Trystan Casey
Third-party electricity suppliers are an alternative to mainstream providers, offering consumers the promise of big savings. However, it's important to be cautious when dealing with these suppliers, as some engage in slamming, an illegal practice of signing consumers up without their knowledge. In some places, such as Maryland, a signed contract is required, while in others, a verbal agreement is sufficient. Oversight powers of third-party suppliers are granted to certain bodies, such as the California Public Utilities Commission, to regulate and address potential issues like slamming.
What does 3rd-party electric mean?
| Characteristics | Values |
|---|---|
| Definition | Third-party electricity suppliers are alternative electricity providers that are not the default supplier in a given area |
| Pros | Third-party electricity suppliers often promise big savings |
| Cons | Some consumers have been signed up for third-party suppliers without their knowledge, an illegal practice called "slamming" |
| Prevention | Be careful what you share with door-to-door salespeople. If they ask to see your utility bill, refuse to show it |
| Oversight | In 2014, a law was passed that gave the California Public Utilities Commission oversight powers of third-party gas suppliers |
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What You'll Learn
Third-party electricity suppliers
In the US, all energy markets were regulated until the 1990s, meaning consumers could only receive electricity from their local or incumbent utility company. However, policymakers eventually decided that this gave utilities too much power over electric prices, so new laws were passed to allow for deregulation and, in turn, non-utility companies to sell electricity. Fourteen states now have third-party suppliers, including Massachusetts, which deregulated its energy markets in 1997.
Third-party suppliers tend to have more flexible contracts than utility companies, but they also have a history of exploiting vulnerable consumers, including low-income individuals and communities of colour. They may advertise that they will save you money on your electric bill, and they sometimes do, but this is not always the case. According to a 2023 report, people in Massachusetts who bought their electricity from third-party suppliers lost $525.5 million compared to those buying directly from utility companies between July 2015 and June 2021.
If you have solar energy, it is generally recommended that you do not switch to a third-party supplier as you will lose out on net metering, which gives you credit for kWh produced by your solar system that were not used at the time of production.
If you are considering switching to a third-party supplier, you can find licensed suppliers in your area by checking Public Utility Commission websites and City or utility company sites. Be sure to study the contract terms closely and monitor your utility bills to ensure you have not been illegally signed up for a third-party supplier without your knowledge, a practice known as "slamming".
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'Slamming' by third-party suppliers
Third-party electricity suppliers are an alternative to the default electricity providers in a given area. While many consumers opt for third-party suppliers because they promise significant savings, some people are unknowingly signed up for these services—an illegal practice called "slamming".
Slamming is when a customer is switched to a third-party supplier without their consent. It is a form of fraud, and it can happen in various ways. For instance, door-to-door salespeople may ask to see your utility bill or account number, and then use that information to set up an account in your name without your permission. In other cases, telemarketers may pose as your utility company and trick you into agreeing to switch providers. Sometimes, slamming occurs when a customer is invited to take a survey or enter a contest, not knowing that the fine print on their entry form authorises a switch to a new carrier.
To identify slamming, monitor your utility bills. If your supplier has changed to a company you don't recognise, you may have been a victim of slamming. Other signs include unusually high bills, or unexpected notices to verify a change in your energy service. If you suspect slamming, notify your energy supplier immediately.
To prevent slamming, be cautious about what information you share with door-to-door salespeople or telemarketers. Do not show them your utility bill or give them your account number. Also, always confirm who you are speaking to before agreeing to anything. By law, third-party suppliers in some states, such as Maryland, must have a signed contract from the customer. In other states, like Washington D.C. and Virginia, a verbal agreement is sufficient.
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Oversight of third-party suppliers
Third-party electricity suppliers are companies that sell electricity to residential and business customers but are not the incumbent utility company. They buy energy from the utility company in bulk and sell it to consumers at a different rate, often initially lower than the utility company's rate.
More than half of US states have deregulated their electricity markets to allow third-party electric suppliers to serve customers. In Connecticut, for example, the Public Utilities Regulatory Authority (PURA) oversees third-party electricity suppliers to ensure fair and reasonable utility costs for residents. PURA has been given discretion to prevent "hardship utility" customers from being switched to any third-party competitive electric supplier. In 2015, it banned variable-rate electric contracts in Connecticut, the first time this was done in the US. Variable electricity rates can produce unpredictable cost increases that negatively impact customers.
In Maryland, third-party suppliers must have a signed contract from the customer, whereas in Washington, D.C., and Virginia, a verbal agreement is sufficient.
Before switching to a third-party supplier, consumers should study their power consumption needs and contract terms, and be aware of potential pitfalls such as "slamming", where consumers are signed up for a product or service they did not contract for. They should also be aware that if they have solar energy, they may lose out on net metering, which gives credit for kilowatt-hours produced by their solar system that were not used at the time of production.
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Alternative electricity providers
Third-party electricity suppliers are an alternative to the default electricity providers in a given area. In some places, such as Texas, all customers must choose their electricity provider from the available options. In other places, such as Michigan, Montana, Nevada, Oregon, Virginia, and Washington, only non-residential utility customers can choose their electricity provider.
Some consumers opt for third-party electricity suppliers because they promise significant savings. However, it is important to be cautious when considering alternative electricity providers, as some companies engage in "slamming," an illegal practice of signing consumers up for a product or service without their knowledge or consent. To prevent this, consumers should be cautious about what they share with door-to-door salespeople and refuse to show their utility bills.
There are online platforms, such as Choose Energy, that allow consumers to compare rates and plans from different electricity, natural gas, and renewable energy providers. These platforms can help consumers make informed decisions and find the right plan for their needs and budget.
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Transmission line access
Third-party electricity suppliers are an alternative to the default electricity providers in a given area. In the context of transmission line access, large electric customers can access electricity directly from transmission lines.
Transmission lines are specialised cables or structures designed to conduct electromagnetic waves in a controlled manner. They are used to carry high-frequency electromagnetic signals with minimal reflections and power losses. The construction of transmission lines involves impedance matching to prevent reflections and power losses. Transmission lines have uniform cross-sectional dimensions, resulting in uniform impedance, which is essential for preventing reflections.
There are various types of transmission lines, including parallel lines (such as ladder lines and twisted pairs), coaxial cables, and planar transmission lines (like striplines and microstrips). RF engineers commonly utilise short segments of transmission lines to construct distributed-element circuits, which serve as filters.
It's important to note that working around transmission lines requires adhering to mandatory safety processes. Before commencing any work near transmission towers and lines, it is necessary to request ROW authorisation from the relevant power company. This ensures that a safe work plan is established, mitigating risks associated with power lines.
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Frequently asked questions
Third-party electricity refers to suppliers that are not the default provider in your area.
Third-party suppliers often promise big savings for consumers.
Some consumers have been signed up for third-party suppliers without their knowledge, a practice known as "slamming".
Be careful what information you share with door-to-door salespeople. If they ask to see your utility bill, refuse to show it.
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