Independent Electric Suppliers Hit Back at Critics

Mar 10, 2014

Credit Sarah Simpson / Creative Commons

Connecticut's independent electric suppliers have come in for some stiff criticism this winter, after it was revealed that some were charging customers astronomical rates for power. But the suppliers themselves claim there's another side to the story.

Connecticut has a couple of dozen companies that offer to sell power on its deregulated market. The deal you can get from them varies wildly. Connecticut's Attorney General and the state's Consumer Counsel went on the warpath recently against suppliers who were charging customers up to 24 cents a kilowatt hour. Contrast that with standard offer from the regulated utilities: nine cents a kilowatt hour.

But remember this, said David Feldman, vice president at Abest Power in Norwalk: "Because of the cold this winter, no one could have accurately predicted how much electricity they were going to need to serve."

Abest is an independent supplier which is currently offering a fixed rate slightly below the standard offer. Feldman said regulators need to cut the suppliers some slack in this exceptional weather. "Companies go into the winter having bought their electricity ahead of time for what they expect their load to be," he said. "Anything above that, they have to buy from the grid on the spot market."

That's been a difficult exercise this winter, in particular. "With the increase in gas prices," Feldman said, "and the scarcity of available gas in the northeast, those spot prices went through the roof."

Feldman said that regulators are taking too narrow a view of the crisis, merely seeming to blame the independent suppliers, when they should be highlighting the problems of New England's aging power infrastructure and over-reliance on natural gas. He does sympathize with consumers who have been caught out by spiking power bills in recent months. Feldman's answer is to raise the level of education buying power on the independent market. "Going into a volatile time of the year like the winter," he said, "staying away from a variable product, is the best advice I can give somebody."

The Public Utility Regulatory Authority just finished a series of meetings to hear public comment about the performance of independent suppliers. It aims to formulate new guidelines for the industry later this year.