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Press Release New AG Report: Massachusetts Residents Lost $426 Million Through Competitive Electric Supply Contracts in Last Five Years

Study Shows Low-Income Residents and Communities of Color Are Disproportionately Harmed; AG Urges Passage of Legislation to Ban Suppliers from Signing Up New Residential Customers
For immediate release:
4/01/2021
  • Office of Attorney General Maura Healey

Media Contact for New AG Report: Massachusetts Residents Lost $426 Million Through Competitive Electric Supply Contracts in Last Five Years

Chloe Gotsis

BOSTON Today, Massachusetts Attorney General Maura Healey released a report that found in the last five years, individual residential customers who received their electricity from competitive suppliers paid $426 million more on their bills than they would have paid if they had stayed with their utility companies.

This is the third report from the AG’s Office that shows that residents who enroll with these companies continue to overpay for electricity by tens of millions of dollars each year. Overall, the approximately 450,000 individual residential customers in the state who are currently enrolled with competitive suppliers lost $173 million in the most recent two years of data examined in the report. The AG’s report also found that these suppliers continue to charge low-income residents and residents in communities of color higher rates for their electricity.

The report’s findings highlight the urgent need to pass legislation that AG Healey, Sen. Brendan Crighton, and Rep. Frank Moran filed earlier this year that will ban these companies from signing up new individual residential customers in Massachusetts.

“Our report shows that these companies continue to drain millions from communities across our state, and worse, our most vulnerable neighbors are being hit hardest in the midst of a deadly pandemic,” AG Healey said. “We’ve heard far too many stories of these companies going door-to-door and calling residents over and over with false promises of cheaper electricity bills, only to stick customers with a higher rate and a contract they can’t get out of. It’s time to pass legislation to protect our residents from these inflated prices and put an end to this deception.”

The AG’s report found that low-income customers in Massachusetts are nearly twice as likely to sign up with individual competitive electric suppliers and that they are also charged higher rates than non-low-income customers. According to the report, individual non-low-income customers who receive their electricity from competitive electric suppliers lose an average of $194 annually, but low-income customers lose even more—an average of $241 annually.

The AG’s report also found that the consumer losses in this market are disproportionately borne by residents in zip codes with a higher concentration of low-income and residents of color in many of the state’s Gateway Cities. In September 2019 alone, Worcester residents collectively lost nearly $400,000 to competitive electric suppliers—more than any other city or town in the state. Similarly, residents in Fall River, Lowell, Brockton, Lynn, and Lawrence lost more than $180,000 in the individual competitive supply market in the same single month.

In December 2019, the AG’s Office successfully called on the state Department of Public Utilities (DPU) to investigate the impact of competitive electric suppliers on low-income electricity customers in the state, the state’s low-income energy assistance programs, and the resulting costs to all ratepayers.

The AG’s report did not analyze the market for commercial and industrial consumers, nor did it examine the state’s approximately 150 municipal aggregation programs. Today’s report follows up findings from the AG’s first report on the individual residential competitive electric supply industry in Massachusetts released three years ago this week, and a subsequent one released in 2019

Other Efforts by the AG’s Office to Protect Consumers from the Competitive Electric Supply Industry

Over the last five years, AG Healey’s Energy and Telecommunications Division has prioritized protecting Massachusetts’ residential electricity customers from the harms caused by these electric suppliers. In January 2021, AG Healey re-filed legislation that will bar suppliers from signing up new individual customers. The legislation will not affect the commercial and industrial market or Massachusetts’ municipal aggregation programs.

The division has recovered more than $15 million for Massachusetts consumers harmed by these companies—including more than $7.25 million from a settlement that it reached with Starion Energy and two of its executives in August 2020. The AG’s Office alleged that the company collectively charged more than 117,000 residents millions more on their electricity than they would have paid had they received electricity from their utility companies. Impacted customers will begin to receive restitution in April. The AG’s Office also secured $3.8 million in restitution through a 2015 settlement with Just Energy and returned $4.6 million to customers it alleges were harmed by Viridian Energy in a March 2018 settlement.

Residents in Massachusetts have filed more than 1,000 complaints with the AG’s Office about competitive suppliers engaging in aggressive and deceptive tactics. Complaints include conduct such as suppliers pretending to be utility companies to induce customers to turn over sensitive information; suppliers harassing customers with repeated calls or home visits; and door-to-door salespeople forcing their way into elderly customers’ homes and refusing to leave without signed contracts. 

Since AG Healey first called for reform in this market in 2018, other states have undertaken similar efforts to protect consumers from these deceptive practices including New York, Illinois, and Connecticut.

Any resident with concerns about these deceptive marketing practices should file a complaint with the AG’s Office or call the consumer hotline at (617) 727-8400. Residents with questions can also contact the Consumer Division of the Department of Public Utilities at (877) 886-5066. 

The AG’s 2021 report was prepared by the Susan M. Baldwin Consulting firm.

This matter is being handled by Division Chief Nathan Forster, Assistant Attorney General Elizabeth Mahony, Paralegal Cecilia Milano, and Energy Litigation Legal Support Specialist Adriana Bakhos, and all of AG Healey’s Energy and Telecommunications Division.

 

Statements of Support

 

Sen. Brendan Crighton (D- Lynn)

“This report details the dishonest marketing and unfair contracts being used by competitive electric suppliers to take advantage of low-income ratepayers in Gateway Cities like Lynn. The legislation that I filed in partnership with Attorney General Healey and Representative Moran would put an end to these deceptive practices employed by these companies to prey on low-income consumers and those with limited English proficiency.

 

Rep. Frank Moran (D-Lawrence)

“For far too long, competitive supplier industries have taken advantage of the most vulnerable constituents in our Commonwealth. Lawrence in particular has been one of the communities most negatively impacted by this industry, and the facts in the report from Attorney General Healey only further enforce our commitment and efforts to pass legislation that will end the predatory competitive electric suppliers that have affected low-income ratepayers for years and years. It’s time that we provide relief to those struggling due to unfairly inflated utility bills.”

Jenifer Bosco, Attorney at the Boston-based National Consumer Law Center

“The Attorney General’s report once again finds that low-income residents in Massachusetts continue to pay too much to competitive electric suppliers for the same electricity that their utility company supplies for less. Massachusetts customers have already lost hundreds of millions of dollars due to the deceptive sales practices of many competitive supply companies. Other states have stepped up to protect their residents, and it’s past time for Massachusetts to catch up and stop the financial harm to our families and neighbors, especially those who are struggling to pay their bills.”

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Media Contact for New AG Report: Massachusetts Residents Lost $426 Million Through Competitive Electric Supply Contracts in Last Five Years

Office of Attorney General Maura Healey 

Attorney General Maura Healey is the chief lawyer and law enforcement officer of the Commonwealth of Massachusetts.
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