Cooperative Review - June 2018
Vol69-02 February 2019

Know the facts if you are considering switching to an alternate supplier

Two studies call for improving consumer protections

Recently, two reports issued by the Maryland Office of People’s Counsel (OPC) and the Abell Foundation expressed concern about Maryland’s third-party energy supply market. They found that many customers who purchase energy through an alternate energy supplier in total are overpaying by millions of dollars. In addition, they found that a high percentage of customers who purchase energy from an alternate supplier are low income customers who receive assistance. In many cases, they are charged more for energy by alternate energy suppliers than they would normally pay to their local utility.

“Alternate energy suppliers” are able to sell energy to SMECO members at rates that are not regulated by the Maryland Public Service Commission. SMECO is concerned that not enough is being done to protect consumers from high rates and deceptive marketing tactics, and we will be working with our state legislators during the 2019 Maryland General Assembly session to help establish some reforms that will discourage predatory sales practices.

Consumers overspend millions of dollars

According to the OPC report, “Maryland’s households are paying approximately $54.9 million more for electricity and gas than if they had purchased energy from their utilities.” When Maryland deregulated the energy market 20 years ago, alternate energy suppliers were expected to offer rates that were competitive with the electric utilities’ rates. But during 2018, the amount that SMECO members paid to alternate energy suppliers was nearly $2.1 million higher than what those same members would have paid if they had purchased energy through SMECO’s standard offer service (SOS). With an average of 5,120 members purchasing energy from alternate suppliers, that’s about $415 per account.

How does your cost compare?

SMECO residential members who purchase energy through an alternate supplier will have information printed on their bill that calculates how much they saved—or how much they overpaid—in comparison to SMECO’s residential SOS energy rate. (Personalized cost information is printed on the Alternate Supplier page of a residential bill under “Comparing Costs.”)

Sample of Price to Compare cost comparison as it appears on your SMECO bill

Maryland OPC offers tips

In an interview on November 26, 2018, Paula Carmody, the People’s Counsel, made the following points (edited for brevity): We see reliance on door-to-door marketing and that is a concern for us. We also see they are targeting neighborhoods that are low income. People are knocking on doors saying “We’re going to save you money.”

  • Energy sales reps who go door-to-door are required to have a printed ID as well as identification on their clothing.
  • If they say they are from the utility, close the door; they are misrepresenting themselves. (Energy sales reps do not work for SMECO.)
  • If they ask to see a copy of your bill to see how much you are paying, do not give it to them: they want to get your account number.
  • Energy sales reps should have written materials they can provide. You can take the materials and compare prices. You don’t have to sign up on the spot.
  • You can look at other suppliers and contact them to see if you can get a better price.
  • Consumers who decide to talk with someone in person (or over the phone) should ask questions.
  • Instead of a variable rate, look for a fixed rate that doesn’t fluctuate.
  • Check for cancellation fees; in some cases, a cancellation fee can wipe out any savings you may have had.

To see the interview, visit the OPC’s website and click the link for Direct Connection: opc.state.md.us/Home/HotTopics.aspx or go to the YouTube video: youtube.com/watch?v=CBQiRWpFSWY

Co-ops work for members, not for profits

Because we are owned by our customers, every dollar that you pay to SMECO goes into purchasing energy, constructing power lines and substations, or running the co-op. At the end of the year after expenses are paid, any money that is left over goes toward your Capital Credits. Later, Capital Credits may be refunded as bill credits, checks, or payments to estates.

Questions?

If you have questions about customer choice, alternate energy suppliers, or any billing related matters, call SMECO’s customer care center at 1-888-440-3311. We’re open 24 hours a day, 7 days a week.

Know the terms

Before entering into a contract with a supplier, be sure you understand the terms.

  • What is the exact price per kWh?
  • What does the price include? Are there any fees, taxes or charges that are not included?
  • Is there a monthly minimum or maximum usage?
  • Is there a fee for a credit check or a deposit?
  • Is the offer for a fixed rate, a variable rate, or a combination? If it’s a fixed rate, how long does it stay fixed? If it is variable, does it change based on the season, the time of day, or the amount of usage?
  • How long is the contract good for and what happens when it ends? Will you be charged a variable rate that is different?
  • Can the price change during the contract period?
  • Can you cancel the agreement at any time?
  • Is there a termination fee for canceling the contract?
  • What happens if you move?
  • Do you have to pay to switch to a different supplier?
  • What is the total price to compare for your estimated kWh usage? (Use the amount of kWh on a recent SMECO electric bill. SMECO’s Standard Offer Service price to compare is the Energy Charge and the Power Cost Adjustment combined. Don’t compare the supplier’s rate to your total SMECO bill, just look at the cost of energy.)