Illinois AG acts against a retail supplier, but indicts the competitive supply industry. Illinois Attorney General Lisa Madigan announced an enforcement lawsuit against a New York-based competitive retail electricity supplier while painting the entire competitive supply industry with a broad brush as one that is “rife with fraud.”
Madigan’s lawsuit charged Major Energy Electric Services with engaging in deceptive marketing practices (both door-to-door and telemarketing) that led consumers to believe they were speaking with someone from their incumbent utility company, Commonwealth Edison. Customers were convinced to switch with false promises of economic savings, the lawsuit alleges. Some customers were switched without their consent after offering up their ComEd customer identification number, the lawsuit charged.
“Major Energy’s business model is nothing more than outright fraud, and unfortunately, Major Energy is not the only company engaged in this fraud,” Madigan said in a news release. “But through my lawsuit today, we can put this bad company out of business for good in Illinois.”
There are nearly 100 competitive suppliers operating in the Illinois competitive retail power market, Madigan noted, citing Illinois Commerce Commission statistics suggesting that customers of competitive suppliers paid $400 million more for electricity over the past three years than if they’d taken default service from their incumbent utility company.
“There are a wealth of bad companies,” Madigan said, as quoted by Mark Brown in the Chicago Sun-Times. “What we know is that it is very difficult to make money by speculating on energy prices and passing on those savings to residential customers,” she said. “You are almost never going to save money by switching.”
The lawsuit filed against against Major Energy is Madigan’s fourth enforcement action against a competitive supplier operating in Illinois. She has entered into settlement agreements with Ethical Electric and PALMCo Power, while a lawsuit against Sperian Energy remains pending.
Madigan is advocating legislative measures to address the marketing practices of competitive energy retailers. The Citizens Utility Board and AARP advocated their own set of measures recently. The Illinois Commerce Commission took steps last year to address concerns about marketing practices, and recently convened a “policy session” on the topic featuring industry representatives and consumer interests..
Retail electricity competition initially took off with a bang in Illinois as utility default rates were at a premium compared with power available in the competitive market. Many municipalities across the state took advantage of the market conditions with customer aggregation programs, many of which solicited renewable energy resources often at a savings compared to utility supply. But after a year or two supplies procured on behalf of the utilities come into line with low wholesale energy prices in the market, and many municipalities switched their customers back to utility default service.
Retail suppliers argue that utilities in customer choice states should not be engaged in procuring electricity supply on behalf of customers. The utilities simply pass through the wholesale costs of the energy to customers and garner profits for their investors through distribution rates, which they complain are used to mask or subsidize the costs of supplying energy. Competitive suppliers also complain that they, unlike utilities, cannot go before state regulators and be made whole if they make a bad decision in the marketplace. They point to Texas, which has isolated distribution utilities from the energy supply market, as the model other competitive states should embrace.
DOE’s Perry hints that FirstEnergy’s Sec. 202(c) request may not fly. Energy Secretary Rick Perry, speak at the Bloomberg New Energy Finance Future of Energy Summit in New York, suggested that the Trump administration is looking at a different solution for financially ailing FirstEnergy than granting the utility’s request for support under DOE’s Federal Power Act emergency authority, Bloomberg reports.
Axios noted that DOE last year denied a similar appeal for an emergency order from Murray Energy, a top coal supplier to FirstEnergy.
While acknowledging that his department has under review FirstEnergy’s request for extraordinary action under FPA Section 202(c), Perry said that it “may not be the way that we decide is the most appropriate, the most efficient way to address this,” emphasizing that “It’s not the only way.”
A FirstEnergy spokesman said the utility is “open to all potential policy solutions that would enable our plants to continue to play their critical role in the security and resilience of the electrical grid.” Nora Brownell, who advanced competition policies as a commissioner at the Federal Energy Regulatory Commission and the Pennsylvania Public Utility Commission, called FirstEnergy’s request for out-of-market support a “real tragedy” for a capitalist society, Bloomberg reported.
Ohio Power Company Has Few Allies in Bailout Bid
FirstEnergy’s request would cripple America’s biggest electricity market, critics say
To Keep Benefits of Competition, Do Not Intervene in Electricity Markets
PJM looks to reconfigure capacity market to address state subsidies for generators. PJM Interconnection has filed proposed tariff changes with the Federal Energy Regulatory Commission to alter its capacity market to assure competitive generators aren’t economically harmed by other generators receiving state-mandated subsidies. Exelon was successful in obtaining state-mandated support for its nuclear plants in Illinois, while legislation to provide subsidies for nuclear plants is advancing in New Jersey. FirstEnergy has aggressively sought legislation in Pennsylvania and Ohio to provide consumer subsidies for its struggling power plant fleet..
“Left unaddressed the subsidies will crowd out efficient, competitive resources and shift to consumers the investment and operational risks of generation,” PJM’s Andy Ott said in a press release. “We seek the appropriate balance that respects state policy while avoiding policy impacts of a state’s subsidies on the market as a whole and on other states.”
In the more than 600-page filing, PJM asks FERC to authorize it to adopt a Capacity Repricing proposal, which would create a two-stage capacity auction process to accommodate state subsidies without distorting market prices. Alternative, PJM asked for changes to its existing Minimum Offer Price Rule to reflect the actual costs of generation without subsidies.
Competitive merchant power producers welcomed the PJM filing. “As events unfolding in New Jersey and other PJM states such as Illinois clearly show, the integrity of wholesale power markets is under serious attack by those seeking unjustified state subsidies for their nuclear and coal plants,” the Electric Power Supply Association’s John Shelk told Natural Gas Intelligence’s Jamison Cocklin. Shelk called for FERC to implement countermeasures to ensure consumers continue to be served by “beneficial competition.”
Nevada co-op counters newspaper column advocating customer choice ballot passage. “It is pretty clear the price rural Nevadans will pay for electric service under Energy Choice will not be less than the current rates they pay for service. Which, by the way, are already less than the rates paid in states with Energy Choice, including Texas which is touted as the poster child for Energy Choice success,” a top rural electric cooperative official writes in the Elko Daily Free Press.
David Luttrell, Lincoln County Power District 1 general manager, president of the Nevada Rural Electric Association and a member of the Governor’s Committee on Energy Choice, was responding to a coilumn by Thomas Mitchell, in which he supported the state’s pending ballot initiative to allow customer choice in electricity, asking “Why shouldn’t residential customers be able to shop for cheaper power?”
Other news of note:
Federal Energy Regulatory Commission says PSEG subsidiary made false statements over 9-year period
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Despite its sunny climate, Dallas finished 44th in per capita solar capacity on a list of 68 large U.S. cities. Even famously rainy Seattle and frequently frozen Buffalo did better than Dallas.
Legislation put forth to hold Maine utility shareholders responsible for investigation costs
Committee still considering changes to utilities’ audit costs
The bill, LD 1729, an Act to Require Audits of an Investor-Owned Transmission and Distribution Utility’s Metering and Billing Systems, was amended to give the PUC some leeway in asking utilities to pay for audits if the audits show imprudent conduct led to problems. Currently if that is found, the PUC cannot shift the costs from ratepayers to shareholders. The PUC can disallow certain costs, however.
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Amending Grafton Energy Choice: A Public Discussion
The electricity plan for Grafton may change. Find out about it and have your say at this meeting.
GRAFTON, Mass.—Town officials are holding an important meeting and public discussion to talk about amending the Grafton Energy Choice aggregation plan at the Board of Selectmen meeting on April 17 at 7 p.m. at the Municipal Center.
Pa. legislation would put a charge into electric vehicles
FirstEnergy’s Ohio Utilities Launch Energy Audit Program to Help Customers Save
AKRON, Ohio, April 9, 2018 /PRNewswire/ — Customers of FirstEnergy’s (NYSE: FE) Ohio utilities – The Illuminating Company, Ohio Edison and Toledo Edison – can now save up to $250 toward the cost of a professional energy audit valued at $350. The Residential Comprehensive Audit Program is designed to help customers make energy-saving improvements and reduce their electricity costs.
FirstEnergy Utilities Urge Customers to ‘Hang Up, Don’t Pay Up’ When Suspected Scammers Call
Norwich, Vt., will evaluate new solar array
Nuclear regulators to license two new reactors at FPL’s Turkey Point facility
However, there is a significant chance the new units will not be constructed due to the billion-dollar price tag to construct a new reactor and competition from cheap gas. FPL officials say they will wait until the Plant Vogtle project in Georgia is complete to make a final decision.
New Behavioral Demand Response Service Drives Consumer Engagements For Retail Energy Providers
Internet solutions company People Power has announced a new block of energy-focused microservices designed to help consumers to save money on electricity through more efficient use of electricity. The new services are bundled into People Power’s new Behavioral Demand Response 2.0 product.
Steps to success for utilities moving into community solar projects
“NextEra Energy Inc., Duke Energy Corp., and Dominion Energy Inc.’s utilities are among a number of companies in the sector contemplating significant solar investments in the near-term. Other companies, including Xcel Energy Inc. and Alliant Energy Corp., are undertaking large wind projects in the near-term, but are considering ramping up solar investments in the coming years,” according to the March 28 S&P Global Market Intelligence report summary, “With eye toward growth, utilities plot ambitious solar CapEx in coming years.”
How Blockchain Is Threatening to Kill the Traditional Utility
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