This winter has been too cold for most people, but it's been especially tough on homeowners buying their energy from third-party providers. For many of them, monthly utility bills have about doubled.

About a decade ago, residential energy deregulation gave us the opportunity to choose different sources for the electricity and natural gas delivered by Atlantic City Electric and South Jersey Gas.

A small number of homeowners chose power derived from renewable sources because they thought it was the right thing to do and were willing to pay more for such power.

Most homeowners who chose a non-utility supplier of their gas or electricity did so to try to save some money. Typically such suppliers offer rates for kilowatt hours or therms of energy that are a little lower than what the utilities charge, buying natural gas and electricity in the spot market and reselling it to consumers.

The savings weren't a lot, since this is just the cost for the energy supplied, not the cost for delivering that energy. But they added up.

Then came the Polar Vortex and the coldest winter by far since energy deregulation. Spot market energy prices soared.

Natural gas, for example, had been just above $4 per million British thermal units wholesale the first week of the year. The price jumped to just above $8 three times since then, the U.S. Energy Information Administration says. The price of electricity soared as well.

If consumers were only billed for higher wholesale costs, that would be fair. But since third-party providers can charge whatever they choose, you can't blame homeowners for suspecting that some providers have jacked up rates and blamed it on the weather.

Open and competitive energy markets should lower costs to consumers in the long run. But markets still need rules to function properly.

We suggest legislators and the state Bureau of Public Utilities make the market for third-party energy suppliers fairer and stronger by doing three things:

Require that consumers choosing a variable rate sign a document clearly stating the rate is variable and can go up dramatically. Right now, consumers can agree over the phone and may not be sure what they're agreeing to.

Require energy providers (including utilities) to show the history of their rates. Markets only work if participants have enough information to reasonably choose.

Investigate bad actors among third-party energy providers. That could address the worst situations and send a powerful message to the rest of the industry that deregulation doesn't mean no one's watching and anything goes.

A deregulated energy market could help restrain high costs consumers pay in New Jersey, but only if we ensure it's working properly.


Welcome to the discussion.

Keep it Clean. Please avoid obscene, vulgar, lewd, racist or sexually-oriented language.
Don't Threaten. Threats of harming another person will not be tolerated.
Be Truthful. Don't knowingly lie about anyone or anything.
Be Nice. No racism, sexism or any sort of -ism that is degrading to another person.
Be Proactive. Use the 'Report' link on each comment to let us know of abusive posts.
Share with Us. We'd love to hear eyewitness accounts, the history behind an article.