“Green” Energy Price Gaps Raise Questions About Transparency
Twenty years ago, following a trend of Republican-style free-market deregulation across the country, the Democratic-led Maryland General Assembly passed a law called the Electric Customer Choice and Competition Act of 1999.
The whole point of the law was to make electricity cheaper for average folks. The idea was to give people the freedom to choose whether to keep buying from old-fashioned, regulated public utilities like BGE or PEPCO, or sign contracts with a whole galaxy of new, unregulated electric providers.
Utility executives who pushed the scheme made millions.
But customers did not make out so well. Two decades after the deregulation law passed, a pair of authoritative reports -- by the Maryland Office of People’s Counsel and the Abell Foundation -- have concluded that Maryland rate payers were ripped off and are now paying more, not less, as promised.
In 2017, for example, the roughly 20 percent of Maryland customers who chose a third-party electric supplier instead of sticking with old-fashioned BGE paid an average of 16 percent more in their annual electric bills – or about $147 more per year, according to the Abell Foundation report. (Note: the Abell Foundation is a sponsor of this radio program.)
Paula Carmody is the Maryland’ People’s Counsel, an independent state official who advocates for consumers.
“At least some of the companies out there are engaged in deceptive practices,” Carmody said. “They are charging higher prices than people realize they should be paying. In many instances they are subject to contracts that are subject to contracts with what they call variable rates. That means these rates are changing month to month. And they tend to, in almost all instances, go up, not down.”
One advertised benefit of the move to re-regulation was the emergence of green energy companies that market themselves as selling electricity generated by wind, solar or other renewable methods.
But Laurel Peltier, one of the authors of the Abell Foundation report, said that her review of data showed that prices charged by these companies vary widely for reasons that are not clear or disclosed to customers.
The average Maryland customer choosing a “green” energy company paid 38 percent more in 2017 – or $263 more annually -- than if they had stuck with BGE, according to Peltier’s research. But one company, Clean Choice Energy, charged 46 percent more than BGE; while another, Clearview Electric, charged only 20 percent more, Peltier said.
“I hope people aren’t paying more for nothing,” Peltier said.
While customers may expect to pay a little more for wind or solar energy, the wide and unexplained variances in prices raise questions about how much cleaner or “greener” some green electricity is than other green power. Maryland’s renewable energy law, originally passed in 2004, classifies the burning of trash and wood waste – which both release large amounts of air pollution -- to generate electricity as being in the same top-tier "renewable energy" category as wind and solar. This means these different sources receive equal government subsidies and support, although they are not environmentally equal.
Customers cannot verify how much of these different energy sources, from which locations, are in their power supply. This is because the Maryland Public Service Commission does not require companies to publicly disclose to customers exactly where the companies are sending their money to buy renewable energy certificates, which demonstrate their renewable credentials.
Peltier said: “Absolutely we recommend – as far as renewable energy – to really have it a much more vetted process and have some agency help make sure these products are working for people."
One of renewable energy companies marketing in Maryland is called Inspire. Their general counsel is Aaron Jacobs Smith.
“You can’t really compare the product that we’re offering to what the utilities are offering,” said Smith. “That’s not only because we’re offering a clean energy product, but because we’re also offering things like a subscription product that has value beyond just price.”
Yes, but one reason customers can’t compare the products is because Maryland allows unregulated electric providers to keep secret the renewable energy documents and reports that would clear up these questions.