November 16, 2018
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New electricity shopping sites mislead customers, watchdog warns

Darren Fishell | BDN
Darren Fishell | BDN
A new website for rating and reviewing electricity plans, pictured here on a smartphone, recently received a license to operate as an electricity broker in Maine. A consumer advocate in Connecticut, where the site has already launched, said it offers a misleading view of the electricity market.

In a private electricity industry that’s bilked at least $77 million from Maine residential customers, new entrants are trying to sell on something lacking: trust.

A series of websites and services are cropping up to help customers navigate the electricity market, providing price listings from different companies in one place. But the top consumer watchdog in Connecticut — a more mature market for home electricity sales — is skeptical the sites have shoppers’ best interests in mind.

The sites have problems, said Connecticut Consumer Counsel Elin Katz, ranging from misleading to possibly fraudulent claims. A Bangor Daily News review found the customer-facing sites provide incomplete price listings and questionable business ratings.

The new marketplaces tout their independence as impartial clearinghouses for the best prices, but they can be limited by their own relationships with electricity suppliers. One newcomer that runs a website geared toward business customers, for example, is owned by an energy conglomerate that operates a 543-megawatt gas generation plant in Veazie.

Generally, the marketplaces’ revenue depends on customers switching away from the state-regulated standard offer price to a private electricity seller. They receive commissions for customers who sign up through their websites.

Two such websites — run by Electricity Ratings LLC and EnergyBot — provide online marketplaces and a review forum for energy plans, and recently received permission to operate in Maine. Electricity Ratings focuses on attracting home customers. EnergyBot focuses on small business customers but plans to add residential listings later.

A third newcomer, Arcadia Power, promises to monitor the market for home customers and sign them up only when they have the potential to save money.

These companies registered as electricity brokers, a type of entity that has historically represented customers in shopping for electricity suppliers. It’s more common for large energy users, such as paper mills or small factories, to hire brokers to find them customized energy deals.

The websites of Electricity Ratings and EnergyBot don’t operate as traditional brokers, however. Instead, they provide a portal for customers to view and select energy plans. Every time someone signs up for a plan after clicking through an Electricity Ratings listing, the company receives a commission from the power supplier.

It’s not clear if EnergyBot has similar arrangements. The company did not disclose that information to regulators or respond to a request for comment.

The companies join the price listing site Choose Energy, which has been operating in Maine since 2012 and in 2017 was acquired by the digital advertising company Red Ventures.

While the sites promise the best rates, they offer only a limited view of the market.

“They’re just trying to sell you one of four suppliers who pay them,” Katz said, after reviewing the Connecticut-focused Electricity Ratings site with staff from her office.

Matt Oberle, founder of Electricity Ratings LLC, said his company aims to be the Yelp or Angie’s List for electricity suppliers, providing company listings and a ratings and review system.

But Oberle said he can’t list the prices of suppliers with whom he does not have a contract. And so the only companies listed are those that have agreed to give his business a commission for every customer who signs up through his network of sites.

Oberle’s company, with sites in multiple states, on July 13 received approval to operate in Maine. He said the company aims to provide more complete information about suppliers and to develop the trust of customers as they shop around.

“The markets work best when customers are as well educated as possible,” Oberle said.

But Katz said the sites can’t fully inform customers without providing the current standard rate, set annually by regulators each Jan. 1. Electricity Ratings does not list that rate.

“If the standard rate isn’t there,” Katz said, “[customers] wouldn’t know whether they’re saving money or not.”

Competition in the electricity supply market was intended to lower prices, which it’s done for larger consumers. But residential and small business customers have paid more by shopping for their own power, compared with taking the standard rate set by the state.

A Bangor Daily News investigation and study by the Maine Public Utilities Commission found those suppliers cost customers $77 million more than if they had taken the standard price from 2012 to 2016.

To sell its higher-priced electricity, retail suppliers have at times used questionable advertising and marketing tactics, quietly re-enrolling customers at higher rates and using door-to-door salespeople who allegedly presented themselves as utility workers to make sales.

Oberle said he is well aware of those types of abuses in other states, adding that his company offers a solution, with more information and more competition weeding out bad actors.

But Katz, in Connecticut, isn’t so sure the new marketplaces will help.

The newcomers

All three companies recently got approval to operate in Maine, offering different services. Electricity Ratings and EnergyBot both have sites that list offerings from different power suppliers. EnergyBot got its broker license July 13 but has not started listing Maine rates.

Arcadia Power offers a different model, telling regulators that it monitors offers for residential customers and switches them to a retail supplier only when the price beats the standard offer. Arcadia is the only such company that actually enrolls or unenrolls customers in power contracts.

Arcadia, which received its broker license June 14, is also the only company that makes reference to the standard offer price, telling regulators it only switches a customer to a retail supplier “once we have received competitive bids and found a supplier with a rate lower than the current [standard offer] rate.”

Kiera Reardon, a consumer advocate with the Maine Public Advocate’s Office, in February said that other companies have tried to offer services to Arcadia’s in Maine “but their success was limited and they soon left the marketplace.”

In marketing materials, EnergyBot makes a proposal similar to Oberle’s, with Electricity Ratings. A cartoon commercial for EnergyBot says: “The industry hasn’t made it easy to compare plans on an apples-to-apples basis. That’s where EnergyBot comes in.”

But a search conducted this week at EnergyBot revealed the site’s limitations. In the ZIP code that includes New York’s utility regulator and capitol in Albany, the site listed two suppliers for a 12-month plan. A site run by New York state regulators produced offers from 24 suppliers.

EnergyBot, a business name used by Blitz Ventures Inc., is ultimately owned by the publicly traded Vistra Energy Corp., which earlier this year bought Dynegy Energy Inc. Dynegy, which owns a natural gas generator in Veazie, sells electricity to home and business customers in Massachusetts but does not sell retail power to Maine customers.

A spokesperson for EnergyBot did not respond to a request for comment.

Bad reviews

While services like Arcadia’s rely on computers to monitor markets and make purchasing decisions, Electricity Ratings’ sites rely on old-fashioned word-of-mouth. The site relies largely on customer reviews of companies, supplemented with other data about providers to make recommendations to users.

But new sites show users reviews from other states, where a company’s power offerings likely differ. Maine’s site has not yet launched, but Oberle said the company’s new sites feature ratings by customers in other states.

“It took me almost 10 years to cultivate the thousands of reviews we have in Texas. When we go into other states, it takes time to solicit local reviews,” Oberle said. “In the interim, we will show reviews from other states as long as it is the same company and same brand.”

When there are sufficient local reviews, he said, the company will display only those for individual state sites.

Katz, in Connecticut, said the cross-posting of reviews from other states struck her “as misleading, and quite possibly fraudulent” under truth-in-advertising laws, as the plans and offerings may differ by market, muddying how relevant a company review from a customer in Texas would be to a customer in New England.

Oberle said its initial listings in Maine will likely include North American Power, Xoom Energy, and potentially Agera Energy, as well as Life Energy and Reliant Energy. The company also has deals in other states with Spark Energy, which owns Maine’s largest supplier, Electricity Maine.

A website maintained by the Maine Office of the Public Advocate lists nine suppliers actively offering residential plans in the state.

A Bangor Daily News review found the same five-star review from 2012, by “Jaime,” at the top of Electricity Ratings sites for eight different states. The review, for Constellation Energy, simply said: “I couldn’t be happier.”

Electricity Ratings’ pages also prioritize positive reviews, listing the highest ratings first.

The rating system also depends on the company’s own independent assessment, factoring in regulatory complaints, customer service wait times “and dozens more data points,” according to a company website. That independent assessment is often out of line with customer reviews, but with little explanation why.

For instance, Spark Energy, which owns Maine’s largest supplier, Electricity Maine, has average customer reviews of 1.6 out of 5 at Electricity Rating’s site for Connecticut, ctenergyratings.com. But the site’s overall ranking, factoring in other variables, is 3.8 stars out of five.

Other listings show discrepancies, such as the reviews for supplier Public Power. While half of the eight ratings for the company are less than perfect, the company’s average customer rating on the site shows perfect 5’s. Oberle did not respond to a request for comment about the rating system.

Maine Focus is a journalism and community engagement initiative at the Bangor Daily News. Questions? Write to mainefocus@bangordailynews.com.

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