged at a time when the state and trade groups are trying to make it easier for customers to shop for cheaper electricity. Last month, the BPU adopted new rules aimed improving billing procedures when customers do switch from their incumbent utility to a new power supplier. In addition, the agency is developing a website to help inform customers about how to go about switching electricity suppliers.

“There’s a great deal of suspicion,’’ said BPU Commissioner Joseph Fiordaliso, referring to consumers shopping for electricity. “They are almost afraid to make a choice. It’s certainly something they should weigh as they do with other financial decisions.’’

BPU President Bob Hanna noted that New Jersey lags behind other states, including neighboring Pennsylvania, in how many of its residential utility customers have switched suppliers.

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