WASHINGTON—Today, U.S. Senator Chris Murphy (D-Conn.) wrote a letter to the Chairwoman of the Federal Trade Commission to request that the Commission better protect electric consumers in Connecticut. Recently, there have been a number of reported instances of abusive rate hikes issued by some independent electrical suppliers in Connecticut.  In these instances, electrical suppliers offer power supply contracts with lower rates, but fail to fully disclose the potential for significant rate hikes in the case of extreme weather fluctuations. Electricity suppliers end up charging some consumers hundreds more than they previously paid other utilities for electricity.

“Too many consumers in Connecticut have opted into power supply relationships without proper disclosure of the risks involved and the ‘sticker shock’ when rates unexpectedly spike,” said Murphy. “In a cold-weather, high-cost state like Connecticut, these issues are enormously important.  I am hopeful that the Commission can help promulgate guidance to better protect electric consumers, and advise other state regulators as to the risks that these third-party suppliers can pose to consumers. As Connecticut state regulators hold hearings and consider revising regulations and disclosure requirements governing these third-party suppliers, I am hopeful that the FTC can do its part to help other consumers learn the lessons that too many of my constituents have been forced to learn.”

The full text of the letter is below:

The Honorable Edith Ramirez

Chairwoman

Federal Trade Commission         

600 Pennsylvania Avenue, NW

Washington, DC 20580

Chairwoman Ramirez:

I write today to direct the Commission’s attention to the growing instances of potentially abusive rate hikes by third-party independent electrical suppliers in my state of Connecticut. Too many consumers in my state have opted into these power supply relationships without proper disclosure of the risks involved and the “sticker shock” when rates unexpectedly spike. In a cold-weather, high-cost state like Connecticut, these issues are enormously important.

While Connecticut has two publically-owned electrical utilities, the state also allows residents to select a third-party independent power supplier for their retail power needs. Thousands of Connecticut residents have been switched to these suppliers, sometimes through phone solicitations without the consumer’s express consent.  However, more and more Connecticut residents are reporting that these companies’ introductory “teaser” rates and murky consumer disclosures fail to alert their customers to the potential downside rate risk. Such variable-rate electric suppliers can expose consumers to vast fluctuations in energy costs. Further, many consumers must wait months until the end of their next billing cycle to revert back to one of the state’s publically-owned utilities.

An especially cold, harsh winter has caused prices to rise and fuel supplies – especially natural gas – to become severely constrained across our region. However, retail electric rates that are sometimes triple that offered by our state’s utilities are simply unjustifiable, regardless of gas constraints. Marketing of such power arrangements clearly is not being regulated sufficiently to protect consumers at present.

While I understand that these supplier-consumer relationships are principally regulated at the state level, I am hopeful that the Commission can help promulgate guidance to better protect electric consumers, and advise other state regulators as to the risks that these third-party suppliers can pose to consumers. As Connecticut state regulators hold hearings and consider revising regulations and disclosure requirements governing these third-party suppliers, I am hopeful that the FTC can help other consumers learn the lessons that too many of my constituents have been forced to learn.

Thank your for your attention to this important matter.

Sincerely,

CHRISTOPHER S. MURPHY

United States Senator