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Slossberg Calls for Ban on Variable-Rate Electricity Contracts

By: Brian McCready |

State Senator Gayle S. Slossberg (D-Milford) submitted testimony to the legislature’s Energy and Technology Committee last month supporting a ban on variable-rate electricity contracts, according to a press release from her office.

Slossberg was joined by AARP, the State Consumer Counsel and fellow legislators in supporting the ban.

“I have often been contacted by constituents who have signed electric contracts expecting one rate, only to see that price skyrocket down the road. They are angry and frustrated,” said Sen. Slossberg in a prepared statement. “Our proposed bill will end this unfair and unreasonable practice, and better protect our families.”

“Variable-rate plans can easily hurt the average consumer, particularly vulnerable seniors,” said Senate President Martin M. Looney (D-New Haven) in a prepared statement. “Some suppliers have engaged in deceptive marketing practices to sell these unpredictable plans, and have then extracted unconscionably high profits from Connecticut consumers. Electric customers deserve stable, predictable electric rates, whether obtained through standard offer service or from a multitude of highly competitive offers in the private supplier marketplace.”

If enacted, Senate Bill 573 would ban variable rates charged to residential electric customers for electric generation service. Customers who have signed into variable-rate contracts report being offered a low “teaser” rate by sales agents who would misrepresent how the rates could change.

At a recent hearing on the subject, customers documented that their rates increased from that teaser rate to an increase of over 100 percent in every case and over 200 percent in some cases.

These customers, many of them senior citizens, had no notice of the rate increases until the bill arrived and payment was demanded using the threat of disconnection of service if payment wasn’t made.

Last year the General Assembly passed Public Act 14-75, which enacted several reforms for the protection of electric consumers. Perhaps the most significant of these measures was a new requirement that, beginning this July, every residential electric customer’s monthly bill must display their rate for the coming month.

Last year’s consumer protection law was intended to provide customers advance notice of an unexpected and potentially dramatic increase in their electric rate, a disturbingly common occurrence, in particular, for customers with so-called “variable-rate” plans. This measure was also intended to limit the variability of these highly unpredictable plans to thirty day periods, so customers will be provided at least some expectation of volatility in their next month’s bill.

Consumer Counsel Elin Swanson Katz asked, “How many of us would choose a variable electric rate or recommend one to a retired parent or a recent college graduate getting their first apartment? I believe none of us would, because paying an ever-changing, uncapped variable rate for electricity is too risky for anyone on any kind of budget. We thank the legislature for last year unanimously passing a requirement that next month’s rate be put on the electric bill, but now the suppliers and the electric utilities are trying to undo that basic protection. Since variable rates pose such a threat of high bills to residents and small businesses, and the industry is saying it cannot provide the most basic consumer protection of advance notice, then we should prohibit variable rates. They bring no value to the consumer.”

“Even with the electric customer bill of rights passed last year in Connecticut, you can still fall prey to predatory variable rate contracts of some electric suppliers,” said John Erlingheuser of Connecticut AARP in a prepared statement. “These contracts have been shown to end up costing ratepayers more over the life of the agreement. Electricity is not a luxury; it is a necessity for health and safety. We need to level the playing field and further protect electric consumers in Connecticut by banning variable-rate contracts.”

Sen. Slossberg also submitted testimony in support of Senate Bill 575, An Act Concerning Electric Rate Transparency. The legislation will require that more opportunities for public comment are provided by the state’s Public Utilities Regulatory Authority (PURA) when deliberating on proposed rate hikes. This will help ensure that consumers are afforded the opportunity to have input on proposed increases that may be more than they can afford.