Advocates and elected officials in Massachusetts have long sounded the alarm about so-called third-party competitive electric suppliers, private companies that aggressively market and sell electricity directly to consumers (perhaps you’ve heard them knocking on your door), warning residents against their predatory solicitation and marketing tactics that cause residents across the state to dramatically overpay for their electricity.
A new report, just released by the Office of Massachusetts Attorney General Andrea Campbell further underscores the threat these companies pose to communities across the commonwealth, and emphasizes the urgent need to help empower residents who want more renewable energy to power their homes at lower costs to make educated choices about where they get their electricity from, and protect them from predatory practices.
The Attorney General’s report, published just last week, finds that over six years, customers of third-party electric suppliers paid $525 million more than if they had received their electricity from one of the state’s utility companies. After a winter of soaring energy costs, this is especially galling. For the approximately 430,000 individual residential consumers enrolled with a third-party supplier, this has meant losing an astounding average of $231 each year.
Even more insidious, the analysis also finds that third–party suppliers both signed up more and charged higher rates to consumers from “communities with low median incomes, communities of color, and communities with high percentages of households with low English proficiency.” Cities like Springfield, Lowell, Fall River, Brockton, and Lawrence are among the municipalities with the highest total consumer loss, and additional data shows that low-income consumers and communities of color continue to be disproportionately harmed, further perpetuating the historic and deeply entrenched inequities that far too many of our communities are already forced to confront.
It doesn’t have to be this way. And, luckily, our cities and towns have an alternative solution right at their fingertips called green municipal aggregation, that can help residents across the commonwealth gain access to clean energy while keeping their electric bills affordable and sustainable.
Green municipal aggregation programs offer proven benefits in terms of reducing energy costs, fighting climate change, and advancing public health, and are already underway in municipalities across the commonwealth. They enable cities and towns to purchase electricity in bulk directly from power generators on behalf of their communities. This electricity typically includes a greater percentage of energy from renewable sources than the state minimum requirement, and is often offered at a more affordable rate than electricity provided by the utility companies, and much more affordable than third-party electric suppliers. A recent report we undertook to analyze the benefits of these programs found that green municipal aggregation programs are on pace to add 1,000GwH per year of demand for renewable energy – that’s the equivalent of nearly 300 wind turbines.
Of the five biggest cities in Massachusetts, four (Boston, Worcester, Cambridge, and Lowell) already offer municipal aggregation programs, and one (Springfield) is moving forward with establishing an aggregation program soon. If your community offers an aggregation program – great! You can participate at any time to capture these cost and climate benefits firsthand. If not, it’s never too late to reach out to your city councilor, mayor, or town manager and ask them to begin the process of putting a green municipal aggregation plan together.
Two pieces of legislation currently under consideration on Beacon Hill could make a major difference in moving this process forward and protecting consumers from overpaying on their electric bills. One bill, introduced by Massachusetts State Representative Frank Moran and Senator Brendan Crighton, would ban third-party electric suppliers from signing up new individual residential customers in Massachusetts in the future. Another, introduced by Representative Tommy Vitolo and Senator Jason Lewis, would catalyze the process for local communities that are moving forward with green municipal aggregation and help them get their programs approved by the state more quickly.
The Attorney General’s report highlights just how severe a toll third-party competitive electric suppliers are exacting upon consumers – and how much worse the consequences of their predatory practices are than had previously been understood. We have solutions at our disposal right now to help our communities, protect our climate, and accelerate our clean energy transition, and a critical window of opportunity to implement them if we can seize the moment.
Larry Chretien is the executive director of the Green Energy Consumers Alliance. Mikaela Hondros-McCarthy is the finance and renewable energy procurement director at Green Energy Consumers Alliance.