Why Energy Companies Get Away With Overcharging Consumers

Regulators have pledged to crack down on power companies for deceptive pricing practices.

By Laura RiceFebruary 16, 2016 10:31 am

Texas regulators are about to come down hard on power companies. Especially those that try to rope consumers into buying electricity plans that are pricier than they appear. The state-run website Power to Choose was created more than 10 years ago, after Texas de-regulated the electricity market across much of the state.

The site is supposed to help Texans find the best deal, but some on the state’s Public Utility Commission say there are charges that show up on bills that consumers aren’t expecting. Jim Malewitz has been following this story for the Texas Tribune. He says that the problem isn’t new, but is just now starting to be scrutinized.

“A lot of the consumer advocates I talked to have raised these issues for years saying that consumers are having trouble navigating all the options out there on our competitive market,” Malewitz says. “Chairman Donna Nelson raised the issue and said she’s been hearing things about it and she instructed her staff to basically examine the whole site and see whether it’s delivering on its promises to help consumers navigate the power market.”

Energy companies can offer a vast number of plans depending on the zip code. Some of those can look really appealing at first blush, Malewitz says. For example, some plans may advertise a low rate, but that only applies for high usage.

“The companies are trying to get that really low number up front in front of your face and, you know, they might charge different rates if you use different amounts of energy,” Malewitz says. “Other things are, this could be a fixed or variable plan, the plan could basically change unannounced if you’re getting a variable plan.”

What can consumers do to avoid getting hit with unexpected fees? Malewitz says do your research, and look closely at all the fine print.

“You really have to scrutinize what you’re seeing, click on every link on a company’s profile,” he says. “You can also look at complaint data in other parts of the website against a company.”

Listen to the full interview in the audio player above.