Thousands Of Ct Electricity Users Being Ripped Off By Suppliers

February 21, 2014
By

Richard Yule of Avon is among the tens of thousands of electric customers in Connecticut who are being ripped off by electric suppliers.

Hoping to save money on his electric bill, Yule switched from CL&P to North American Power, which offered a low teaser rate. By the time Yule figured out he was taken to the cleaners, he had spent almost $300 more on electricity in a couple of months than if he had stayed with CL&P.

State Attorney General George Jepson says that his office and other state officials have had hundreds of complaints from consumers who feel they were taken advantage of by unscrupulous suppliers.

The situation has deteriorated to the point that Jepson and state Consumer Counsel Elin Swanson Katz have asked legislators in the upcoming session to pass bills that will protect consumers from incompetent and fraudulent suppliers. They are also approaching state utility regulators to make changes.

Jepsen, in a telephone interview with CtWatchdog, said two critical changes need to be made:

1)      There is a need for transparency, Jepsen said. He and Katz want disclosures in monthly electric bills of exactly how much CL&P and UI are charging for electricity and how much is being charged by the customer’ supplier.

2)      And, he said, customers should be able to switch back to CL&P or to UI (which offer the standard rates in Connecticut) within 48 hours of a customer’s request.

There are two main reasons why customers who switched from CL&P and UI are being financially hurt, Jepsen said.

The first issue, he said, is that among the more than 100 suppliers there are many that are small firms that don’t have the competence to provide long-term  stable prices. They are frequently forced to purchase electricity in the more volatile spot market instead of having a ready supply of long term contracts. They also don’t have the buying power – or economic muscle – to provide stable prices. Many shouldn’t be in the business, he said.

“Some are just incompetent and that is being charitable,” Jepsen said.

The other issue involves larger players who sucker in customers with low introductory “teaser” rates and then when the customer is no longer paying attention to  their prices, they jack them up, some more than 200 percent higher than the standard offers from UI and CL&P.

“You have companies that rely on consumer ignorance, and trapping consumers” in higher rates without any advance notice, Jepsen said.

Katz and Jepsen recently made public the names of 10 suppliers that were charging at least 17 cents per kilowatt hour, compared to the standard offer of about 9 cents. Some customers have been paying almost 25 cents per kilowatt hour.

“This is not buying donuts,” Jepsen said. “This is expensive electricity” where monthly bills can be in the hundreds of dollars.

Discount Power, Choice Energy, Palmco Power, Starion Energy, Public Power, NextEra Energy, HOP Energy, Xoom Energy, Blue Pilot Energy, and Perigee Energy were singled out by Jepsen and Katz.

Jepsen said that suppliers have “captive” customers because even when consumers discover they are being ripped off it takes them another billing cycle before they can switch back to CL&P and UI.

Instead of more than 100 suppliers, consumers would be better served if there were only a dozen or less larger suppliers providing electricity, Jepsen said.

Customers who wish to shop for a new supplier or to return to the utilities’ standard service rate should visit http://www.ctenergyinfo.com/compare-energy-suppliers, or speak with an energy professional at Connecticut’s toll-free Energy Information Line at 1-877-WISE-USE.

Yule said he tried to switch back to CL&P in the fall after discovering that he was paying a higher rate than the standard offer from CL&P.

But he said he got jerked around by North American Power and ended up paying $293 more than if he had stayed with CL&P.

I contacted North American Power on Yule’s behalf and the company responded quickly.

“Upon receipt of your message, we were able to contact Richard, address his concerns, and resolve the issue. We apologized for the errors he encountered and are issuing him a refund in the amount of $292.99, per his request. We have also resubmitted the customer’s cancellation request, and will issue a further refund, using the same formula, for the remaining billing cycles that the customer is on our service,” Chad Klein, Director of Corporate Communications, said in an email to CtWatchdog.

He said the jump in prices is due to the extremely cold weather and the inability of New England power companies to obtain enough natural gas to power their generating plants. His complete response can be read at the bottom.

“In New England, the issue has been two-fold—extremely cold weather, and a lack of adequate natural gas pipeline capacity to meet the increased demand in the winter months. Over the last several years, many electric generation facilities in the Northeast have moved to natural gas as a means to produce electricity due to its affordability (in normal months). In addition, more and more New England households have chosen to switch to natural gas for their heating needs—moving away from traditional heating oil,” Klein said.

“This increase in demand has put enormous strains on the current pipeline infrastructure—dramatically driving up the cost of natural gas in the colder, high demand months. Because so many generation facilities now use natural gas to generate electricity, high natural gas prices means high electricity prices as well.  This increase has affected suppliers and utilities across the region—and many customers that are on variable rates are seeing very high rates due to the rise in the wholesale market costs.”

Klein said his company “sent a notice to all of our CT customers currently on a variable rate at the beginning of the winter. This notice informed them of the forecasted increase, and encouraged them to contact us to discuss their options—which included moving to a fixed price plan to avoid the fluctuations this winter.”

Yule said he was pleased with the company’s response, but had a warning for consumers. His complete complaint can be read below.

“I still believe that people have to be very careful with electric suppliers in general and there are many plans available that exist only to take advantage of customers who do not have time or knowledge to keep on top of these things.”

YULE’S COMPLAINT

I originally signed up for North American Power (NAP) when I got a flyer in the mail offering a $50 rebate and guaranteeing a good rate for two months.

I missed the rebate, you need to show a bill and they only give you about a month to mail it in before the deal expires.  I was busy, which seems to be the way they get customers into these plans and then keep them.

They gave me the good rate, but for my September bill, then increased the rate by 50% for October.

I called up to complain after getting the second bill, and they said they would send me a check for the difference.  They did not (until later, see below).  I called again a couple of weeks later after not getting the check, they said they would call me back.  They did not.

I called again, they said they would give me the good rate for another month.  I waited for my November bill, it still had the higher rate (9.99-10.99 cents).  I called CL&P to cancel my service with NAP and make CL&P a provider.  I also called NAP about the check.

They said they did not make an offer for two-month guarantees when I signed up.  I fortunately still had the postcard so I faxed it to them.

This time I think their employee genuinely tried to help; he mailed me the check for the month of overcharge, and said he would give me the good rate until my cancellation went into effect with CL&P.

But when he put in the good rate, it undid my cancellation with CL&P.

I do not know if they did it intentionally or not, but NAP extended my service without my permission.  I received my December bill and saw that I was still a NAP customer, so I called CL&P to see what happened.

They told me that I was no longer in cancellation.  I asked to cancel NAP again, but CL&P said at that point I would be getting the higher CL&P rate going into effect for January, so I decided to wait until January to see what rates would be available.

I got my January bill, NAP was still my provider, but the rate was about the same as CL&P.  I didn’t have time to go through the list of providers in January, so NAP was still my provider when I got my February bill.  That’s when I got slammed with the 19.99 cent rate.

I use electric heat at my house, so with 2723 KWH that came to $292.86 higher than the CL&P rate would have been.  Yes I should have switched providers by now (even after they reversed my cancellation), but the truth is it takes a lot of effort to work through this when every call you make to the provider involves a false statement.  And legally, since they offered me a good rate until my cancellation went through and then they undid my cancellation (possibly by accident), I believe I have a case for a refund of at least the difference between their rate and the CL&P rate.

NORTH AMERICAN POWER RESPONSE

Hi George,

My name is Chad Klein, the Director of Corporate Communications for North American Power. Thanks for bringing this to our attention and allowing us to have the chance to resolve the issue with Mr. Yule. Upon receipt of your message, we were able to contact Richard, address his concerns, and resolve the issue. We apologized for the errors he encountered and are issuing him a refund in the amount of $292.99, per his request. We have also resubmitted the customer’s cancellation request, and will issue a further refund, using the same formula, for the remaining billing cycles that the customer is on our service. He was pleased to know that swift action was being taken to resolve the issue.

With regards to the higher-than-usual variable rate that the customer received last month, wholesale electricity costs have been astronomically high in Connecticut this winter—in fact, they’ve been high throughout New England, the mid-atlantic, and the midwest. In New England, the issue has been two-fold—extremely cold weather, and a lack of adequate natural gas pipeline capacity to meet the increased demand in the winter months. Over the last several years, many electric generation facilities in the Northeast have moved to natural gas as a means to produce electricity due to its affordability (in normal months). In addition, more and more New England households have chosen to switch to natural gas for their heating needs—moving away from traditional heating oil.

This increase in demand has put enormous strains on the current pipeline infrastructure—dramatically driving up the cost of natural gas in the colder, high demand months. Because so many generation facilities now use natural gas to generate electricity, high natural gas prices means high electricity prices as well.

This increase has affected suppliers and utilities across the region—and many customers that are on variable rates are seeing very high rates due to the rise in the wholesale market costs.

While North American Power is not required to notice its customers about changes in variable rates, we were able to forecast an increase ahead of time, and sent a notice to all of our CT customers currently on a variable rate at the beginning of the winter. This notice informed them of the forecasted increase, and encouraged them to contact us to discuss their options—which included moving to a fixed price plan to avoid the fluctuations this winter.

We’re happy to have been able to resolve the issue with the customer, and I hope our response helps shed some light on the winter energy shortage that is occurring in many regions of the country right now.

Thanks again, and please feel free to contact me if you have any additional questions.

-Chad

Chad Klein, 

Director of Corporate Communications

North American Power

20 Glover Avenue, Norwalk, CT 06850

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20 Responses to Thousands Of Ct Electricity Users Being Ripped Off By Suppliers

  1. Jim on February 21, 2014 at 12:42 pm

    I was one of those ripped off by Discount Power. My rate went from 9 cents to 24 cents in one month. But you don’t have to wait until the next billing cycle to switch back to CL&P, as the article states. Read your meter, call the reading in to CL&P, and they will switch you immediately. I was back to CL&P within a couple of hours after opening my outrageous bill.

  2. Brad on February 21, 2014 at 12:55 pm

    Did you ever notice, it seems like corporations (in general) always seem to give the customer the run around and never take action on a problem until the customer contacts a media source? The second sentence of Chad Klein’s response is a perfect example. “Thanks for bringing this to our attention…” So that means Richard Yule’s multiple contacts with the company did NOT bring it to their attention? Why does it take contacting a consumer advocate to get an honest response?

  3. Ed P on February 21, 2014 at 1:07 pm

    Both “Buyer Beware” and “greed” comes to mind. You have to take the time and read the fine print. Today’s bargain can be tomorrows scam. There are a few reputable companies that give reasonable fixed rates, long term.

    That low, low, low teaser rate has to be pair for somehow. This entire deregulation thing is one be scam for people to make money.

  4. hosey on February 21, 2014 at 1:54 pm

    A big issue not addressed is that many of these suppliers use a “pyramid sales system” promising high income to prospective sales people. Simply check Craigslist jobs under “energy” and read the pitch. Simply call your friends to change their electric supplier and big $$$ residuals!!!! The people placing the ads are looking for people to get that ratepayer to switch so they can keep the money commissions- no training or any out of pocket costs for them with no overhead.

  5. Robert on February 21, 2014 at 4:05 pm

    I understand from both Mr. Yule’s complaint, and Mr. Klein’s response, that Mr. Yule received incompetent customer service, only rallied at the end when his consistent regaling and Mr. Gombossy’s intrusion into the mix made a beneficial turnaround for Mr. Yule. Nice for him. Really.

    However, this article and several others like it on this website seem to unduly favor CL&P, as I did some due diligence on my part with the facts and companies given.

    First, some of the companies listed by both counsel above do not even provide service in CT. So counsel is using these exterior company scams as a wedge to foment yet another piece of legislation to restrict free trade in this state, and instead create reliance on fewer and fewer suppliers, to the benefit of “larger” energy corporations (“…consumers would be better served if there were only a dozen or less larger suppliers providing electricity, Jepsen said”). Remember deregulation, fellas???? Let the market govern…if more persons like Mr. Yule open up, complain, etc., market forces will determine the results.

    Second, the open market levels off to responsible suppliers (and lower prices) if consumers would consistently pay attention to their bills or usage. Even CL&P has an issue, not mentioned in this article. For example, the website where we are directed (http://www.ctenergyinfo.com/compare-energy-suppliers/compare-supplier-options), shows heavy favoritism to CL&P.

    {today, 2/21/2014, 2:30 pm, when I accessed that site to compare rates, CL&P was listed first “as the lowest rate” in the state at about 7 cents/kWh. As one slides down the page however, the initial box that housed CL&P’s rate price slides down right along with you–just in case you want to keep comparing, sort of “in-your-face.”

    It was only when I went off this site, direct to CL&P’s site, that I obtained the “correct” rate at 9+ cents. Conveniently, as I went back to (ehhmmm) “www.ctenergyinfo”, amazingly and almost miraculously, the website changed the rate–within two minutes!!–it must be tracking me online—->CL&P was now #16 ON THE LIST<—–(down from #1).

    However, as was typical, that little CL&P "box" kept sliding down the page right along with me.

    Third, how many customers know that their rates are split between two charges (transmission and supply)? Let this be a lesson–NO ENERGY COMPANY has plans that last for a long term (i.e, greater than 6 months) unless one wants to pay a hefty fee for leaving that locked-in rate…(see Perigree, for example at $200). Lesson learned?? Consumers, check your bill every few months, but at least twice a year. "Caveat emptor" and all that…don't let the state do it for us.

    How many know that it isn't all about the rate? There are choices within choices. Some customers may prefer a supplier based on their energy management (i.e., ConEd with smart meters vs. others).

    Others choose consumer response (witness our example with Mr. Yule).

    And more importantly, others choose based upon "state-mandated" renewable energy utilization(i.e., "going green"–Connecticut mandates 18% minimum, some consumers may prefer greater than that outlook).

    With this article, it would have been critical to note how many complaints each company rec'd in the grand scheme of things (I would venture less than 1% of the total company's consumer base, but it's always the loudest ones–legitimate or not–that get the notoriety with the media). Frankly, in my opinion, the state is using the media as its own arm of information and push for even MORE legislation than needed in this matter… IMHO

    I'm willing to bet CL&P has its own fair share of complaints as well (such as in storm communications, but that's for transmission protections; however, they are just as notorious for having short term plans with no notification to ITS own consumers–it happened to me). Gee, Jepson and Katz, why not also mention CL&P??

    To Jepson and Katz–keep your "nanny state." We have enough "transparency" with website analysis, and with individual suppliers posting their rates on billing. This is America and let the markets govern. Stay out of my life, for God's sake…!!

    As for the ability to "…switch back within 48 hours to CL&P and UI"–how convenient for you both!!! Why not allow switching immediately to a supplier of our OWN PERSONAL choosing–why does it have to be just CL&P, or UI? This smacks of heavy favoritism–www.ctenergyinfo.com included.

    Unbelievable….

  6. martha on February 21, 2014 at 4:18 pm

    Thank you Jim for the tip on calling CL&P with the meter reading to switch immediately.
    I had Energy Plus Holdings and the rate was ,26 per KWH.
    I called CL&P today, and switched over to them rather then wait one or two billing periods.

  7. Stealth on February 21, 2014 at 6:23 pm

    For Christ-sakes…the REAL problem ( that NOBODY IS TALKING ABOUT ) is WHY the bloody hell do we have to pay as much to DELIVER the utility as the utility COSTS!!??? THAT is the freeking problem!!!

  8. RBM on February 21, 2014 at 8:21 pm

    Last fall a young man representing Palmco knocked on all the doors in my apartment complex offering a rate of 0.689 for a year with no cancellation fee. I declined to sign right at that moment, but because the rate was the lowest that I was aware of, I looked up Palmco’s website. Unlike other alternate electric suppliers that I’ve researched, Florida-based Palmco did not have its generation rate on its website. I used their contact form to ask them to confirm the 0.689 rate. They responded in an email that I should call them for details; they did not confirm their rate or make any mention of it. Due to their evasiveness, I never called them. Now I see by this article that it was wise to avoid them as they are one of the price gougers that the attorney general singled out. Some suppliers charge a little more than the CL&P standard offer because higher amounts of renewable energy like solar and wind power are used to generate the electricity. But the DPUC should just pull the licenses of all the alternate electric suppliers that charge above the standard offer for electricity that is not “green”. There is no reason for an alternate supplier to be licensed to do business in Connecticut if its rate is equal to or higher than CL&P’s. As an apartment renter, I average about $15 a month in the generation cost, but I must pay another $30 to have that electricity delivered over the power lines. De-regulation raised my total monthly utility bill. Unsurprisingly, the state legislature has shown no interest in re-visiting their decision to de-regulate.

  9. Janice on February 21, 2014 at 10:00 pm

    I used to check the rates on ctenergyinfo.com about twice a month. I am now checking them every day to determine who has the lowest price without a cancelation penalty. I am constantly changing the supplier and trying to do so in line with my meter read date, not an easy matter. This whole business has become another chore; I am disgusted by it and not happy with our government officials for allowing such a process to be put in place. The average person is going to lose out because they don’t have the time or inclination to keep up with all these constantly changing rates. What a disservice to the public!

  10. Yooper on February 23, 2014 at 1:40 pm

    Mr. Yule appears to be his own worst enemy. He states that he was too “busy” to apply for his rebate on time or look for another provider, but he found plenty of time to complain. Then he called BOTH CL&P and NAP and kept changing his mind on what he wanted. Good way to screw things up even more.

  11. Walt on February 23, 2014 at 3:07 pm

    As said msot of those companies guarantee their rates only for a month or two.

    We saved pretty good money for a few years with Dominion Electric which then guaranteed it rates for a year (or almost)

    They changed a year or two ago and joined those outfits which guaranteed rates w only for a month or two and had cancellation charges.

    Have switched back to U.I. for now. Looking for the annual(?) comparison sheete, showing info comparison sheet which UI sends out and will take a chance again if longer- term guarantees appear again, with no cancellation charges

    Forgot how much we saved with Dominion, but it was worth the effort. and we never were charged rates ove- market, but if you gamble on your rates, you must keep up with end dates etc or you will get screwed.

  12. John E DeGennaro on February 23, 2014 at 7:15 pm

    When the “customer charge” first appeared on my bill and I learned that I was paying X for electricity and equally X for distribution, I looked outside to see if I had a new wire straight from the Power Plant attached to my house! Far As I knew, the same poles and wires that had been there for years were still there and no “new” distribution device had come into play so why the double charge?
    It was explained to me that the two charges were newly mandated to be itemized on my bill and that I had always been paying the charge. HUH? WHY, THEN, DID MY BILL DOUBLE? UI’s rate had always been 11 cents/kwh and 15 cents/kwh in the Summer months so where on Earth is the “standard” rate lower? I left and moved to Florida.

  13. Alycia A Keating on February 23, 2014 at 8:53 pm

    Good morning!

    I was so delighted to see you giving press to the price-gouging going on by North American Power. They are not small, and I don’t for a moment believe they are being forced to raise prices because of natural gas speculation. Our rates shot up from .06999 per kWh to .1999 per kWh. A bill that would have cost us $18 for generation charges is now asking for more than $57 on top of transmission costs. I am disabled and my 64 year old housemate is facing imminent closure of his workplace. We have kept the heat at 62°, but now because of NA Power, it’s at 58°. We don’t use the dryer, dishwasher, or incandescent bulbs. We live in near darkness. It’s ridiculous, and our arthritic old skeletons would dearly love a bit of heat!

    Can you help?

    We have mailed a complaint to the attorney general’s office but as he is inundated I don’t see us getting much help.

    Thank you!

  14. Veritas on February 28, 2014 at 8:43 am

    I switched to ConEdison years ago because their rate was fixed and there was no charge to switch at anytime. Their rate is still less than CL&P and they notify me each year ahead of time what their rate for the coming year will be. We always receive rate schedules with our CL&P bills and they are specific as to rates, fixed or non-fixed, charges for change in service, etc. Like the ARMs that caused so much economic chaos because people didn’t think ahead about what it would cost them when that interest rate would escalate; this is the same thing: “buyer beware–really aware” still has meaning.

  15. John Elias on March 3, 2014 at 5:23 pm

    I want to add my name to the group that complains about North American Power. My charge went from 7.9c/kw to 14.9c/kw next month, then to 19.9 c/kw. I have one more month with them and I’m afraid to see it. I know I was fixed for 6 months then to a variable rate. But 2X or 3X, come on that’s a rip off.

    I live at 18 Spithead rd., Waterford,Ct. 06385.

    • mike on March 17, 2014 at 3:36 pm

      Remember when CL&P wants to raise rates they need to get permission from the DPUC. Not true for the rest of the bunch as I understand it. It’s the equivalent of a fixed rate vs. a variable rate mortgage; you may save in the short term but you lose in the long term.

  16. John Barnett on March 3, 2014 at 7:19 pm

    I am amazed at how few people take responsibility for their own actions or lack of action.

    I have been a customer of North American Power for almost 4 years now. I have seen my bill go up a bit … down a bit … up last winter before fixed rates were available. Once the fixed rates came out in CT I have been below CL&P and saving money without any issue.

    When my term was almost up the company sent me a letter stating that I should call in and see what was available for new contracts. It also stated that if I did not call in I would be placed onto the monthly variable and subject to the price fluctuations.

    I didn’t want to fluctuate any more so I signed up on the new term. I just recently got another letter because my current term was ending. I called up and got a new product called a guaranteed variable which is good thru June … my rate is guaranteed not to go above CL&P during that time.

    In June I will call up and lock in another term.

    I have saved good money being a customer … but I did have to pay attention and make a few phone calls. My bills aren’t very high but every dollar counts.

    If you pay attention and take action … you can save good money.

  17. Christina Plourd on March 5, 2014 at 8:56 am

    I too experienced this problem. I called NA power and was confronted with a rude argumentative customer service rep. Not only did I not receive a warning letter about rate hikes, but all contact I’ve made with the company has been ignored or I’ve been made to feel like it’s entirely my fault. I can take ownership of my part in this, but I honestly was pretty happy with my low variable rate until the months of dec, jan, feb. I had installed a new energy efficient heat pump so I thought this was the cause so instead of changing energy suppliers I was playing with the settings on my heat pump. It was the media that brought this to my attention. Sales reps for this company are on Facebook pointing fingers and being just as argumentative. Just read an article that Maryland made NA power pay a fine of 100,000k for their selling tactics in Maryland. They are blasting Rhode Island right now with MLM sales strategy. I am waiting for a response from the company on a resolution/negotiation of my bill. The woman at pura said she thinks the state is going to force refunds.

  18. Robert Sullivan on March 13, 2014 at 3:19 pm

    I am not sure that there is anyone able to help me, but I am hoping that there might be something that can be done. Last year, I switched my supplier to Direct Power Inc., although I still pay through United Illuminating. When I first moved to Direct Power, I had an electric bill rate of about $.08 per kWh and a monthly bill of $400. Over the past three months, Direct Power increased the rate to $.14, then $.19, and finally $.22 per kWh. My payment this month is $2726.47! I cannot afford to pay this bill to UI and I was never notified by Discount Power that my rate was going to increase to the extent that it did. This is such a hardship for my wife and I, especially with two children in college, and a third that is going next year.

    What can be done, as I have reached out to both Direct Power and UI and they have not provided any relief.

  19. Joan Neil on March 16, 2014 at 10:21 pm

    I was called by a telemarketer from Choice Energy who offered me a rate of .0725, and did not tell me it was an introductory rate. I did receive the .0725, but only for one month. The next month the rate went up more than double to .l699 and my electric bill tripled from $213 to $610. I called Choice Energy and spoke to a Supervisor, who was not interested in what I had to say and just said I had a variable rate. He offered me a fixed rate of .1099 but said it would take a couple of months to change. I asked if he could make it retroactive and he said no, it would be going forward after the change. The following month the rate was still .1699 and I had another $600 bill. I looked for the lowest fixed rate with a contract. I now have Direct Energy and have a 10 month contract, which was emailed to me, with a rate of .0849. My bill was cut in half to $311, half of what it was with Choice Energy. I realize that I have to be vigilant and check the rates again before the contract is up, since we don’t seem to be protected from this type of price gouging.

    I have been emailing with the Office of Consumer Counsel, who have been helpful and said I should look for a low fixed rate and get a contract. Their office is compiling letters and emails to use in their investigation. I, also, sent letters to PURA to try to get some help with this situation, but have not heard from them.

    The State of CT Legislators and Governor have to get involved and set some standards for these energy providers who are using telemarketing and other measures to entice and take advantage of the elderly and all the citizens of CT.

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