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Sen. Blumenthal of Connecticut Urges FTC to Probe Retail Electric Price Gouging

October 28, 2015 By Cheryl Kaften

U.S. Senator Richard Blumenthal (D-Conn.) issued a letter to the Federal Trade Commission (FTC) on October 23, urging that the agency investigate deceptive marketing and price gouging by third-party retail electric suppliers.

A Connecticut Office of Consumer Counsel report found recently that the vast majority—86 percent of Eversource and 77 percent of United Illuminating—of third-party electric retail consumers paid substantially more than the standard service rate in August. In total, Eversource customers who chose a third-party supplier paid $8.4 million more and UI customers paid $2 million more.

In his correspondence with FTC Chairperson Edith Ramirez, Senator Blumenthal pointed out that, “In 2014, consumers residing in states with deregulated energy markets, including Connecticut, were shocked to see their monthly bills significantly increase due to variable rates that were previously fixed. As revealed by a new report by Connecticut’s Office of Consumer Counsel, the vast majority of Connecticut consumers who use third-party retail electric suppliers pay more than the standard service rates – sometimes twice as much – amounting to more than $23 million extra spent so far in this [past]year alone.”

He noted that, while Connecticut and other states have banned the variable-rate electricity contracts that have been the source of many consumer complaints, grievances stemming from issues related to sales practice claims and quality of customer service continue unabated.

“Consumer complaints also stem from issues related to sales practice claims and quality of customer service,” Senator Blumenthal stated. “Complaints have been filed by both consumers and state government officials related to sharp price increases, misleading marketing, phone harassment, and intentionally burdensome cancellation processes. Many complaints detail ongoing questionable practices over the past several years.

He detailed his priorities for an FTC investigation. “In particular,” Senator Blumenthal said, “I urge you to investigate whether the marketing and terms and conditions of these contracts are deliberately misleading, and whether they represent an unfair or deceptive act or practice under the FTC Act. If so, the Commission should immediately seek civil penalties and provide consumers with refunds.”

Finally, after the Commission has conducted a review of current market practices, Senator Blumenthal urged the agency to issue industry guidance to provide a set of best practices that all suppliers should meet. “For example,” he said, “the FTC should consider advising the industry that disclosure statements should be in plain language, understandable to consumers, and should be required to state a ceiling or limit on the price variability that can be experienced by customers.”

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