The residential retail energy market and products sold by retail choice companies are complicated and often long in the fine print. 

 "Retail energy suppliers give consumers the power to choose their energy supplier. This fosters competition, which may offer lower prices, improve customer service, and add a broader range of energy products, including renewable energy. The ability to choose what works best for your home or business empowers consumers to find plans that best suit their needs and environmental preferences.”   — Quote from Retail Energy Supply Association.RESA’s op-ed

It sounds pretty good, right?

Yet, after 20+ years, consumers just got higher power bills.

Mountains of data reveals the “competitive energy” promises were not delivered. 

Today, about 10 million US families across 13 states have switched to a “competitive” energy supplier. 

Since 2000 - U.S. families have paid $40 billion more for third-party energy supply than they would have with regulated electricity. 

Wait, this doesn't make sense. Why would savvy American shoppers "choose” to pay so much more for home energy.

One simple explanation: The retail energy “gotcha.” 

A very important product detail, a “gotcha,” is rarely, or never, shared with state decision makers, legislators, the media or even their very own residential customers: 

Variable rates. Buried in nearly every retail energy contract is a bait & switch pricing scheme.

A consumer will only see lower rates if they track and re-shop your supplier contract and expiration date very closely. Say you enroll in a 3, 6, 12 or 24 month contract, if you take no action at the end of that term, your retail energy pricing will quietly and legally convert to variable rates. Rate with no regulator oversight and rates the supplier chooses for you.   

Very few retail energy customers seem to know this bait & switch scheme. Most, about 75% of accounts, don’t re-shop their offers. They set-it-and-forget-it, sort of like their regulated utility contracts. Over time, their electricity and gas supply rates just rise up and up. And because retail energy supplier charges for that month's energy use are included on the regulated utility bill, the bill few actually review every month, millions aren't seeing this price increase.  

Since retail energy market rates were ‘deregulated,’ in 13 states, these rates are market driven and have no maximums. Supplies can charge whatever price they want to. 

So about 10 million US residential accounts are switched to retail energy supply for both electricity and gas and pay a lot more. 

I’m curious, if customers get behind on their utility bill, how do retailers making money?

Most deregulated states also passed a sweetheart regulation called “purchase of receivables.” 

As this industry got off the ground in late 1990s, suppliers convinced most states to transfer consumer credit and collections risk to the regulated utilities. That's really to you and me. At the same time, all states consolidated both the regulated delivery charges and the retail supplier charges onto one bill - the regulated utility bill. 

For retail energy suppliers, once a regulated utility, say for example PECO, in the Philadelphia-area, prints a retail supplier's charges on one of their PECO customer bill, PECO is legally required to buy up that customer’s retail energy charges from the supplier, pay the supplier, even if the supplier’s customer didn’t pay their PECO bill. PECO is then legally responsible for all the collections activity - mailing termination notices, disconnections, account reconnections, new deposits. The worst case is when a utility ends up moving this amount to  "bad debt" which PECO customers pay that tab. 

So now you know how the US retail energy market came to be a $40 billion rip-off: 

• No retail energy rate regulations or oversight. 

• Suppliers can legally go door-to-door and sell low rates, then bill higher variable rates. 

• Retail energy suppliers bear little, to no, credit and default risk due to purchase of receivables. We think that makes charging high rates even more appealing. 

• Lastly, Have you read your utility bill lately? Or really read the fine print on contracts for subscriptions? Well, neither do millions of retail energy customers.

Theres much more to the retail energy story if you’re interested. 

• How the Texas market is funding this industry

• Learn how retailer had to rely on door sales and how the practice became predatory. 

• How the “renewable” offers are really greenwashing

• How the industry has consolidated into 3 big energy power brokers. Well-funded and powerful. 

• Learn how new massive financial players like Goldman Sachs and Brook stone VC are entering into the market.