EnergizeCT was created as a marketplace where customers could shop for third-party electricity retailers in order to save money when standard rates from Eversouce or United Illuminating are too high. But state officials say customers – particularly low-income residents – overpaid for electricity using those third-party services from 2017 through 2021.

PURA (the Public Utilities Regulatory Authority) is looking into ways to address this issue, including a recommendation from its Office of Education, Outreach, and Enforcement (EOE) that supplier rates be restricted so residential customers are charged rates equal to or less than the standard service rate.

The whole point of the electric supplier market is to benefit customers, not to secure a profit,  according to a February investigative report by the EOE. The EOE compared five years of rates – from 2017 to 2021 – finding that two-thirds of those customers who contracted with a supplier paid more than the standard service rate.

“Residential customers with a supplier overpaid between $37 million and $25 million each year, resulting in approximately $151 million total overpayment over the course of the five years examined,” according to the report. 

Further, the EOE found that in 2021, “as customers attempted to regain their financial footing after the pandemic, customers contracting with a supplier paid $136 [per year] more than customers on standard service,” the report states. “At a time when people needed the most help, suppliers offered the most harm.”

Residents in low-income areas were particularly affected, as customers “in communities where the median household income is less than $50,000 continue to sustain significant harm from suppliers’ prices.”

“PURA is now in the process of reviewing the report and its recommendations as well as the extensive evidence provided in the docket so that it may make the appropriate determination to ensure the supplier market does not harm any residential customer,” according to Joe Cooper, a PURA spokesman.

In response to the report, attorneys for the Retail Energy Advancement League wrote that the EOE’s report “fundamentally misunderstands the ‘overpriced’ and ‘harmful’ standard,” adding that the legislature never required supplier prices to be lower than standard service.

Written by Day Pitney attorney Alexander W. Judd, the response goes on to say, “the IR relies on a standard for ‘overpriced and harmful’ that is arbitrary, unsupported, and contrary to legislative intent, and applies that standard to reach conclusions and recommendations that would impermissibly violate due process if adopted by the Authority.”

PURA says it has attempted to come up with ways to protect customers. For instance, in 2019, PURA transferred hardship clients to standard service, and prevented them from contracting with suppliers. 

Connecticut’s Consumer Counsel (OCC) Claire Coleman said that since 2019, the price of electricity on standard services has doubled, and consumers are now seeing cost savings by contracting with a third-party supplier.

In addition, OCC staff had received complaints from hardship customers who were able to save money by engaging the market and therefore were unhappy about being forced into standard service.

In 2021, the state legislature passed, and Gov. Ned Lamont signed, Public Act No. 21-117 authorizing PURA to condition a supplier’s license on terms the authority determines to be just and reasonable.

According to a recent consumer alert issued by the OCC, for the rolling year of February 2022 through January 2023, residential consumers who chose a third-party – also called “retail” – supplier saved $23.7 million more than the Standard Offer, but have still overpaid by more than $285 million since January 2015.

The market is still difficult for most to navigate, according to Coleman, prompting her office to focus on educating consumers about available options.

“As these fluctuations occur, they often leave consumers confused as to the best path forward – those who have had no prior experience with the third-party market, may see the high price of standard service and enter into a contractual agreement unaware of any potential longer-term risks and may not regularly monitor the EnergizeCT Rateboard to ensure they are still getting the most affordable rates as the market changes,” Coleman said.

More possible legislative remedies include allowing hardship customers to enroll with third-party suppliers, subject to a standard service rate “cap,” and passing a prospective ban on third-party supplier auto-renewals.

“It is important to note, Connecticut has some of the strongest protections for energy consumers who are participating in the third-party market in the nation. OCC has had wins, big and small, but there is more work to do to foster a healthy competitive market while ensuring that historically marginalized consumers are not taken advantage of,” Coleman said.