BOSTON — Attorney General Maura Healey is calling on state regulators to expand an investigation of retail energy suppliers, alleging that the burgeoning market is actually leading to larger bills for low-income residents.
Healey accuses retail energy companies of using high-pressure tactics and deceptive door-to-door marketing to dupe largely poor and elderly consumers into switching to a new supplier that ultimately charges them more for electricity or natural gas.
Her office has asked the state Department of Public Utilities to investigate the impact of the retail energy market on low-income consumers and the programs that are designed to help them.
“For too long, our office has seen low-income residents in Massachusetts targeted by competitive suppliers and overcharged by millions of dollars on their electric bills,” Healey said in a statement. “These jacked-up costs harm not only these customers but also all of our state’s ratepayers, and weaken our low-income support programs.”
Retail energy suppliers started popping up in the late 1990s after the state deregulated the electricity market.
Independent suppliers say deregulation gives consumers more choices in an energy market dominated by regional utilities like National Grid and Eversource, but Healey and municipal leaders claim many of the companies are scamming consumers.
Salem Mayor Kim Driscoll is one of a dozen local officials who have called for stepped-up oversight.
“Competitive suppliers regularly target our communities with misleading and deceptive marketing,” Driscoll and other municipal officials wrote in a filing with state regulators. “We hear most often from elderly residents, who are particularly vulnerable. Sadly, the deceptive marketing is very effective.”
Last year, Healey filed legislation that would ban retail energy suppliers from signing up new customers beginning next year, among other proposed changes.
In filings with the Department of Public Utilities, the energy companies have pushed back against Healey’s claims and proposals seeking more transparency and oversight.
A coalition of suppliers wrote to state regulators that many of her proposals, such as “do not call” lists and requirements that suppliers report instances of “spoofing” or unsolicited phone calls to potential customers, are unnecessary. They’ve pointed out that major utilities and natural gas companies are not required to disclose such information.
“Singling out electric suppliers is unreasonable, discriminatory and unfair,” the companies wrote.
“Moreover, these requirements are both unnecessary and duplicative of robust consumer protections already available under federal, municipal and state law provisions regulating telemarketing and door-to-door advertising.”
Many of the companies have requested that details of their sales and marketing practices be shielded from public disclosure, arguing that it would put them at a disadvantage.
“Making the locations of suppliers’ marketing campaigns publicly available would reveal their business strategies to their competitors cause them competitive harm,” the companies wrote.
Statewide, an estimated 500,000 residents buy electricity or gas in the competitive supplier market, according to Healey’s office.
Many of those who who’ve made the switch end up paying more, Healey alleges.
Between July 2015 and June 2018, customers who switched to competitive electric suppliers paid about $57 million more than they would have paid if they had kept their old service, according to a 2018 report commissioned by Healey’s office.
In Lawrence, where about a third of the city’s residents participate in the competitive electric supply market, they’ve collectively lost more than $140,000 over a one-month period in June 2018, or an average of $18, the attorney general’s report noted.
About 17% of Salem residents have switched to the competitive energy market, losing an estimated $47,529 combined, or paying about $15 more a month.
Gloucester residents have lost $46,286 collectively; those in Newburyport lost $18,053; and Andover residents lost $38,054, according to the report.
Many programs for low-income heating and electricity customers are subsidized by the state and federal governments, meaning taxpayers are also taking it on the chin, Healey’s office said.
In November, the attorney general’s office reached a settlement with Platinum Advertising that bans the company from operating in Massachusetts for one year and fines it $150,000 for “deceptive marketing and sales tactics” that forced energy customers to pay higher rates.
Another company, Viridian Energy, agreed in March 2018 to pay $5 million in restitution to Massachusetts customers to settle allegations of deceptive marketing practices.
Christian M. Wade covers the Massachusetts Statehouse for North of Boston Media Group’s newspapers and websites.
Editor's Note: An earlier version of this story included incorrect details about a 2018 study of electric bills commissioned by the attorney general’s office. The study covered the years from July 2015 to June 2018. Estimates for how much more customers paid to competitive electric suppliers were for the one-month period of June 2018.