Competitive Electric Supply: Frequently Asked Questions from the Office of the Massachusetts Attorney General

FAQs Regarding Competitive Electric Supply for

Residential Customers in Massachusetts

                                         

• What is a competitive supplier?

A competitive supplier is a company licensed by the Department of Public Utilities to sell electricity and related services to retail customers.  See 220 C.M.R. § 11.02.  A competitive supplier purchases electricity and related services from the wholesale electricity markets for resale to retail customers.  Typically, a customer who buys electricity from a competitive supplier will see the charge as a line item on the customer’s electric utility bill. 

• Why should I choose a competitive supplier?

By shopping among competing electric suppliers, you may choose among different pricing, term and billing options or find a supplier that uses a higher percentage of clean, renewable energy resources than your electric company. 

• If I do not sign up with a competitive supplier, what happens?

Customers who do not sign up with a competitive supplier remain on their electric utility’s Basic Service supply rate.

• What type of rates are offered by competitive suppliers?

Competitive suppliers offer fixed and variable rates.  A fixed rate remains the same during the length of your contract, which could last for a few months or several years.  However, many fixed rate contracts will automatically renew at a variable rate.  A variable rate typically changes from month-to-month according to the market and the terms of your agreement with a competitive supplier.  The rate for fixed Basic Service, the electricity supply offered by your electric utility, changes every six months for residential customers. 

• Is my electric utility overcharging me for electric supply?

Electric utilities in Massachusetts do not earn profits from selling you electric supply.  Every six months your electric utility sets the Basic Service price for residential customers based on the electric utility’s cost to purchase wholesale electricity. 

• If I decide to talk with a competitive supplier, what are some of the questions I should ask?

If you are considering buying competitive electricity, you should ask the supplier for the following information:  

 What is the price per kWh (i.e. unit of electricity sold)?

 Is the price fixed or variable?

 If the price is variable, how does it change?

 What is the term or length of the contract?

 Are there penalties for early termination of the contract?

 Does the contract contain an introductory price? If so, how long will it be effective?

 Does the contract automatically renew at the end of the term?

 Does the contract provide renewable power?  If so, what is its source (i.e.wind, solar, hydroelectric, etc.)?

• What if I sign up with a competitive supplier, and then change my mind?

You have three days from when you receive your competitive supply contract to cancel, without charge or penalty. See M.G.L. c. 164 § 1F(8)(a)(ix).  If you cancel your contract after three days, you can return to Basic Service, but there may be an early termination fee depending on your contract with the competitive supplier.

• Can a competitive supplier turn off my service?

No. Only your electric utility is authorized to connect or disconnect your service.

Avoiding Pitfalls in the Competitive Supply Market

• Do not show a competitive supplier’s agent your electricity bill or give him/her your account number unless you have agreed to sign up with the competitive supplier.

A common tactic for a dubious sales agent is to ask to see the customer’s utility bill under the pretense of “determining eligibility” or “comparing the rate that you’re paying now.” Some Massachusetts consumers have complained that they have been switched to competitive supply without their authorization after showing a competitive supplier’s sales agent their account number or showing the agent their electricity bill. 

• If signing up for a variable rate, understand how your rate will change.

If a competitive supplier is offering a rate that changes from month-to-month after an introductory period, make sure you understand how the rate will change.  A competitive supply may offer you   variable rates that change based on “market conditions,” the “supplier’s discretion,” or similarly vague language that does not commit the competitive supplier to set your rate based on any formula or methodology.  Be very wary of signing up for these kinds of rates.  A competitive supplier may offer these variable rates with a short term “teaser” rate that is lower than the customer’s utility Basic Service rate, but once the “teaser” rate expires, the competitive supplier uses its “discretion” to set rates that are sometimes twice as high as the rates offered by the electric utility. 

• When signing up for a fixed rate contract for a year or more, understand that electricity in Massachusetts is most expensive in the winter.

Due to seasonal factors, electricity in Massachusetts is currently more expensive in the winter months, especially January and February, than it is the rest of the year.  The electric utilities change their Basic Service rates every six months, so, during the six-month period that includes January and February, their rates are expected to be higher than in the next six-month period.  Therefore, a fixed-rate contract with a competitive supplier that lasts for an entire year may have a price that is lower than the rate you are receiving from your electric utility in the winter months, but much higher than the electric utility’s Basic Service rates in the summer and fall.  Be especially wary if your house has central air or you use window air conditioners during the summer, because high consumption could amplify any difference between a year-long rate locked in with the competitive supplier and the lower rates that electric utilities typically offer in the summer months. 

• Your electric utility will NOT contact you about your electricity supply rates.

Your utility will not send representatives to your door, or call you on the phone to talk about electricity supply rates. If a representative contacts you about electricity supply rates, this person most likely works for a competitive supplier.

• Be wary of aggressive sales tactics.

Do not let a sales agent pressure you into signing up with a competitive supplier.  If you choose, you have the right to stay on Basic Service or choose another competitive supplier.  If a competitive supplier’s sales agent refuses to take “no” for an answer or refuses to leave your home, contact local law enforcement authorities.  

Complaints Involving Competitive Suppliers

• First contact your competitive supply company to give the company the opportunity to resolve the issue to your satisfaction.
• If contacting your competitive supply company does not resolve the problem, contact the Department of Public Utilities Consumer Division at: (617) 737-2836 or 1-877-886-5066 (toll free) or file a complaint with the Attorney General’s Office at (617) 727-8400.

For more information on understanding your electric bill, stay tuned for the MCC Law Center's upcoming blog!