Is shop and save the best bet with electricity?

November 14, 2023

By Bruce Mohl

In Connecticut, Eversource Energy has been running an ad campaign aimed at convincing customers to shop around for the best deal on electricity from competitive suppliers and not just settle for the so-called basic service the utility provides.

The campaign has had some success. Last winter, 90 percent of customers relied on basic service. Heading into this winter, the percentage is down to 70 percent.

In Massachusetts, Eversource isn’t running a similar campaign. A company spokesman said 70 percent of the company’s customers in eastern Massachusetts and 40 percent of the firm’s customers in western Massachusetts are already purchasing their electricity from a competitive supplier or a municipal aggregation plan, an option not available in Connecticut.

“We always encourage our customers in Massachusetts to compare the basic service rate and other available rates to choose the option that works best for them,” said the spokesman, William Hinkle.

But one of those options – the competitive supply market -- could disappear if legislation pending on Beacon Hill wins approval.

Studies conducted by Attorney General Andrea Campbell and her predecessor Maura Healey say the competitive supply market is full of bad actors who have preyed on customers, signing them up for plans that end up costing more than basic service.

Campbell released a report in May indicating customers of competitive suppliers paid $525 million more on their electric bills over the last six years than they would have paid if they just stuck with basic service provided by their utilities.

A group of competitive suppliers have banded together and countered with legislation that would clean up the competitive supply market and penalize any bad actors, but keep the option available for consumers. Under the banner of the Retail Energy Advancement League, they provided a briefing to lawmakers this morningin which they said Massachusetts residents could have saved $1.1 billion between November 2022 and April 2023 if all utility ratepayers had shopped for the best available deal.

The dueling reports grab one’s attention but probably oversimplify the situation. Part of the problem is people aren’t used to shopping around for electricity even though the option has been available for decades.

With basic service, sometimes called default service, utilities purchase electricity contracts on behalf of their customers twice a year, serving as middlemen who earn no profit on the transaction. For years, basic service worked well, offering steady, reliable rates.

But as the market for electricity has become more volatile recently, the twice-a-year approach has sometimes led to enormous spikes in basic service prices. Competitive suppliers and municipal aggregators, with far more flexibility in how and when they purchase electricity for their customers, have gained an advantage.

According to 2022 data, the electricity supply market in Massachusetts is split among three buckets – 2.4 million customers on basic service; 1 million on municipal aggregation, where a city or town purchases electricity on behalf of its residents; and 400,000 people purchasing power on their own through competitive suppliers.

The competitive suppliers say they have something to offer, particularly as states decarbonize and electricity becomes a more important aspect of daily life. They point to current promotions by some companies, including 100 percent green energy and free power for electric vehicle charging from 11 p.m. to 6 a.m.

“Strong consumer protections and smart regulation are the foundation of a healthy competitive retail market,” the companies said ina letter to lawmakers. “We request you consider evaluating the market for opportunities for improvement before considering market closure and the removal of competition and choice that benefit so many residents.”

HOUSING PAINS: The 2022 Greater Boston Housing Report Card finds production in the metro core far behind where it needs to be, worsening rent burdens and contributing to out-migration. 

BEACON HILL

• Native community leaders are again urging state lawmakers to ban the use of Native American mascots in public schools. A bill is pending before the Joint Committee on Education. (MassLive)

• The Senate is preparing to approve a drug cost reduction bill. (Salem News)

MUNICIPAL MATTERS  

• Gas hookups in new construction won’t be banned in Boston anytime soon, after Boston Mayor Michelle Wu abandoned a planned application for a state pilot program that would’ve allowed the prohibition. But Wu administration officials are eyeing another mandate: “Net zero” carbon emissions. (Boston Business Journal)

• Worcester’s commissioner of health and human services stressed the connection between opioid deaths and housing pressures before the city’s Board of Health. (Worcester Telegram)

• Falmouth voters gave the go-ahead to designing a new wastewater system to halt the degradation of Great Pond, a key watershed in the densely populated area. (Cape Cod Times)

NATIONAL/INTERNATIONAL

• New York City Mayor Eric Adams has adopted a version of the Ron DeSantis playbook in dealing with a flood of migrants overwhelming the city’s shelter system and budget, offering one-way plane tickets out of New York to new arrivals. (City Journal) 

ELECTIONS

• Rob Anderson writes in The New Republicthat if Joe Biden were to adopt the same litmus test today that he put forward in late 2018 about mounting a presidential run, he’d opt not to seek reelection and let another Democrat carry the banner. 

BUSINESS/ECONOMY

• An energy services company is hoping to steer tourists and shoppers who are looking for a place to charge their electric vehicles toward Black-owned businesses and historic landmarks. (WBUR)

EDUCATION

• A judge hit the Andover teachers union with a $50,000 fine for staging an illegal strike, and said another $60,000 fine will be levied if the strike is not over by 3 p.m. today, and a further $70,000 will be assessed if it’s not over by Wednesday afternoon. (Boston Herald)

ENERGY/ENVIRONMENT

• Climate change’s effects on the Northeast include heat waves and floods that are likely to damage homes and agricultural economies, according to a new national report. (WBUR)

CRIMINAL JUSTICE/COURTS

• The Supreme Court adopted new ethics rules for justices, but didn’t say how they’d be enforced or by whom. (New York Times)

• Two people accused of running “sophisticated high-end brothels” in Greater Boston and eastern Virginia appeared in federal court in Worcester. (Worcester Telegram)