Greg Dudkin: We can save customers millions by providing protections they deserve

Here in Pennsylvania you can shop for your electricity supply. Just like you would shop for a car, you compare different offers and choose what is right for you at the lowest cost.

Because utility companiesare delivering the electricity, we have no vested interest in which supplier you choose. But we do care whether you are paying a reasonable rate for electricity.

PPL Electric Utilities has been monitoring the rates shopping customers pay compared to the default rate, which is the rate charged if you do not choose a supplier.

We’ve found many of our residential and small business customers are paying more for electricity through their supplier than they would have on the default rate. For customers paying more than the default rate, over a one-year period, our residential customers paid about $97 million more and small business customers paid $34 million more.

This is alarming. The goal of deregulation is to save customers money. And that is obviously not happening. Where did it go wrong?

One of the biggest issues is that suppliers have limited accountability to be transparent with customers. Deceptive marketing tactics are used to attract customers.

You have probably received phone calls or letters from suppliers claiming to provide a new and better rate. Often these solicitations are disguised as a utility-endorsed communication, using a utility’s logo or stating that the call is about your utility bill. You may be told that if you switch now, you can get $300 gift card rewards.

If it sounds too good to be true, it usually is. Those gift cards are often short-term discounts to mask higher rates. And the low rates suppliers’ offer you are often teaser rates. They only last a short while and then they skyrocket.

Suppliers are intentionally vague in hopes you won’t understand the long-term cost increase or aren’t monitoring your electric bill closely. Many customers end up paying double the price of default energy.

Suppliers argue that residential and small business customers are willingly paying $131 million more than the default rate for value-added products, like renewable energy. Even if we assume that all customers paying above the default rate are purchasing renewable energy, we still find that over 205,000 PPL residential customers are paying approximately $93 million more based on our estimate of a market based renewable rate of 1 cent per KWH above the default energy rate.

These practices are harmful and must be monitored.

Look at what happened in Texas — or, better yet, what happened here in Pennsylvania during the 2014 polar vortex. Pennsylvania customers were baited into paying variable rates — or rates that change by the hour, day or month. When the extremely cold weather hit, those customers saw price spikes.

Just like the Texans who are now saddled with thousands of dollars in utility bill balances, the same may happen again if things do not change.

So, what can be done?

We must critically evaluate the current electricity retail market and put customer protections in place. We need restrictions around introductory, promotion and teaser rates. Suppliers need to be held accountable and be transparent.

We should also reject any proposals that allow suppliers to aggregate and send a consolidated electric bill to customers directly. Giving suppliers full control over bill communication puts customers at a disadvantage and makes it more difficult for the utility companies to protect customers.

As we continue to advocate for our customers, it’s critical that you continue to shop smart. Read the fine print, be aware of deceptive marketing tactics and check your electric bill regularly to see how much you are being charged.

I also encourage you to speak to your local officials to raise awareness about the consumer protections that are needed.

The time for change is now, or Pennsylvania customers will continue paying the price.

Greg Dudkin is president of Allentown-based PPL Electric Utilities.