Attorney General Maura Healey on Thursday called for the Legislature to shut down the market that allows consumers to buy electricity from independent suppliers instead of their local utility, saying they are being hit with millions in extra costs.
Healey released a report that showed electric customers who switched to a competitive supplier collectively paid nearly $180 million more than if they had remained with their utility, during a two-year period between July 2015 and July 2017.
The report focused on the nearly 500,000 residents who buy directly from a competitive supplier, not residents participating in a group contract organized by their community. Healey said she found patterns that indicate low-income and minority neighborhoods are being targeted with aggressive sales tactics: Thirty-six percent of low-income households received their electricity supplies from a competitive supplier, double the rate among nonlow-income customers.
Edgar Dworsky, founder of the ConsumerWorld.org website in Somerville, said he was surprised to learn that low-income residents are particularly being targeted, and are paying more than other people as a result.
“There may have been a bona fide deal for some short period of time,’’ Dworsky said. “But like the $99 triple play from the cable company, you better be careful when the year is up because that bill is going up. Rich or poor, everyone needs to scrutinize their bills monthly.’’
Shutting down the competitive market for individuals, Healey said, is the most effective way to protect them from scams. She is not targeting municipal group-purchasing cooperatives, or the commercial and industrial market.
Earlier this week, Healey announced that one supplier, Viridian Energy LLC of Connecticut, had agreed to pay $5 million to settle charges that its marketing and sales practices were deceptive. The company also agreed to not market its electricity supply door-to-door in Massachusetts for the next two years.
A spokesman for the state energy and environmental affairs office said the Baker administration would review Healey’s report.
Customers have been able to buy electricity from a company other than their utilities since a 1997 state deregulation law took effect. While many large commercial and industrial users, such as factories or university campuses, were quick to take advantage of the opportunity, savings have been harder to find on the residential side. One reason is the existing utilities — namely Eversource and National Grid — can be tough to beat. They buy power at wholesale rates and pass on the costs directly to consumers without a markup.
In 2014, state regulators adopted rules that allow suppliers to pass along unpaid bills to the utilities, making it less risky for new firms to enter the market.
The Retail Energy Supply Association, a national trade group that represents 20-plus companies, called Healey’s analysis “solitary and flawed.’’
“It’s not like everyone in this market is a bad actor,’’ added James Bride, president of Energy Tariff Experts LLC in Cambridge. “There are reputable companies that do deliver value to customers.’’
Bride suggested the state could subject suppliers to new regulations, such as clarifying their marketing claims. He also said officials should encourage “smart meter’’ practices that allow consumers to pay less for power during off peak times. Those types of plans could give suppliers a competitive edge.
“Just shutting the entire thing down strikes me as a little Draconian compared to doing a thorough analysis of best practices all around the country,’’ added Ian Bowles, who works at a Boston firm that finances energy startups and is a former state energy and environmental affairs secretary. “We need more, not less, innovation in this area.’’
Jon Chesto can be reached at jon.chesto@globe.com. Follow him on Twitter @jonchesto.
