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An Uneasy Adjustment

A huge increase in National Grid’s electric rates late last year has prompted some customers to shop around for a better deal. And with a handful of alternate power companies there are options available. But a Pawtucket man found out the hard way: there may be some unexpected charges that come with a change.

If you want to see what the Rhode PUC says about the billing adjustment, click here.




A huge increase in National Grid’s electric rates has prompted some customers to shop around for a better deal. And why not? With a handful of alternate power supply companies out there, there are some options. But one Pawtucket man found out the hard way: there may be some unexpected charges with the change.

Rzepecki: ``I decided was going to switch over…’’

Like many National Grid customers Larry Rzepecki got a letter from North American Power offering cheaper electricity - and reminding him about the substantial rate increase the state approved for National Grid late last year.

Rzepecki who is retired and has two electric meters for his house in Pawtucket, thought it sounded like a pretty good deal.

Rzepecki: ``I agreed to a contract for one year at a rate of 8.99 cents kilowatt hour, versus 10. 72 (cents) which is only a savings of about 1.73 cents per kilowatt hours, but roughly in the vicinity of $10 to $20 per meter.’’

Everything was going well until he got a bill from National Grid two months after the switch.

Rzepecki: ``And when I got the bill I kind of flipped out and started calling National Grid.’’

Rzepecki had received what is called a standard offer billing adjustment. In his case it was $136.35 for one of his meters and $86.78 for another, totaling $223.13.

Rzepecki: ``In Rhode Island right now there are about four or five companies that are active in offering new contracts to residential and small (commercial and industrial) customers.’’

Thomas Kogut is an associate administrator for the Rhode Island Public Utilities Commission, which regulates National Grid’s electric rates and approved a 24 percent increase last year.

Hummel: ``Why the push now for an alternative to National Grid?’’

Kogut: ``I think it’s a market opportunity issue and the market opportunity is generated by volatility. In New England we have a gas pipeline constraint problem. A large part of our electric generation is fed by natural gas, in fact a growing percentage is going to be fed by natural gas. That gas pipeline competes with heating customers for volume on those pipes. As a result in January and February the electric generation prices throughout the region basically go through the roof. If you’re a competitive supplier you now have a target to go against. You can offer in a volatile market maybe a price that’s a bit cheaper.’’

And that’s what hooked Larry Rzepecki - but he had buyer’s regret after being hit with the one-time adjustment charge.

Rzepecki: ``I considered it a deceptive….I used the term deceptive practice, for not letting me know in advance as to I would be hit with these high fees. In other words had I known I would have never switched over.’’

The PUC got an earful from Rzepecki and hundreds of others.

Kogut: ``We have a staff member who has literally been picking up the phone from the minute he walks in to the end of the day and then sometimes appreciably awhile thereafter. He’s been doing that solid for the last two months.  One of the problems is a misperception as to what the billing adjustment is. Some people are saying: `Aha, National Grid is penalizing me, or it’s spiteful act by National; Grid.’’

Hummel: ``For them leaving..’’

Koguts: ``For them leaving. National Grid doesn’t care, they really don’t.’’

Kogut says the adjustment comes because customers in January and February have been paying less per kilowatt hour than it cost National Grid to supply the electricity and the company is simply squaring up the discrepancy. If they had stayed with the company it would have evened out over the course of the year.

Kogut: ``However the perception and the reality is, the one thing we do know is there are hundreds of customers out there who didn’t fully anticipate the fact that they were going to get a bill that would have a line item on it that says `Here you owe $80 , $100, $120 as a residential customer in this true-up. And that’s  a problem. It takes awhile to explain to people what that is. We have investigated a lot of these complaints, specifically on that issue: whether or not there had been disclosure on the billing adjustment; we had a couple of situations we were a bit concerned with some of the suppliers it wasn’t as clear as it should have been, those things have been corrected.’’

We found the disclaimer in the fine print on the back side of American Power’s solicitation letter, but Rzepecki says he’d like to see the state force the companies to tell customers exactly how much they’d have to pay for an adjustment before they decide to switch.

Rzepecki: ``They send out these notice, how are you doing with your neighbors and electric bill - you’re doing better or worse and all that. I think one of the companies, either North American Power but I think first start with National Grid because they’re the ones that charge you the bill, they should tell you up front, if you want to switch companies, here’s what it may cost you.’’

And Kogut offers this advice:

Kogut: ``Read your electric bill - how many of us actually read our electric bill?We do here in this building, but…’’

Hummel: ``That’s your job.’’

Kogut: ``We’re living the dream. We look forward to reading our electric bills.’’

Jim Hummel, for The Hummel Report.