Rate Counsel Helps Keep Third-Party Power Suppliers on the Level

In filing with BPU, agency seeks more protections for customers who buy electricity from alternative suppliers

Stefanie Brand, director, Office of Rate Counsel
The New Jersey Division of Rate Counsel wants to ramp up efforts to prevent alternative energy suppliers from misleading customers when they switch from their incumbent electric utilities.

In a filing with the state Board of Public Utilities, the agency, which represents the interests of utility customers, is seeking more protections for ratepayers who decide to buy their electricity from companies other than state utilities.

The filing occurs at a time when the state already is launching an investigation into whether those suppliers are engaging in false marketing and contracting.

The issue became a focus of regulators this past winter when electricity prices for customers who switched to so-called third party suppliers skyrocketed when severe weather spiked prices for natural gas. As a result, customers had to absorb big increases in their electric bills that were totally unanticipated.

Division of Rate Counsel Stefanie Brand warned that the misleading practices and unexpected boost in bills could derail efforts to encourage customers to shop for cheaper energy bills — a primary incentive behind the state’s efforts to deregulate the energy industry more than 15 years ago.

In her filing with the BPU, Brand is suggesting changes in existing regulations to give consumers more information in an easier format when they are considering changing suppliers.

Among other things, Brand wants third-party suppliers to give customers a single document detailing the terms and conditions of the transaction. In the past, many complaints have been filed with regulators from customers who said they had no idea prices that they thought had been guaranteed could rise if electricity prices spiked.

Under the proposed regulation suggested by Rate Counsel, the terms of when a fixed-priced contract could be revised have to be spelled out in bold print to ensure the customer understands the contract.

Noting that some customers had experienced 100 percent increases in their monthly bills, the Rate Counsel called for changes in the regulations.

“Thus, it appears that current regulations are inadequate to address the concerns of TPS (third-party supplier) customers and require modification,’’ according to the filing by the Division of Rate Counsel.

The BPU indicates that approximately 16 percent of residential customers have switched to alternative energy suppliers, who have been able to offer lower prices to customers because of low natural gas prices.

That option failed this past winter for some suppliers because the extreme cold weather spiked natural gas prices for suppliers who did not lock in contracts for the fuel, which led them to pass on those additional costs to their customers. In response, some consumer advocates suggested ending variable pricing contracts, a measure not endorsed by the Division of Rate Counsel in its filing.