Energy-bill shocks follow cold weather

Higher energy use — and rate spikes for some — increase costs, one ripple among many from the unusual winter

  • Greg Economou sits in the living room of his modest abode with a utility bill of over $400 that he recently paid Wednesday, Mar 19, 2014.
Greg Economou sits in the living room of his modest abode with… (Karl Merton Ferron, Baltimore…)
March 22, 2014|By Jamie Smith Hopkins, The Baltimore Sun

Matt Kumpar paid $622 for the electricity his auto shop used in January, so he thought the February charge — a whopping $3,192 — was a mistake.

It wasn't. The rate for his electric supply skyrocketed, a shift his provider blamed on abnormally low temperatures brought on by the polar vortex.

"I was absolutely blown out of my socks," said Kumpar, owner of the Baltimore Collision Center in Remington.

The frigid winter caused all sorts of energy market disruptions. Demand spiked. Natural gas prices soared. At least one energy supplier folded. Power plants knocked out of service.

And, of course, higher utility bills.

Most Marylanders are seeing big bills — continuing to arrive this month and likely next month, too — because their heating systems needed extra fuel to maintain normal temperatures. But customers with variable-rate contracts got a double whammy. They used more power and discovered just how variable their rates are.

It's a problem that extends beyond Maryland. Pennsylvania's attorney general launched a review a few weeks ago to determine whether some of the volatility — like bill increases of 300 percent — is a result of price gouging. Connecticut officials put out a consumer warning that named energy suppliers with suddenly high variable rates.

Locally, consumers are inundating regulators with rate-spike grievances. Maryland's Public Service Commission saw a ninefold increase in February.

"We're averaging about 35 to 40 new complaints a day," said Obi Linton, who directs the agency's office of external relations.

Commissioners are in the midst of reviewing winter bill problems, hoping to avoid a big jump in utility shutoffs this spring. They fear that higher usage, not to mention rates, will leave more residents and businesses unable to pay.

"People are being forced to make some very tough decisions," said Phil Croskey, CEO of, a Baltimore company that connects customers and energy suppliers. "I had one lady [say], 'I'm going to have to figure out if I pay my car payment or my utility bill.' "

WegoWise, a Boston firm that helps property owners improve building efficiency, said typical per-bedroom heating costs jumped 24 percent in January compared with a year earlier at the roughly 1,500 Baltimore-area apartments and homes they track. That was largely due to higher usage.

Baltimore Gas and Electric Co. said the area had twice as many hours with temperatures at or below freezing this winter, compared with a year ago. It urged customers to call immediately if they're worried about their bills.

The Public Service Commission's bill review has focused on ensuring that utilities are helping customers. Because the review is ongoing, a spokeswoman could not say whether the commission will move to change how third-party energy suppliers do business.

Pennsylvania regulators plan to require that suppliers disclose more information to customers upfront and as terms change. They also want to cut the maximum wait to switch suppliers from 40 days to three.

Locally, the switch can take up to 45 days, depending on where a customer is in the bill cycle. Some suppliers require 30-day notices on top of that, said Paula Carmody, who heads the state Office of People's Counsel.

Carmody, the state's advocate for residential utility customers, says variable rates are a bad idea. The short-lived teaser price might look good, she said, but the contracts leave consumers vulnerable to "paying a high price with no cap."

"You sign these at your own risk," she said.

Even customers who sign up for a fixed-rate contract can wind up with a variable rate later. Consumers need to scrutinize the terms of their renewal offers because they could roll over to a variable price plan if they take no action.

Greg Economou, an IT salesman from Towson, said he doesn't know how he ended up with a variable rate. He said he saw no notice of that change or that his energy suppliers' accounts had been acquired by a competitor in 2012.

What brought it to his attention was the bill arriving last month. He usually pays about $250 a month for his townhouse's gas and electricity, and suddenly the tab was $436.

When he called BGE, the details came out. His February supply rates more than doubled for natural gas compared with December and jumped nearly 70 percent for electric.

He canceled the contract with supplier XOOM Energy on Feb. 24. But it was already too late to avoid the charge for March and April bills, he said.

"When I called them initially, I said, 'Look, I don't want to get hit with another $400-plus bill,' " Economou said. "And they basically told me there's nothing I can do about it."

Jackie H. Whitman, a XOOM spokeswoman, said the company emailed a rising-rate warning to customers and put a notice on its website Jan. 24. Economou searched his email Friday and said he never received anything from XOOM.

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