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Customers who switch electric suppliers getting hit with surprise bills

Utilities have faced competition from new suppliers; some consumers reported unexpected costs. David L. Ryan/Globe Staff

In response to hundreds of consumer complaints and a surge of callers seeking help, Massachusetts’ utility regulator has required competitive electric supply companies to warn customers about costs their utility can charge them for switching.

According to a letter dated March 23, the chairman of the state’s Department of Public Utilities told the state’s competitive supply companies that they would have to begin warning customers that they could face charges — sometimes in the hundreds of dollars — for switching away from the basic service package they get through their utility.

“It is necessary for customers to receive this information, and competitive suppliers are in the best position to inform their potential customers,” wrote Angela O’Connor, the head of the department. “It is not acceptable that a customer should be surprised to see such a recalculation on their electric bill.”

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Facing high winter electric rates, many Massachusetts residents, such as Jay Yesselman of Cambridge, have turned to competitive suppliers, who say they can get customers a better deal on electricity than big utilities such as Eversource or National Grid. Consumer advocacy groups raised concerns on the suppliers’ sales tactics, and at least two have been fined by the attorney general for violating consumer protection laws.

But thousands of people who switch have ended up facing unexpected charges — in Yesselman’s case, $80 — from their old utility. The utilities recalculate up to six months of their old bills to charge them for “variable rate” basic service instead of the “fixed rate” basic service many households use by default. About half the time, customers end up getting a credit. Over the past 13 months, Eversource has recouped $2.2 million from recalculating bills, and National Grid has recouped $160,000, state filings show. But those recalculations go to power plant owners, not the utilities’ bottom lines.

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But payers tend to notice — and get angry — when they get an unexpected bill.

“I’ve been an NStar customer for 40 years, paying my bills on time. It was just shocking to get caught in this,” said Yesselman, using Eversource’s old name. “I like to think when I sign something that I know what the terms are.”

About 300 customers filed formal complaints with the utility regulator about the surprise charges and the department has had 60 to 100 calls per day from customers asking for clarification on the recalculation, said Katie Gronendyke, a spokeswoman for the state’s Office of Energy and Environmental Affairs.

The utility regulator is taking comments from utilities, competitive suppliers, and the attorney general on proposals including eliminating the basic-service recalculation for residential and small business customers. According to filings, National Grid wants to keep the recalculation, but Eversource said it caused more trouble than it was worth.


Jack Newsham can be reached at jack.newsham@globe.com.