KIYC: 3rd-party energy companies examined

Across New Jersey, customers of third-party electricity suppliers are getting a bad case of sticker shock. A Kane In Your Corner analysis finds this is the downside to a market deregulation that, up until now, has saved many of those consumers money. (2/24/14)

NEWARK - Across New Jersey, customers of third-party electricity suppliers are getting a bad case of sticker shock. A Kane In Your Corner analysis finds this is the downside to a market deregulation that, up until now, has saved many of those consumers money.

Kane In Your Corner recently brought you the story of the Pak family of Green Brook, which switched to a third-party energy provider, Systrum Energy, last summer. After months of modest savings, they were hit with a $484 electric bill in January, three times what they would have paid their local utility.

Since then, calls and emails have been pouring in from customers of other third-party providers across New Jersey.  Theresa, a customer of HIKO Energy says her combined bill, which included her traditional utility company’s portion, was $408 for January but skyrocketed to more than $800 in February. Susan complained her third-party provider “promised us that they were going to lower our  Public Service bill and yet it quadrupled.”

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The problem is that with traditional utility companies, rates are regulated and can only be increased with the approval of the New Jersey Board of Public Utilities. That tends to keep rates fairly stable. But most third-party suppliers simply buy and resell energy at the market price, so when energy prices spike, as they did during the recent cold snap, so do customers’ bills.

“If you go with the variable rate, sometimes you save money when times are good; it’s just that when times are bad, it gets really, really bad,” says Stefanie Brand, the director of the New Jersey Office of Rate Counsel, the state’s ratepayer watchdog.

Kane In Your Corner offers these tips before switching from a traditional utility: Ask if you can get a guaranteed, fixed rate, and for how long? And inquire about the cancellation policy - is there a fee to switch back to your traditional utility company and how long will it take?

As for customers who are unhappy with skyrocketing third-party electric rates, if they suspect something illegal is happening, they can file a complaint with the Board of Public Utilities. But chances are, their only option is to switch back to their traditional utility provider, and that could take a few weeks to take effect.

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