Consumer advocates: Shopping energy costly

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​By Laura Legere

Pittsburgh Post-Gazette

As energy costs surge in Pennsylvania, consumer advocates are highlighting the harm of a practice that was meant to save residents money: shopping around for electricity.

In 2024, residential gas and electric customers who chose their own electricity suppliers collectively overpaid by more than $400 million to heat and power their homes compared to what they would have paid if they had stuck with the default rate at their utilities, according to testimony by the trade organization for the state’s major energy utilities at a state House meeting on Tuesday.

“We’re starting to see customers not reap the benefits that were promised” by the residential energy markets, Andrew Tubbs, president and CEO of the Energy Association of Pennsylvania, said. The group represents regulated utilities in the state.

The statistic is especially remarkable because only about 20% of Pennsylvania residential electric and gas customers shop for their energy suppliers, or less than 1.6 million customers, according to the Pennsylvania Office of Consumer Advocate.

Skyrocketing electric generation prices driven by the rise of demand from AI data centers are expected to cost the roughly 5.1 million residential customers of the state’s major electric utilities an estimated $940 million more for default service this year compared to 2025, according to the Pennsylvania Utility Law Project.

At the session on Tuesday, Elizabeth Marx, executive director of the Pennsylvania Utility Law Project, which advocates for low-income utility customers, said, “Pennsylvanians are losing money in the competitive market” at a time when record numbers of state households had their electricity or gas shut off because they couldn’t pay their bills in 2025.

Her organization found that, between January 2015 and May 2024, residential customers of the state’s major electric utilities who shopped for power paid $2.2 billion more than if they had stayed with the default utility rate, also known as the price to compare.

The $2.2 billion overpayment represents net costs, meaning it factors in those who saved money by switching from the default service and those who paid more.

Affirmative choice

Pennsylvania has had a competitive energy market for the past 30 years. Monopoly utilities that, prior to 1996, both generated and delivered power, retain responsibility for delivering electricity, but separate businesses compete to generate and sell power.

In the residential retail market, that allows customers to shop for electricity or gas products that have different prices, terms or energy sources. Customers who don’t sign up with a competitive supplier are assigned to the default service provided by the utility, whose price is determined by auctions.

The Pennsylvania Public Utility Commission operates two websites, 

PAPowerSwitch and PAGasSwitch, to help shoppers compare competitive offers.

Electric generation costs represent just part of a customer bill. Transmission, distribution and other charges, which are shared across a utility service territory and approved by regulators, represent a growing share of utility costs.

A primary problem that testifiers described on Tuesday are low-price fixed-rate teaser products that residents can sign up for, typically for three months.

At the end of the promotional period, the customers are often rolled over to the supplier’s higher-cost variable-rate products, in which prices can swing dramatically.

Under state law, customers have to take steps to stop that rollover from happening — either by signing up for a different competitive supplier, or enrolling in their utility’s default service.

Pennsylvania consumer protection laws require competitive energy suppliers to notify residents twice in advance of such a switch, but those steps have not solved the problem.

“They will miss the letters that came in, they forget about them, they don’t pay attention,” Darryl Lawrence, the state’s Consumer Advocate, said. Regardless of the reason, “the penalties are harsh.

He recommends that the law be changed so that residential customers are automatically returned to their utility’s default service at the end of their fixed-term contracts unless they affirmatively choose to stay with their supplier.

“This simple change in the law will save Pennsylvania consumers enormous sums of money,” he said.

Ms. Marx supported that change “at a minimum,” but advocated going even further: “The clearest solution after years of excessive prices,” she said, “is to close the residential retail energy markets.”

Legislation introduced in the House and Senate — inspired by constituents who were stuck paying energy bills that were thousands of dollars more than under their original contracts — would change the law so that customers are automatically returned to default service at the end of their contracts unless they act to renew them.

Advocates for retail energy suppliers opposed that proposal, saying that it would end up increasing overall costs.

“Retail competition is not the cause of today’s energy affordability challenges,” Frank Caliva, spokesman for the Retail Energy Supply Association, said. “We believe competitive suppliers offer customers tools to navigate these pressures through innovation, through choice and through real savings.”

Rep. Carl Walker Metzgar, R-Somerset County, said consumers don’t make choices in competitive energy markets based on price alone. Sometimes, they choose a higher-priced product intentionally, such as those offering renewable energy.

He said automatically switching energy customers back to default utility service indicates “you think Pennsylvanians are so dim or inexperienced that they need such controls in a market like this, where we want them to have that competition.”

Advocates for reforming the rules for residential energy markets said there is evidence of predatory practices other than just what the massive overpayment figures indicate.

“I will tell you that we had utilities that have seen that some of these offerings are targeted to ZIP codes that have a large number of customers that are just beyond our low-income programs,” Mr. Tubbs of the utility trade group said.

Sometimes gift cards or gas cards are used as an enticement.

Ms. Marx of the legal aid program said she “could tell you stories all day long” about clients who are paying higher prices for energy products they did not deliberately choose.

“It was not an affirmative choice of the 90-year-old veteran on hospice that we helped get out of a product that he switched from his hospice bed that was close to three times the default service rate,” she said.
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