Twenty-Five Years After Maryland Deregulated Its Retail Energy Market, a Huge Win Looms For Energy Justice Advocates

Laurel Peltier sat cross-legged at a table strewn with papers as she carefully scanned a utility bill she clutched in her right hand.

Henry Burlock, 57, a short, stout African American man sat to her left, wearing a chef’s apron and thick prescription glasses that accentuated the perplexed look on his face as he listened to Peltier describe what he needed to fix in order to avoid having his electricity cut off. 

Peltier, who calls herself an energy justice advocate, works as a volunteer here at Cares, a local social services nonprofit in north Baltimore’s Govans neighborhood, helping people like Burlock fight back against deregulated energy retailers, also known as “third-party suppliers,” who have often preyed on low-income people, offering them low introductory rates before increasing them, massively, if a payment is missed. 

On Thursday, much of that stands to change. 

Maryland fully deregulated its energy market in 1999, allowing these retailers, also known as “third-party suppliers,” to purchase energy from the wholesale market and sell it to businesses and residents at a different rate, on the theory that such competition would drive down rates. 

Instead, energy advocates like Peltier and some state legislators have long maintained that an unsupervised deregulated energy market opened the door to deceitful bait-and-switch practices by the retail suppliers. One recent study found that retail energy has cost mostly low-income consumers more than $1 billion in utility overpayments since 2014. Through another common practice called “slamming,” sales representatives often use customers’ utility account numbers to take over their accounts without their consent. 

“You don’t use a lot of gas, but Aligo Energy charged you 75 percent more,” Peltier said, shifting her gaze away from the electric bill and making eye contact with Burlock.

 “And then Park Power?” she asked, almost pleadingly. 

She got up to get him an application for a state program that could help get him out of arrears. ”Now, let’s get you on energy assistance,” she said.

Aligo Energy and Park Power did not respond to multiple requests for comment. 

It was past 10:30 one morning last week and bright sunlight flooded Cares’ busy reception area. The sign-in sheet on the reception desk was already half full. 

Like Burlock, almost everyone present was behind on their utility bills. Some of them sat wearing half-blank stares, not knowing what would happen next. Others flipped through the piles of bills and papers they brought with them, waiting to be heard. 

Peltier has heard countless such stories in the past seven years since she started volunteering at Cares. But that’s not all she’s been doing. 

For much of that time, she’s also been pushing at the state legislature in Annapolis to reform Maryland’s deregulated retail energy market. And now, what’s become her life’s work is closer to bearing fruit than ever. 

On April 8, the Maryland General Assembly passed a far-reaching reform bill and sent it to Gov. Wes Moore’s desk for signing. 

The bill includes a raft of helpful provisions, including new licensing requirements and expanded oversight by the Maryland Public Service Commission coupled with additional fines and penalties to protect consumers. 

State Sen. Malcolm Augustine, a Democrat from Prince George’s County, said previous attempts to correct the predatory behavior of energy retailers forced the legislature to restructure the marketplace. 

“The legislation seeks to return over $150 million a year to the pockets of hardworking Marylanders, over 300,000 of them,” Augustine said. “We crafted the legislation to address the problems and concerns associated with the retail energy market while still maintaining a competitive marketplace that will work for Marylanders.” 

He said the retail energy lobby was working behind the scenes in hopes of forcing Moore to veto the legislation, which Peltier said also caused her to lose sleep. 

“A hundred and fifty million dollars a year is a lot of money. So, I am not surprised that there are entities working as hard as they can to keep that level of money flowing,” Augustine said. “But it’s not good for Maryland. I feel very strongly that the legislature has spoken very clearly with overwhelming majorities in support of the legislation. I think that we have strongly made that case and I’m confident that the governor will agree.” 

Chris Ercoli, of the Retail Energy Advancement League, an industry group representing energy retailers interests, called the legislation ill-advised. “The Retail Energy Advancement League has requested that Gov. Moore veto Senate Bill 1,” he said. “It will remove customer access to clean energy plans and EV charging products, block companies from competing with the utility and backtrack Maryland’s decarbonization progress.” Ercoli did not explain how the legislation would hinder the state’s decarbonation efforts or cut access to clean energy plans or EV charging equipment.

In emailed remarks, Ercoli denied that energy retailers were overcharging customers and said that the legislation would establish a price cap lower than that charged by the state’s primary regulated utility, Baltimore Gas & Electric, “while also introducing provisions that make it more expensive to conduct business and further stacking the deck in favor of the utility.” Nearly half a million Maryland consumers, who have chosen a retail energy provider, will be affected by this legislation, he added.

Countering the industry’s claim, David Lapp, Maryland’s People’s Counsel, an advocate for ratepayers, said that “Senate Bill 1 is vital to protect consumers from harmful business practices that have cost customers tens of millions of dollars over the past two decades.” In emailed comments, Lapp said the bill was critical for ensuring the integrity of the retail energy markets and furthering the state’s environmental goals because the legislation requires energy retailers to prove to the Maryland Public Service Commission that their clean energy products are sourced from real renewables, adding to the state’s net clean energy import.

“Over the past decade, our office has investigated and participated in significant litigated cases against more than a dozen retail suppliers who charged exorbitant rates to thousands of Marylanders,” Lapp said, explaining that many of those targeted by retail suppliers were limited-income households, elderly and disadvantaged individuals and families. 

“The regulatory gaps are numerous and require this corrective legislation,” he said. 

A Deregulated Energy Market That Went Sideways

As the number of walk-ins swelled at Cares, Peltier handed Burlock the paperwork he needed. “You can fill out the paperwork and bring it next week. And we’ll get you signed up for energy assistance,” she said. 

Sensing a way out of the quagmire, Burlock smiled and nodded. 

They high-fived. Burlock headed for the exit and Peltier turned to check the next person on the sign-in sheet, Lauren Grayson. 

A 34-year old African-American woman with short, bleached hair, Grayson is the mother of two boys and a girl and lives in northeast Baltimore’s Idlewood area. She said she owed $1,256 in utility bills and feared her electricity might be cut off at any time. 

She sat down with Peltier around a coffee table setup in the back room behind the reception area, away from the bustling front desk. Peltier scanned her bills and quickly found the problem. 

“Do you know why your bill is so high,” Peltier said. 

“Yes, because I have an old gas furnace,” Grayson said. 

“No, because you’re using a third-party supplier called Green Choice,” Peltier said. 

Grayson was shocked. “I don’t even open doors for the salespeople trying to sell things because I’m aware of the tricks they pull. But my account got switched?” she said, sounding baffled. 

“You’re going to need copies of your ID. And we’re going to need your pay stubs for the last 30 days,” she told Grayson, explaining that she could get help from the same fund she was helping Burlock sign up for, energy assistance. The $100 million program managed by the state subsidizes energy bills. 

One big problem with the state’s deregulated utility market is a regulation known as “purchase of receivables,” Peltier said, which the Maryland Public Service Commission had approved in 2010. It guaranteed that the energy retailers would get paid by the regulated utility even when their customers defaulted, creating a big incentive for energy retailers to charge higher rates. 

“The new law that the Maryland General Assembly just passed eliminated the purchase of receivables, which is great news for people like Grayson and Burlock,” Peltier said. 

Another reform provision in the legislation is that anyone can call Baltimore Gas & Electric and say they no longer wanted to remain with the third-party retailer, which can be particularly helpful to older people who can be easily confused by energy sales pitches, Peltier said. “That way even if someone switched their account, the system will reject it,” she said, almost giddily. 

‘Marylanders Should Not Be Taken Advantage Of’

Sen. Augustine has been scrutinizing energy and utilities policies for the past six years as a member of the Senate Education, Energy, and the Environment Committee. 

He said in an interview with Inside Climate News that the data clearly showed that people were paying more than they should have and also revealed abuses, such as deceptive marketing and sales practices. These, he said, were reported to the Maryland Public Service Commission and the Office of the People’s Counsel. 

“Over the years, I talked to people in the [energy] industry and retail suppliers and I said to them that Marylanders should not be taken advantage of. So, you all need to fix this,” he said.

He said that his calls were ignored, which became the genesis of SB1.

Augustine said that while there had been incremental attempts to correct the market, they simply did not provide the competitiveness that the legislature was originally sold on for creating this market.

“As long as these retail energy suppliers are able to provide savings for Marylanders, we want them in Maryland and they’re still going to be able to function just fine in our state,” he said. 

He said that the bill passed by the General Assembly would prohibit energy vendors from charging above the standard utility rates if they are selling the same product. At the same time, a carve out has been created that allows energy companies to charge higher rates if they are selling “green” electricity sourced from renewables. 

“We want to encourage renewable energy…solar power, wind power…and Marylanders are willing to pay a little bit more for that,” Augustine said. “But we want the Public Service Commission (PSC) to make sure that people are not paying more than they should and that they are actually paying for the renewable energy and not being tricked into thinking that they’re buying something that they’re not.”

“People shouldn’t be working two, three jobs and not be able to keep the lights on…”

Augustine shared the concern expressed by advocates like Peltier that the retail energy lobby was working overtime to convince the governor to veto the legislation. 

Del. Brian Crosby, a Democrat from St. Mary’s County, who co-sponsored the bill in the House, said he, too, was aware of the lobbying efforts in Annapolis to get the governor to veto the legislation. 

“It’s Senate Bill One. And it passed with a very strong majority in both the chambers. We’ll have to wait and see,” Crosby said, adding that the self-reported data from the industry showed that households were overcharged billions of dollars for energy, which was also what constituents and advocacy groups told him over the years. 

“People shouldn’t be working two, three jobs and not be able to keep the lights on, or commute for an hour to and from work to make sure their kids have clothes or the internet, to succeed in their homework,” Crosby said. “And sometimes they’re paying three times more for energy than the person next door. That’s not okay.” 

He said the new licensing requirements and the price cap on rates will ensure that retailers behave fairly and still have an advantage because they can enter into longer purchase agreements with utilities when the energy is cheaper, which would allow them to be competitive and make a profit. 

Late Tuesday, word came down from Moore’s office that he intends to sign the legislation on Thursday. 

The Magic Sauce

As she juggled between computer screens at Cares, making print outs and checking utility accounts, Peltier said that a number of factors had to align for the legislation to pass. “It’s great to see hard work actually meet great legislation. And to see the bill get as far as it did because it reins in an extremely powerful industry,” she said.

The change of political administration from Gov. Larry Hogan, a Republican, to Moore, a Democrat, was a huge help, she said, as was having committed legislators with seats on the right committees who also cared about their constituents to sponsor the bills.

“I’m really pleased that the entire House and the entire Senate, led by two amazing legislators, passed this bill, which is a top to bottom fix. And now it’s now sitting on the governor’s desk,” she said. “It still feels surreal to me.”

Peltier felt that accessing billing data was fundamental to legislative success, particularly after a recent Berkeley Energy Institute report found that third-party suppliers targeted Baltimore’s lowest income neighborhoods through direct marketing, and the highest rates were paid by Hispanic, Black and immigrant families. 

Jenya Kahn-Lang, the author of the study, found evidence that suppliers charged customers different prices based on their attention and search behavior. “Firms can raise prices on existing customers that aren’t paying attention, they can offer low prices to consumers who search more, and charge higher prices through in-person marketing,” Kahn-Lang told Inside Climate News. 

The areas with household income below $10,000 paid particularly high prices, the study found, as did the neighborhoods with a large proportion of non-citizens, residents without high school diplomas and Black, mixed race and Latino and Hispanic residents.

Peltier called the study a “huge gift” because it clearly showed through economic modeling that third-party retailers relied primarily on direct sales to low-income households for their profits. 

A 2022 report had similarly found that low-income families in Maryland faced untenable burdens from high energy bills, with households on the Eastern Shore and in Baltimore City having the highest gross energy burden—paying 15 percent of their annual income for energy needs. The average statewide gross energy burden is 12 percent for all low-income households, the report found. 

Nearly 450,000 households in Maryland—21 percent of the population— are estimated to be low-income, with over 380,000 households eligible for energy assistance benefits. Between 75,000 to 100,000 households in Maryland get state energy assistance to help pay their utility bills, according to an estimate. 

The new legislation wasn’t Peltier’s first win in Annapolis. In 2021, the Maryland General Assembly passed legislation prohibiting retail suppliers from charging customers on energy assistance more than what a regulated utility would charge for gas or electricity. About $15 million from the state energy assistance grants was flowing annually to third-party suppliers at the time, she estimated. 

“I’ve already seen a difference in six months because I don’t see the same people coming to Cares anymore because not a single third-party supplier would commit to charging less than the utility’s standard rates,” Peltier said. “So, it’s working.”

The current retail choice reform bill will give back $220 million every year to Marylanders, Peltier said. It will also bar energy retailers from overcharging customers and set the conditions for fair competition with value-added energy products, she added.

“Those savings will go right back in consumers’ checkbooks because they’re not going to be ripped off year after year after year. Now we can work on bigger problems like the rates are too high, people’s energy usage is too high,” she said.