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NJ utility watchdog proposes new rules to guide unregulated third-party energy suppliers

By: Alexi Friedman |

New Jersey’s consumer utilities advocate today proposed sweeping measures to regulate third-party energy suppliers, whose often volatile pricing structure led to sharply higher monthly bills for thousands of gas and electric customers last winter.

Speaking in Trenton, Division of Rate Counsel director Stefanie Brand also called on state law enforcement to investigate customer claims of unscrupulous business practices by some third-party providers.

Noting that most of those suppliers “are reputable and follow the rules, there are some bad actors out there and they need to be reined in,” Brand said at an Assembly Telecommunications and Utilities Committee meeting on the subject. Allegations involved false advertising, “slamming” — illegally switching a customer’s provider without permission — and misleading marketing tactics, she said.

The state Attorney General and its Consumer Affairs division have already “indicated they intend to investigate and bring enforcement action, if appropriate, against the companies that are doing this,” Brand told the committee.

In response to her testimony, Consumer Affairs acting Director Steve Lee said it was the policy of the attorney general “to neither confirm nor deny the existence of an investigation.”

In the last few years, more than half-a-million New Jersey residents switched from their regulated gas and electric utilities to the dozens of licensed but unregulated third-party providers to take advantage of modest monthly savings.

But when last winter’s frigid temperatures drove up energy prices, many third-party suppliers passed those increases on to ratepayers. The state Board of Public Utilities said it logged 2,700 consumer complaints against third-party suppliers from December through April. The complaints, for bill charges, contract issues and marketing practices, were far higher than in previous years.

In a recent board meeting, BPU President Dianne Solomon said the agency was concerned about the rise in complaints “about some third-party suppliers’ marketing tactics and lack of transparency in the terms of their agreements.” The board, she added, was developing its own regulations to guide the industry.

Steven Bennett, who is New Jersey chairman for the Retail Energy Supply Association, also testified today, saying the industry only exists if does not “run afoul of rules and regulations. The value to our customers,” he added, “does not include fraud, does not include lying, does not include overpromising and under-delivering products.”

Among the new rules Rate Counsel proposed, third-party energy suppliers would be required to send customers who had signed up online, in writing or by phone, a written copy of the contract with all the terms and conditions. Many customers, Brand said, never received a written contract or were directed to a website, where the terms were buried in the fine print.

The changes would also require prior notice be given to customers before a fixed price contract reverted to the more volatile variable rate.

Along with educating consumers, Brand said she believed “these simple measures will go a long way to making sure that customers are more knowledgeable and informed about what they are signing and what they are getting.”