Two summers ago, mailers arrived at households promising electricity rates that would be nearly comparable to those offered by the local utilities, but with energy coming entirely from renewable sources like wind and solar
In Massachusetts, home to some of the nation’s highest electricity rates, it was an attractive promise — just a few minutes effort, and at least homeowners could feel better about their energy bills.
The trouble was, according to allegations in a recent filing by the state Department of Public Utilities, that promise was based on bad information — the utility rates CleanChoice used as a comparison were out of date and significantly higher than what was actually on offer.
That’s just one of the allegedly deceptive practices outlined in the state’s filing this week, in which the DPU proposes fining CleanChoice $5.1 million and revoking its license to sell electricity in the state. This step is the latest in a yearslong push to address what the state says are predatory practices by so-called third-party competitive energy suppliers.
“CleanChoice Energy is one of the most prolific bad actors in a sea of deceptive direct-to-consumer electric suppliers,” said Hessann Farooqi, executive director of the Boston Climate Action Network. “We are relieved to see the DPU taking this action. . . . This marketing is often far too effective, particularly for our members who want to support renewable energy.”
In an emailed response, CleanChoice spokesperson Kate Colarulli acknowledged the problematic mailers, which she said the company had identified and sought to rectify on their own, while defending CleanChoice’s record in the state.
“We take our commitment to customers and compliance very seriously,” she said. “We are fully cooperating with the Department of Public Utilities to ensure our practices meet all state regulations, and we are ready to voluntarily make any changes that may be required.”
In addition to the mailers, CleanChoice is also accused of switching customers to variable rates that climbed higher over several months, resulting in rates that were 133 percent or 214 percent higher than the initial sign-up.
While the company had made clear that a variable rate would be used following the introduction period, it said those changes were “based on market conditions and CleanChoice Energy’s costs” — meaning they could increase or decrease, and that they were likely subject to seasonal changes. But the DPU’s investigation showed similar increases (and no decreases) regardless of the time of year a customer moved to a variable rate.
Political leaders in Massachusetts — including Governor Maura Healey, Attorney General Andrea Campbell, Boston Mayor Michelle Wu, and many members of the Legislature — have said for years that the industry must be reined in.
The practice has existed since the 1990s and is based on the idea that allowing people to shop around for cheaper electricity rates would keep the market competitive and drive down costs for all. Supporters say they like the ability to shop the market, and find they are able to save on their electricity bill as a result.
Massachusetts residents pay among the highest electricity rates in the nation, trailing only California and Hawaii.
But third-party electric supply markets have failed to bring broad ratepayer relief, and investigations in Massachusetts and other states have found that the industry often gives way to predatory practices, specifically targeting low-income communities of color.
It’s been particularly problematic in Boston, where city leaders have urged residents to avoid third-party suppliers and instead participate in the city’s offering — Boston Community Choice Electricity — which offers its own rates for electricity. Its latest offering, which begins in December and lasts for two years, is lower than past years, and below what local utility Eversource offers.
Boston’s approach — known as municipal aggregation, in which a city or town shops around for the most competitive plan for its residents — “provides price stability, price certainty, and a very different level of transparency,” said Oliver Sellers-Garcia, Boston’s Green New Deal director.
But still, he said, plenty of residents in Boston and beyond end up being taken advantage of by the competitive supply industry.
Statewide, between July 2023 and June 2024, Massachusetts residents overpaid on their electricity bills by $73 million collectively compared with buying electricity through their utility’s basic service plan, according to a January report by the attorney general’s office.
The harm extends much further, according to Campbell’s office. Over nine years, extra consumer payments have reached a total of $651.3 million.
“For over six years, we have advocated for a ban on this broken and predatory market,” said Campbell in a statement. “We are pleased to see the Department [DPU] taking action to protect consumers.”
Last year, the Legislature seemed poised to ban third-party competitive suppliers from selling directly to residential customers, but the effort died after opposition from the House.
Now, CleanChoice will have 30 days to respond to the DPU. In the meantime, news of the alleged violations has prompted renewed calls to reform or ban the practice of selling competitive electricity plans in the state.
“The competitive electric supply industry continues to overcharge customers at a time when families can least afford it,” said state energy Secretary Rebecca Tepper. “The predatory practices by this industry underscores the urgency of much stricter oversight.”
The governor has proposed a series of reforms to the industry that aim to rein in predatory practices. As part of the proposed Energy Affordability, Independence, and Innovation Act, the state would eliminate automatic renewals and variable rate contracts while enhancing penalties for violations.
A group of more than 30 advocacy organizations who oppose third-party competitive suppliers say they support those reforms, but would like to see the state go even further.
“The single best way to protect Massachusetts residents from third-party electric suppliers’ exorbitant rates and predatory practices over the long term is to pass legislation to ban third-party electric suppliers from the residential electricity market,” said Larry Chretien, on behalf of the Campaign to Stop Predatory Electric Suppliers.
Sellers-Garcia agrees. “Let’s not kid ourselves — they should be banned, or we should at least allow municipalities to opt out."