The following is a contributed article by Christopher Ercoli, president and CEO of the Retail Energy Advancement League.
Americans’ relationship with electric utilities is a bit fossilized, much like the fuel sources many utilities burn to produce electricity. For many ratepayers, the market has been frozen for over a century, when the government permitted the creation of utility monopolies by closing the market to competition and customers had no option but to accept a default electric service.
Fortunately, for Bay Staters, Massachusetts broke up these monopolies in 1998 by restructuring the electric market, opening up the marketplace to competitive suppliers and empowering customers with retail energy choice.
In Massachusetts, that market is regulated and overseen by the Department of Public Utilities, which also manages “Energy Switch Massachusetts,” an online platform where customers can make comparisons of competitors’ current electric rates, offers, and contract terms, review different sources of electricity and make a selection based on their household’s energy usage, preferences and needs.
The number of Massachusetts customers who shop has grown every year. According to the Massachusetts Department of Energy Resources, almost 500,000 residents chose a different supplier than their default utility provider in 2021.
Perhaps that growth shouldn’t come as a surprise. A large number of residents prefer choosing their energy supplier so they can play an active role in addressing the climate crisis and help the transition to a clean energy future. In a recent survey, 83% of Massachusetts electricity customers said they favored the option to choose a 100% renewable energy supplier, something Massachusetts utilities are not required to offer.
While it’s clear that choice will help achieve the Commonwealth’s established clean electricity and carbon reduction goals, competition has also proved beneficial for customers seeking more affordable electricity.
Unfortunately, special interest groups are pushing a narrative that retail energy customers pay more than utility ratepayers, using a “study” that whistles past many inconvenient facts. The handpicked data supports a pro-utility monopoly narrative, selecting an intentionally limited time period when utility rates were in decline, rather than examining a retail energy supplier’s fixed, long-term contract. It’s worth noting that the report’s author, Susan Baldwin, has popped up in several states as an “expert” advocating that states force their retail energy customers back under the utilities’ thumb.
The fact is, energy prices can be highly volatile, based on a diverse set of complicated factors. The beauty of competition is that if a customer doesn’t like what they currently pay, they are empowered to shop the market or return to their utility. Competitive retail suppliers provide terms that range from six to 36 months, enabling the customer to shop for a low-cost rate and lock in that price for an extended period, something utilities do not offer.
For example, if you shopped the market using the state’s platform last September, you could have locked in a 24-month fixed price offer with a retail supplier. You would now be saving 30% on your electric bill this month compared to ratepayers on default utility service. With inflation and the projected spike in energy prices, you would be set to continue reaping bigger and bigger savings through summer and two winters.
Despite these realities, language exists in Massachusetts Senate Bill 2842 that would shut down the state’s competitive electric market and reestablish utility monopolies.
More than three quarters of the competitive electric supply available to residents right now is a 100% renewable product and almost 20% of renewable generation purchased by residential customers will be removed from the market if this language is included in the final bill. Oddly enough, this small paragraph with huge repercussions is buried in a comprehensive plan to address the climate crisis while banning the retail choice that helps facilitate the switch to clean energy, and eliminating suppliers that will help the Commonwealth achieve its goals.
This anti-competition approach thwarts Massachusetts from benefiting from the evolution of our modern electric grid, which now offers a range of renewable and affordable energy sources because of the diversity of competitive suppliers and products. Renewables are gaining a greater foothold in the competitive market and Bay Staters want them to stay. Now is the time to expand choice, not to shut down a market that is saving ratepayers money while enabling a transition to a clean energy future.
The bottom line is this: right now Massachusetts residential electricity customers can shop, save money and choose products that suit their needs and preferences. The proposed market ban in S. 2842 takes all of that away.