Proposed ban is solution in search of a problem
Imagine if your choice for a mobile phone company had one option because your state’s legislators believed you didn’t understand the rate plan. What about your right to select your doctor? Or choose your home insurance provider? As an American, you would likely find these scenarios unacceptable. This is the same situation some households in Massachusetts will face if they prefer a choice for the electric supply portion of their residential energy bill.Â
Last week, the Green Energy Consumers Alliance held a webinar asking state leaders to ban third-party electric suppliers from serving residential customers through Senate Bill S.2106. One of the participants, Benjamin Meshoulam, senior advisor for climate and energy at the attorney general’s office, noted the number of households enrolled with competitive electric suppliers was modest and declining. “Our most recent numbers show that around 378,000 households receive electricity from competitive electric suppliers between July 2022 and June 2023,” he said. (See transcript timestamp: 9:29 – 9:43)
The US Census Bureau estimates the number of households in Massachusetts around 2.74 million (2,740,955). Based on this data, along with the numbers from the attorney general’s office, consumers who purchase electricity from a retail supplier are a small fraction, 13.8 percent, of the total market.
Despite the persistent claims from some regulators and consumer advocates that consumers are filing an excessive number of complaints against competitive retail suppliers, the data released by these same groups do not add up. Here are two recent examples.
On March 6, the AG released the 2023 Consumer Advocacy Report, which highlights the top 10 most complaints received for a consumer product or service in the Commonwealth. Out of the 25,435 consumer complaints filed, the number one category was healthcare services, receiving 1,348 complaints, while home appliances came in at number ten, receiving 490 filed complaints. Other top ten complaints include bundled travel & vacation, landlord-tenant, auto repair, used car sales, home improvement, health insurance, auto & home insurance, and rooftop & community solar. Notably, retail electric suppliers are absent from this list, indicating a high level of consumer satisfaction and trust.
During the March 12 webinar, Meshoulam also reported the AGO consumer advocacy and response division had received 700 complaints against retail electric suppliers since 2016. The 700 complaints over eight years averages out to approximately 87.5 complaints annually. (See transcript timestamp: 10:42 – 10:55) That data alone makes it clear how competitive retail energy did not come close to making the AG’s top ten list.
Although retail energy was not in the top ten, rooftop & community solar was the ninth leading source of complaints, with 534 reported grievances filed in 2023. That’s six times more complaints than the annualized average of complaints against retail electric suppliers. Yet, no one in Gov. Maura Healey’s administration is suggesting that retail solar be banned—and to be clear, neither are we.
The Retail Energy Supply Association (RESA) recognizes the Commonwealth has ambitious carbon emission goals of being 80 percent carbon-free by 2050. For this to happen, more renewable energy projects must be implemented. In 2003, the Renewable Energy Portfolio Standard (RPS) for Class I resources required 1 percent of the state’s electric utilities and retail suppliers’ energy portfolio to come from renewable sources; each year after, the percentage increases by one point, with the current minimum standard for 2024 being 19 percent.
A REC, or Renewable Energy Credit, is a proof of purchase that can be verified and accounted for. Not only are RECs traceable, but environmental benefits do not have borders or boundaries. RECs generated from eligible sources and “retired” in the New England Power Pool Generation Information System are created around the region, not just in Massachusetts.
Some suppliers elect to do more than what is required by RPS. However, because some RECs are not purchased in Massachusetts or New England, consumer advocates disregard the positive benefits of a supplier electing to do more than required and focus instead on labeling this “greenwashing.”
There are certainly economic benefits to building new renewable energy generation in the Commonwealth, but, as will be familiar to many, the costs to build anything in Massachusetts can also be significant. As suppliers try to balance sustainability and affordability, in some instances, they provide customers with products that go beyond the RPS but use RECs generated elsewhere in the country to allow customers to support renewable energy generation and provide general environmental benefits.
This approach avoids making perfect the enemy of good – customers can support the development of clean energy at an affordable price. For other customers, the benefits of local renewable energy projects may be appealing enough that they are willing to pay an even higher price. Those customers should have the choice to do that, too – but we can and should do both.
Or another option could simply be suppliers could reduce their efforts by mirroring the utility’s energy portfolio and only meeting the minimum RPS required. This would immediately quash the greenwashing narrative, solving the PR problem, but certainly not the environmental one. More importantly, it would rob consumers of the choice to express their support for clean energy voluntarily through their wallets.
RESA wants to ensure that protecting the rights and interests of consumers remains the priority and supports Rep. Tackey Chan’s bill, which would address all consumer protection concerns while preserving consumers’ right to choose. The bill would set a high standard for new entrants before they even begin marketing to consumers by requiring suppliers applying for a license with the state DPU to post a $5 million bond. The bill also adds new rules governing the sales, marketing, and enrollment process. It will hold suppliers accountable after a sale, which increases the window for customers to file a formal complaint for any unauthorized switch from 30 days to two years.
We respect the Healey administration’s commitment to its aggressive green energy goals. At the same time, we also believe that consumers should have the power to choose what electric suppliers and products work best for their homes based on their needs. We urge the administration to reconsider its support of a bill to ban all residential third-party electric suppliers, as it seems to be a solution in search of a problem, according to its own data.
Frank Caliva is the national spokesperson for the Retail Energy Supply Association, one of two industry groups seeking to preserve retail electricity consumption.
The article was published in the CommonWealth Beacon on March 29, 2024.
