Are Consumers Benefiting from Competition?

An Analysis of the Individual Residential Electric Supply Market in Massachusetts

A Report by Massachusetts Attorney General’s Office
Commonwealth of Massachusetts
August 2019 update

Executive Summary

In March of 2018, the Massachusetts Attorney General’s Office (“AGO”) issued the first comprehensive analysis of the individual residential electric supply market in Massachusetts(“Massachusetts 2018 Report). Analyzing data from July 2015 through June 2017, that report specifically undertook to answer the questions whether (1) residential consumers in Massachusetts pay more or less for their electric supply when they buy it directly from a competitive supplier rather than through their electric company (such as National Grid, Eversource, and Unitil); and (2) if so, what remedies might be warranted.

The Massachusetts 2018 Report found that, between July 2015 and June 2017, Massachusetts consumers paid $176.8 million more for individual residential electric supply than they would have paid for basic service from their utilities.

This new report, also commissioned by the AGO (“Massachusetts 2019 Update”), updates the original report to include new data for the one-year period beginning in July 2017 and ending in June 2018. Using the same types of data and analytical methodology, the Massachusetts 2019 Update shows that Massachusetts consumers in the individual residential electric supply market paid $253 million more than they would have paid if they had received electric supply from their electric company during the three-year period from July 2015 to June 2018.

Conclusion

The Massachusetts 2019 Update demonstrates that individual residential consumers have suffered large financial losses by directly signing contracts for their electric supply with individual residential electric suppliers. The size of the harm to consumers, the significant loss in all three years of the study, and the continuing loss from one year to the next, strongly suggest that consumer harm will continue.

The scope of this report is limited to the individual residential electric supply marketplace. I do not analyze the commercial and industrial market, where, as a general rule, sophisticated consumers are often expert at purchasing electric supply for their businesses (and have greater negotiating power than an individual residential consumer) and have therefore benefited from competition in the electric supply market. I also have not analyzed the Commonwealth’s variousmunicipal aggregations.

Read the full report by the Massachusetts Attorney General’s Office