Connecticut’s consumer counsel: Third party power providers overcharge variable rate customers

State Rep. David Arconti, D-Danbury, center, spoke in support Tuesday of stronger consumer protections during a news conference in Hartford. Connecticut Attorney General William Tong is shown to Arconti’s immediate left. Arconti is the House Chair of the General Assembly’s Energy & Technology Committee.

Connecticut’s Office of Consumer Counsel released an analyis Tuesday which shows that in December and January, thousands of customers of The United Illuminating Co. and Eversource Energy paid in an excess of $859,000 more than had to because they still remain on variable rate electric contracts with third party power providers.

Acting Consumer Counsel Richard Sobolewski said Tuesday officials with his office determined that on average, over 24,000 UI and Eversource Energy customers who were still on variable rate contracts in December and January overpaid by an average of $30 per month. Sobolewski said the calculation was based on a review of what generation charges customers of the two electric distribution companies paid to third party providers and comparing it to what they would have paid if were standard offer customers of the two utilities.

Under Connecticut’s standard offer rules, UI and Eversource Energy officials purchase the electricity from power generators. The two distribution companies are only allowed to charge customers what utilities paid the power generators.

The state outlawed the use variable rate electric power contracts in 2015. But because of the way these contracts are worded and because they were signed before variable-rate contracts were outlawed, it’s all perfectly legal the way things currently stand.

“It’s something we’re actively tracking now,” said Sobolewski, whose office represents the interests of Connecticut utility customers in rate cases. “If the legislature won’t do anything, then we’re going to have to get something done through PURA (the state’s Public Utilities Regulatory Authority) because this just shouldn’t be happening.”

Connecticut Attorney General William Tong and officials with AARP’s Connecticut chapter held a press conference in late January urging state lawmakers to close the loophole that allows the third party providers to keep customers locked into variable rate power purchase contracts.

With variable rate electric power generation contracts, a customer’s supply rate fluctuates from month to month based on market prices.

“OCC urges all customers to review the supply summary portion of their electric bill to determine whether they are on a legacy variable rate, especially those customers who receive electronic billing or have their bills automatically withdrawn from their bank account,” Sobolewski said.

The analysis, performed by its economist John Viglione, who said in statement that “the data makes clear how those customers on legacy variable rate contracts shoulder a heavier burden when it comes to overpayments.”

“Only 7.54 percent of third-party supplier customers in Eversource territory are on variable rates yet this sliver of customers account for a walloping 44.19 percent of all overpayments,” Viglione said. “In United Illuminating territory, only 6.71 percent of third-party supplier customers are on variable rates and these customers make up 16.33 percent of all overpayments.”

Ultimately, high variable rates contribute to uncollectible accounts, according to Sobolewski, which in turn impacts the general class of all electric ratepayers.

Those with questions regarding variable rate contracts are encouraged to contact OCC at 860-827-2900 or via email at occ.info@ct.gov.

Connecticut Media Group