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State warns consumers about variable electric rates

By: WCSH6 |

The state’s public advocate, who represents consumers in issues involving electricity and phone service, is warning people to watch out for big jumps in their electric bills.

The problem is variable rate electricity plans. Most residential and small business customers use the Standard Offer electric rate. But the Public Utilities Commission says about 200,000 customers –roughly 25% statewide — have contracts with a variety of private electric suppliers. Some of those contracts include an initial fixed-rate price, which then changes to a variable rate after several months. Public Advocate Tim Schneider says his office has received complaints from customers who have seen their electric bills go through the roof, double or even triple what they had been paying. He says some customers didn’t know they had signed up for variable rates, while others didn’t understand what that would mean. Schneider says those rates are legal, but he believes some of the suppliers do not do an adequate job of disclosing the variable rate clause, or keep it in the “fine print of the contract”.

Schneider says some private electricity suppliers do offer fixed rate contracts. And he says consumers can also switch over to the Standard Offer at any time. But that may not be the long-term answer . The state no longer regulates the price of electricity, so doesn’t track the prices or deals being offered by the private suppliers. The Maine PUC does, however, set the rules for informing consumers about private contracts. The agency has scheduled a public hearing for next Wednesday to review the rules and see if they need to be changed or updated. Schneider says changes are needed. “The market has been changing really fast,” he says, “and we’ve been struggling to keep up with the different offerings and sales tactics competitive suppliers are using.”