Guest column: Power of choice can lower electricity bills
Massachusetts residents can choose their electricity supplier and are not captives to electricity monopolies. The power of customer choice is the single most important consumer protection in any market.
Fire the provider doing a bad job and take your business elsewhere. Nothing incentivizes businesses to better serve customers and protects consumers more than robust competition in the marketplace.
Yet, the attorney general of Massachusetts just recently published a faulty report, written by paid contractors, that calls for taking the power of choice away from consumers. The truth will have to put on its fastest running shoes to catch the many deceptions in that report.
Those deceptions begin by the AG saying its report was a “2023 update” of Massachusetts’ competitive electricity market. In fact, the report’s faulty analysis ends in June 2021 and has no information or data from July 1, 2021, to May 2023. It also treats 100% renewable energy products or 24-month fixed priced products as identical to the utility product, which is largely generated from burning gas and changes every six months.
Over the past six months, utility ratepayers could have saved up to 50% on the power supply costs on their electricity bills by shopping. Also, electricity customers could have locked in much lower prices for 12 months or 24 months, compared to the utility price that changes every six months. Many families and businesses would have been able to, and still can, buy 100% renewable energy products, as opposed to fossil fuel-generated products for less than the utility rate.
Oscar Wilde said, “Nowadays, people know the price of everything and the value of nothing.” The lowest price can be the best value for some, but only customers can make that judgment for themselves.
Competitive electricity suppliers offer services, products and unique contract terms compared to the utility, and the customer is the only one who can judge for themselves the value of the different products offered. Do they value the lowest price or 100% renewable energy products for public health and environmental benefits, even though it may cost more than the utility rate? Or perhaps the predictability of a flat monthly bill for budgeting purposes, or the security of a long-term fixed price is more valuable than the utility rate that changes every six months.
Competition in the retail market also provides indirect benefits to the customer. I appreciate Massachusetts’ aggressive goals to achieve net zero greenhouse gas emissions by 2050. The retail market plays a critical role in achieving those goals by empowering customers with options like 100% renewable energy, special plans for residential electric vehicle charging, or incorporating energy-saving technology for smart homes. These voluntary choices enable customers to help the state accelerate meeting clean energy, efficiency, or EV utilization goals without requiring all customers to participate.
These offerings are available because of private investments by retailers, without the need for state or utility programs, paid for by the taxpayer. The retail market also creates a market incentive for companies to invest private dollars into clean energy generation, again without the need for state-funded projects. Closure or discouraging customer participation in the market is counterproductive to accomplishing the state’s carbon emission reduction plans and will put the burden on ratepayers instead of the private market to fund these programs.
The government has an important role to play in educating consumers about their electricity choices and penalizing any companies that engage in prohibited practices. Residents should be urged to visit www.energyswitchma.gov, so they could see firsthand that better or cheaper power products could be purchased. But the attorney general should not repeat the mistake of using taxpayer funds to pay for a misleading, deceptive analysis of electricity competition.
As it does in all marketplaces, government also has an important role in policing the electricity marketplace to penalize any fraudulent or improper actions. But we all know that government has limited resources. That’s why insuring consumers can take their business from one supplier to another is the strongest consumer protection possible.
John Hanger lives in Shrewsbury and served as a commissioner with the Pennsylvania Public Utility Commission and as secretary of the Pennsylvania Department of Environmental Protection.
This article originally appeared on Telegram & Gazette: Guest column: Power of choice can lower electricity bills
