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BAD BUSINESS

 

Consumers Corner # 43

CHOOSING THE WRONG ELECTRICAL
SUPPLIER CAN BE A COSTLY MISTAKE

By Jim Murphy

I’ve always wondered why consumer advocates are so thrilled when people are offered a chance to purchase their own electricity.

In practice, it sounds like a great idea. In reality, energy choice is
not a simple decision. And for many, it can be a very expensive mistake.

Consider what happened in Feb. 2014 when Pennsylvania got hit by a “polar vortex.” Temperatures dropped, power demand soared and some people who had variable rate plans saw their home electricity bills double or triple.

Some even had signed up for fixed-rate plans, but their deals had expired in the meantime. They howled, with good reason, to the Pennsylvania Utility Commission (PUC).

One company, Hiko, struggling to pay higher rates caused by the cold, intentionally overbilled customers enrolled in its guaranteed savings plan, says Paul Muschick of the Morning Call in Allentown. The PUC penalized five companies millions of dollars that that year for deliberately overcharging customers, but did not revoke their licenses.

Frankly, I am not overwhelmed by the PUC’s attention to detail on electrical energy choice. Why?

Philly.com reported in Nov. 2017 that the PUC’s website, papowerswitch.com “was promoting a potential 44 percent annual customer savings based on one supplier’s three-month rate offer.” But the “savings” did not include a $145 enrollment fee or the fact that the low rate was guaranteed for only three months. Those are two pretty big omissions.

Even though I was skeptical, I did choose a supplier several times about ten years ago. The first year, I saved a lot of money. Two other times, the suppliers I chose stopped participating partway into the year. Finally, I decided to do without all the angst and paperwork and go back to simply dealing with PECO Energy. And my life has been a lot easier.

The Boston Globe points out that “apparent savings can easily be undone by hidden fees or expiring teaser rates. And contracts often will automatically renew at a variable — and potentially much higher — rate.” Now, Massachusetts Attorney General Maura Healey wants to end the competitive electricity supply market for individual residential customer in that state completely, reports the Worcester Patch.

These consumers didn’t save, they paid more

The average low-income Massachusetts customer who enrolled with a competitive supplier paid $231 more than if they received electricity from their utility company, the report says. Some lost more than $541 by switching.

“From a financial perspective, consumers usually end up paying more for competitive supply,” says Jenifer Bosco, an attorney with the National Consumer Law Center in Boston.

A critical report the law center published in April 2018 is titled: “Competing to Overcharge Consumers: The Competitive Electric Supplier Market in Massachusetts.”

The points it makes apply to Pennsylvania as well. “Deceptive and aggressive door-to-door marketing appears to be disproportionately directed towards older consumers, people with limited English proficiency, and low- income communities,” it says.

How big a problem is it? “For the period of June 2016 through May 2017, Connecticut residential customers who purchased electricity through competitive supply companies paid $66,736,598.41 more than they would have paid their regulated public utility companies for the same electric service” the report says.

My advice: Don’t switch from your utility company. For most people, the risk far outweighs the reward. 

But if you have the urge to gamble, be careful.

  1. Make sure you go to an official site. The one in Pennsylvania is: papowerswitch.com.
  2.  Don’t be fooled by industry sites, such as: Shop.chooseenergy.com, Electricityrates.com, Paenergyratings.com, or Powersetter.com.
  3. Make sure you select a fixed rate, not a variable rate.
  4. Make certain you can read the fine print. I went to constellationrates.com and when I clicked on Terms and Conditions, it brought up a window with six pages of tiny type. Either enlarge the copy or print it out.
  5. Be sure there are no exorbitant cancellation or termination fees. If there are, it will cost you a lot of money to get out of the contract.
  6. Do not allow anyone into your home who claims he is working with your energy company and will give you a lower rate if you supply a bill or account number. These people are working for themselves, not for you. And if they ask you to sign a paper saying you gave them permission to talk to you and that they will lower your rates – do not sign it. If you do, you’re most likely giving them permission to switch your account to their energy supplier.

 The bottom line: Find others ways to gamble. This is not a safe bet.

 

NOTABLE NUMBERS

8

Number of U.S. children a day killed by “Family Fire,” says a new campaign by the Ad Council.

Source: New York Times

 

4.6 million

Number of U.S. children who live in homes where at least one gun is loaded and unlocked.

Source: Journal of Urban Health

 

82

Percentage of firearm suicides among youths “who used a firearm belonging to a family member, usually a parent,” reports a 2005 study.

Source: Los Angeles Times

 

Parents today are fearful about school safety

USA Today says about one-third of today’s parents are afraid for their child’s school safety. Its source: a poll by Phi Delta Kappa, an educators’ association. This percentage is the highest since 1998, and a big jump from 2013, when it was just 12 percent.

 

PHILLY FUN FACT

Thanks to large deposits of high-quality brick clay just below the surface, Philadelphia residents built brick houses right from the start. Besides giving Philadelphia  its distinctive red appearance, brick buildings helped reduce the threat of fires. That was a major goal of Philly’s founder William Penn, who saw London suffer a devastating fire in 1666 that consumed over 13,000 homes, most of them wooden structures.

 

Photo Credits”

“1985-B0095+237” flickr photo by Joe+Jeanette Archie https://flickr.com/photos/jarchie/3916565569 shared under a Creative Commons (BY) license

 

Jim Murphy is a direct marketing copywriter who has run his own consulting business since 2004. For nine years, he wrote and edited “Choices,” an award-winning credit union magazine with a circulation of 80,000. Now a certified member and vice president of the Association of Philadelphia Tour Guides, Jim gives tours and has written more than 50 historical articles for both the Queen Village Neighbors Association magazine and the Society Hill Reporter.

Any comments made are Jim’s opinion, and not necessarily those of the Old Pine Community Center.

 

 

 

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