Sunday, March 2, 2014

Our Retail Electricity Bill Just Killed Our Summer Vacation

Should protection from ignorance kill consumer choice?

Our Retail Electricity Bill Just Killed Our Summer Vacation:
What would you do if a salesperson came to your door offering you the opportunity to gamble on weather derivatives – financial contracts based on the weather?  You could bet on rainfall (farmers) or snowfall (ski areas do it). Or you could bet on temperature. If it’s a warm winter, you win.  A cold one?  You lose.  Not many ordinary people would probably take that bet – it’s too unfamiliar, maybe too risky, and far beyond their comfort zone. Might as well go to Vegas.
Well, it turns out that hundreds and maybe thousands of people did unknowingly take a similar bet this winter in the northeastern U.S,. and they lost big time.
...customers’ wallets got badly dented, and the pain is evident. Here are justtwo letters that the informative website Energy Choice Matters pulled from various social media sites:
Thanks to your price gouging, we (a family of 4 with 2 hard-working parents) will not purchase our tickets to a summer amusement park because we now can’t afford it. We will, instead pay our, 4.5 times more than usual power bill. Thanks for screwing the hard-working middle class yet again! 
This energy company offered my mother-in-law with an introductory 7.9c per KWH rate. In December (sic) the rate increased to 10.9c per KWH. In January, my mother in law received a $750.00 electric bill.. When I examined the bill, she was charged 44.9c per KWH. This is a 400% increase in one month. They did not provide her with any warning of the rate increase. I will be contacting the PA attorney general to file a complain.
The interesting thing here is that the retail supplies who sold them this product probably didn’t make much, if any money. They were simply passing along their market-based costs. But it doesn’t matter because the vacation got ruined, the mother-in-law is irate, and now the AG is involved. This is bad news for the whole notion of retail electric energy choice, which is too bad. Choice is a good thing, if handled properly and if customers are educated as to what they are buying and can take action in real time.
 The entire article, at Forbes, is worth a read, possibly in conjunction with a previous entry on this blog, Emergency energy aid runs low: time-of-need, time-of-use, etc. (and/or the Small but enthusiastic band of users finds big savings in 'dynamic pricing' article cited there).

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