Cold Calls: Limits on New Energy Marketers

Posted on 05/1/2014 by | AARP Blog Author | Comments

John Hall, a member of the Utilities Watchdogs, noticed an upsurge in complaints about calls from third-party energy suppliers. Photo by Matt Roth

John Hall, a member of the Utilities Watchdogs, noticed an upsurge in complaints about calls from third-party energy suppliers. Photo by Matt Roth

By Christina Hernandez Sherwood

At meetings last year of the AARP Greater Woods­town Chapter, John F. Hall kept fielding the same questions and hearing the same concerns: Members were annoyed by repeated phone calls from third-party energy suppliers​ encouraging them to switch providers to get lower rates on their electricity.

“People were getting confused,” said Hall, the chapter president. “We don’t want people to live in fear of answering the phone.”

State Assemblyman Dan Benson (D-Hamilton) also got complaints: “We were getting stories of misleading claims as well as people receiving multiple phone calls in the same day.”

New Jersey residents were particularly vulnerable to these solicitations during the recent winter, which was unusually cold and snowy, said Hall, 66. “Everybody’s interested in trying to save a few dollars on their utilities today.”

Hall, a volunteer member of AARP New Jersey’s Utility Watchdogs, said most people prefer to contact the third-party suppliers themselves instead of receiving cold calls.

In response to these and other concerns, the New Jersey Legislature this year approved, with near-unanimous support, a bipartisan bill to protect utility customers in the relatively new third-party energy supply market.

Signed into law by Gov. Chris Christie (R), the measure prohibits electric power suppliers from making false and misleading claims to potential customers and limits suppliers’ phone calls to residential customers to once a year when no business relationship exists.

“It was clear that third-party suppliers, as well as their third-party marketers, were either ignoring the Do Not Call List or assuming they had an exemption,” said Benson, one of the bill’s sponsors.

Rates can fluctuate
The state’s deregulated energy supply market has changed rapidly as a recent drop in natural gas prices fostered the emergence of third-party suppliers.

These companies, which purchase energy on the spot market, can sometimes offer lower rates than the state’s four major utilities, but they also have short-term energy contracts that can fluctuate quickly. That can lead to higher rates for users, particularly during extremely cold weather or prolonged heat waves, the state Board of Public Utilities (BPU) has warned.

The new law requires the BPU to adopt advertising and marketing standards for electricity suppliers. “It’s a good piece of consumer protection legislation,” Benson said.

Frank Felder, director of the Center for Energy, Economic and Environmental Policy at Rutgers University, said it was getting easier for new suppliers to recruit customers. “People aren’t used to shopping for electricity, so they think about it very differently.”

The energy supply market is exploding in a number of states, said William Barkas, manager of state government relations for Dominion Energy Solutions, a third-party energy supplier with about 44,000 New Jersey customers. Barkas said he faces up to 30 competitors in some states where a few years ago there were only a handful.

Dominion doesn’t do much telemarketing, Barkas said. It prefers direct mail, which gives potential customers time to read and understand an offer. “We’re supportive of legislation and regulations that make a fair playing field for all consumers,” he said. “It’s too bad you have to pass laws like this to protect consumers, but that’s the way things are right now. There are bad actors out there.”

The BPU offers a primer for consumers on how to shop for an energy supplier. Go to state.nj.us/bpu/residential for more information.

Christina Hernandez Sherwood is a writer living in Collingswood, N.J.