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Petition Calls on BPU to Protect Consumers Who Switch Utilities

By: Tom Johnson |

NJ Division of Rate Counsel wants clearer disclosure of contract terms, shorter waiting period before customers can switch back to previous provider

The New Jersey Division of Rate Counsel is once again petitioning regulatory officials to toughen rules to prevent abuses by energy suppliers who sell gas or electricity to consumers.

A little more than a week after the state Board of Public Utilities denied its original proposal to overhaul rules governing market, advertising and disclosure requirements, the Rate Counsel office submitted a new petition to the BPU on Friday.

The issue arose after a brutally cold winter in which bills for gas and electric customers suddenly skyrocketed, largely because of a spike in natural-gas prices. Promised savings quickly disappeared and customers’ increased tenfold, with many alleging fraudulent advertising and marketing practices.

In some cases, those practices already have led to charges against some so-called third-party suppliers. In June, the Attorney General’s office alleging they had used misleading and deceptive marketing practices to lure customers away from their previous utilities.

The petition submitted by Rate Counsel Director Stefanie Brand says meetings with the Retail Energy Suppliers Association, the trade group representing the industry, has yielded many areas of agreement.

“Primarily, both agreed that false or misleading advertising claims and unsavory marketing practices and unsavory business practices harm both ratepayers and TPS (third party suppliers) and that increased disclosure of contract terms to customers is desirable,’’ according to the petition.

Some of the Rate Counsel recommendations mirror proposals already working their way through the Legislature that would require written contracts between customers and third-party suppliers of electricity or gas.

“The most important improvement is increased disclosure, in clear and plain language of all contract terms,’’ the petition reads, specifically recommending that contracts spell out all terms of pricing in bold letters—not in fine print.

When customers saw their bills soar unexpectedly, many were surprised to learn the savings promised to them could disappear, in some cases because they were on variable pricing contracts which allowed bills to fluctuate depending on the selling price of energy on the spot market.

In legislative hearings on the issue earlier this year, some organizations called for the state to end those variable pricing contracts, but the Rate Counsel’s petition stops short of adopting that recommendation.

Instead, the proposal emphasizes that consumers need to become better informed about switching energy suppliers. It recommended the BPU establish a website providing more details about consumer rights, including allowing customers to comparison shop by listing prices offered by various suppliers.

Finally, the petition urges shortening the current 60-day time frame now required before customers can switch back to their “incumbent supplier” – it doesn’t specify new length of time. That proposal is rooted in the frustration expressed by customers who saw their bills unexpectedly but then had to keep paying those prices for another two months before going back to their former utility.

“In sum, a lot can be done to make they system better,’’ according to the Rate Counsel petition.

In New Jersey, 16 percent of residential electric customers and 9 percent of gas customers had switched suppliers as of this past May, according to data compiled by the BPU.