Dive Brief:
- Five retail electricity companies are under investigation over their variable rate contracts this past winter by the Maryland Public Service Commission (PSC).
- Some customers were billed “five to six times higher than either the introductory rate offered by certain competitive suppliers or their Standard Offer Service rate,” according a PSC press release.
- The PSC is focusing their investigation on whether variable rate contracts were misrepresented to customers, and the charge that price hikes were “unexpected and drastic.”
- Under investigation are: American Power Partners, Blue Pilot Energy, XOOM Energy, U.S. Gas & Electric and Energy Services, and Major Energy Services. Only Major Energy Services has publicly denied any wrong-doing.
Dive Insight:
Maryland is yet another state where this past winter's unusually high electricity demand, particularly on the East Coast, has become a source of rate-payers’ ire. Variable rate contracts often offer low introductory rates before switching to line up with market forces. This can save consumers money, but it means if demand is high, as it was last winter, rates can go up at short notice.
Potomac Edison, the default supplier, has to have its rates approved by the PSC, which could stop customers from having to bear the brunt of extra and unexpected costs. Potomac Edison spokesman Thomas Meyers said customers should study contracts carefully before signing up for variable rate supply, as any low introductory rate will only be in place for a limited time.