Beware of Claims Made by Alternative Power Companies, or Risk a Shock

Photo (cc) by ericskiff

You may have the power to decide where your electricity comes from, but before you switch suppliers, the Federal Trade Commission has some powerful advice of its own.

Residents in at least 15 states from Portland, Maine, to Portland, Oregon, get to choose what company supplies their electricity — and in some cases natural gas — even though it’s still distributed through a local utility company’s power lines.

Beware of deceptive practices. In New York state, 200 companies are certified to provide electricity and natural gas. About 1 in 5 of the state’s 7 million electricity customers receive power from a retail electricity provider rather than from their local utility company. However, a New York State Public Service Commission review found that multiple energy services companies overcharged for electric and gas service as well as failed to deliver on promises for savings and clean energy.

Some companies charged up to four times the local utilities’ rates.

“We have zero tolerance for these unscrupulous companies, whose business model is to prey on ratepayers with promises of lower energy costs only to deliver skyrocketing bills,” New York Gov. Andrew M. Cuomo said recently as he announced a plan to protect residential and small commercial consumers.

What are the rules in your state? Each state’s utility regulation agency will have rules that govern third-party energy suppliers and energy marketers. Here are links to information in 15 states that allow power switching:

Colleen Tressler, a consumer education specialist at the Federal Trade Commission, and state utility commissions offer tips to make sure you get the best deal and not be shocked by a power contract’s details.

  • How much will this cost? Compare your current price per kilowatt-hour with what an alternative supplier is offering. Is the rate every month the same, or does it vary? Is there an enrollment fee, a fee to end your contract early, or other extra fees or service charges? Does the price include an introductory rate that expires?
  • What else comes with it? Energy marketers might offer more than just electricity. Are they promising that their power comes from renewable sources, like wind or solar? Do they include a more advanced thermostat to help you save money?
  • How long will this last? Know your contract terms. Can the price change during the time it lasts? If it does, how will they inform you?
  • What if you’re not satisfied? Who do you call if there are problems with your bill? How do you cancel the contract if you want out?
  • What happens at the end of the contract? When your contract expires, what happens? Will it renew rollover automatically? Will the price change?
  • Are environmentally friendly generation sources available? Does the power come from solar, wind or hydro generators?

Remember, the choice is yours, Tressler says. Never be pressured by door-to-door salespeople or telemarketers.

What is your experience with alternative power sources? Share with us in comments below or on our Facebook page.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

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