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Oct 31, 2023

The dark underbelly of retail electricity competition

Electricity meter The Download

Electricity meter

The Download

By CommonWealth Staff 0 Comments Jun 6, 2023

Twenty-five years ago, Beacon Hill lawmakers dramatically changed the way electricity is bought and sold in Massachusetts. The old way was devoid of competition, with utilities producing and distributing electricity under the supervision of state regulators. The new approach opened the production of electricity to competition while leaving distribution under the purview of regulated utilities.

Consumers also saw their role change in 1998. Instead of merely taking whatever price regulators set for electricity, they were given a choice. They could buy electricity from retail sellers, they could buy from municipal aggregators, or they could do nothing and let their utility purchase electricity on their behalf. Most consumers took the lazy way out and did nothing.

On Monday, key players came together at a legislative hearing on Beacon Hill and concluded that giving consumers the freedom to choose their own electricity supplier has been a disaster. Unfortunately, there was no consensus on what to do about it.

Gov. Maura Healey, Attorney General Andrea Campbell, and Boston Mayor Michelle Wu formed a united front at the hearing, calling on lawmakers to eradicate the retail market for electricity. They accused the retailers of lying, cheating, and using deceptive sales practices to sell homeowners overpriced electricity. The best way to address the problem, they said, is to get rid of the retailers.

Rev. Mariama White-Hammond, Wu's chief of environment, energy, and open space, said she experienced the duplicitous tactics of the retailers first-hand when one salesman showed up at her front door representing himself as an employee of the city of Boston.

Campbell pointed to a report her office published last month indicating retail customers paid $525 million more to retailers between 2015 and 2021 than they would have if they just let their utility purchase electricity on their behalf. "It is egregious that we allow this industry to continue to harm and prey upon people who are really struggling to pay basic necessities like food, housing, and their utilities," she said.

The retailers formed something of a united front as well, testifying that their businesses should continue to operate but with tighter regulation. They backed a bill filed by Rep. Tackey Chan of Quincy that would require retailers to post bonds worth $5 million, contribute funding to provide more oversight of their operations, tighten rules on door-to-door sales, and assess a fine of $10,000 per day for every license violation.

"We ask that you not paint all the companies with the same brush," said Travis Kavulla, the vice president of regulatory affairs at NRG, a Fortune 500 company that participates in the retail market. "We understand additional regulations are needed."

The retailers also pointed out that Campbell's study didn't take into account last winter, when the price of electricity purchased by utilities on behalf of their customers skyrocketed to astronomical levels.

Healey has been pushing a retail ban since she was attorney general – with no success. Her approach has gained some traction in the Senate, but none in the House.

At Monday's hearing of the Telecommunications, Utilities, and Energy Committee, senators seemed wary. (Only senators attended because of an ongoing dispute between the House and Senate chairs.)

Throughout the hearing, Barrett kept asking why the retail market didn't work. Most witnesses focused on the many bad apples in the retail business, but an equal number acknowledged consumers are simply not sophisticated when it comes to buying electricity.

"The average person doesn't know enough about how to read their bill," said White-Hammond.

BRUCE MOHL

FROM COMMONWEALTH

SouthCoast is out: SouthCoast Wind ends its waffling and reveals to Rhode Island regulators that it is moving to terminate its power purchase agreements with Massachusetts utilities and seeking to rebid its wind farm at higher prices in the state's next procurement.

– The announcement means the second and third offshore wind procurements in Massachusetts are now officially a bust, with the two wind farm developers saying inflation, rising interest rates, supply chain issues, and the war in Ukraine unraveled deals they agreed to last year. Read more.

Tax revenues rebound: State tax revenues bounced back in May, but with one month left to go in the fiscal year they are about $619 million below what was projected. Read more.

OPINION

Linking rent stress to health: High rents are bad for your health, and Boston Mayor Michelle Wu's rent stabilization plan could help, say Drs. Jarone Lee and Raymond Liu, Angie Liou of the Asian Community Development Corp., and UCLA medical student Audrey Nguyen. Read more.

FROM AROUND THE WEB

BEACON HILL

Senate President Karen Spilka says a tax-cut package will go through this year, notwithstanding the bombshell revelation that the Baker administration mistakenly used $2.5 billion in federal aid on unemployment claims that should have been paid using state funds. (Boston Herald)

House minority leader Brad Jones and Ross Connolly, the former regional director of Americans for Prosperity, pen an op-ed warning that high taxes are driving an exodus from Massachusetts that must be stopped. (Boston Globe)

MUNICIPAL MATTERS

The Worcester Zoning Board of Appeals unanimously approved special permits for Zion Lutheran Church to be converted into a six-unit temporary family homeless shelter after a raucous public hearing. (Worcester Telegram)

A state sale of the former St. Mary's Home for Children in New Bedford to Roxbury-based Cruz Development Corporation will bring 28 mixed-income rental units to the city. Lt. Gov. Kim Driscoll discussed the pending sale and other efforts to tackle the housing crisis with CommonWealth on last week's Codcast. (New Bedford Standard-Times)

HEALTH/HEALTH CARE

The state-run veterans’ home in Chelsea has been hit by a new COVID outbreak. (Boston Globe)

WASHINGTON/NATIONAL/INTERNATIONAL

Gov. Maura Healey and seven other Democratic governors urge school textbook publishers not to censor their products to remove controversial discussions of race, gender, and history. (Eagle-Tribune)

ELECTIONS

It's getting to the stage of asking who isn't running for president, as former VP Mike Pence files paperwork to go up against his one-time boss, Donald Trump, (New York Times) and former New Jersey governor Chris Christie plans to announce his GOP bid tonight. (Washington Post) Meanwhile, philosophy professor and left-wing activist Cornel West is in, too, announcing he's running under the People's Party banner. (Politico)

Gov. Chris Sununu says he won't be seeking the Republican nomination for president, and warns that a crowded field will only help Donald Trump win the nomination. (Associated Press)

Former Everett city councilor Anthony DiPierro seeks to regain office after resigning for making racist remarks. (GBH)

BUSINESS/ECONOMY

Boston Mayor Michelle Wu launches a $4 million effort to slot 1,000 people into biotech jobs by 2025. (State House News Service)

Trulieve is closing its three dispensaries and its growing facility in Massachusetts because the company says the market is oversaturated. (Daily Hampshire Gazette)

A Jamaica Plain youth group is calling out Stop & Shop, saying it found that a set of items at the store's outlet in lower-income Jackson Square cost $34 more than the same basket of goods at a Stop & Shop in better-off Dedham. (Boston Globe)

EDUCATION

Student loan payments, paused since the start of the COVID-19 pandemic, are set to resume in September. President Biden agreed to the restart as part of the debt ceiling bill, with a Supreme Court ruling on the legality of the student debt forgiveness plan expected this month. (MassLive)

TRANSPORTATION

The MBTA files a new track work safety plan with the Federal Transit Administration, which had deemed an earlier version a nonstarter. (State House News Service)

ENERGY/ENVIRONMENT

Beech leaf disease, a tree malady that made its way from Ohio to Massachusetts over the last decade, is now widespread in Barnstable County on the Cape. The state is asking people who see infected trees to fill out a form to alert the forest health program. (Cape Cod Times)

CRIMINAL JUSTICE/COURTS

The Massachusetts Peace Officer Standards and Training commission has suspended former Hopkinton deputy police chief John Porter, who was indicted on charges for sexually assaulting a teenager while he was assigned as a school resource officer. (MassLive)

New York Times publisher A.G. Sulzberger makes the case for journalistic independence, something he says is increasingly under threat. (Columbia Journalism Review)