Whether it's scammers or incorrect bills, home energy can cause headaches. Here's what you can do about them.
Andrew King is an award-winning journalist and copywriter from Columbus, Ohio. He has covered sports, local news, entertainment and more for The Athletic, The Columbus Dispatch, Major League Soccer, Columbus Monthly and other outlets, and writes about home energy for CNET. He's a graduate of Capital University, and recently published a non-fiction book called "Friday Night Lies: The Bishop Sycamore Story" investigating the fraudulent high school football team that became the talk of the nation.
Issues with your energy provider can be a difficult problem to face. So what recourse do customers have when they're dealing with negligent suppliers or incorrect billing? And how can you avoid getting into that scenario in the future?
The answer is that it depends on where you live.
The most important difference for consumers to be aware of is the regulated or deregulated nature of energy in their home state.
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In regulated markets, energy comes from a designated utility provider -- residents don't have a choice. Regulated energy markets create a form of monopoly, meaning no competitors to choose from or switch to, and the public utility faces oversight by the state government. Through what's commonly known as retail choice or energy choice, deregulated states give residents a say in where they get their energy. In these states, energy suppliers can function like any other business: Competitors provide options, and residents choose how to spend their money.
But what happens if your utility company or energy supplier isn't living up to its promises? Who do you complain to? And how do you protect yourself against scams that proliferate in competitive energy markets? Let's take a look.
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Red flags to watch out for from energy companies
The biggest threat to consumers isn't typically energy companies themselves, but scams centered on energy.
There are some basic red flags that should alert just about any consumers that something shady might be going on. Those red flags can depend on whether you live in a regulated or unregulated state. In general, however, these scams tend to be similar to identity theft -- or, simply, actual identity theft itself.
For instance, in a regulated state, one of the most common scams happens when you receive a phone call, text message or email from someone pretending to be the energy utility. Often, you can spot those scams by simply investigating whether the phone number or email really belongs to the company.
"The scam there is that people scam them into believing that they're the utility," said David Kinchen, chief operating officer at Energy Ogre, a Texas energy broker. "Or it's, 'You need to pay this bill.' So it's more about trying to spoof (the consumer) into thinking that party is the utility."
In a deregulated environment, someone might be able to squeeze much more mileage out of that scam.
"People will sign up with stolen identities, pick a provider, get free electricity for 30 days and then call a new provider 30 days later and sign up with a new provider," Kinchen said.
There are other opportunities for less-than-savory marketing approaches which, while not entirely scams, may portray deals or prices that aren't real. Take the door-to-door salesperson, for example.
"Generally, if they're paying a rather large bounty to get people to walk around the neighborhood and sell a product, my accusation is that's probably a higher margin product because they're having to pay that guy to walk around and sell the product and get a bounty structure on it," Kinchen said. "The ones that you see on TV and on billboards or the door knockers are going around selling are generally higher-margin products because they can afford to pay to advertise or pay a bounty structure. So usually, if they're coming to your door, those are not the cheapest prices."
How to protect yourself from energy scams
If you don't have the ability to choose energy suppliers or utilities, you can take a relatively straightforward approach to ensuring safety: Simply do your best to pay attention to whether you're interacting with the real utility.
"If you're signing up for electricity or gas or whatever with the utility, you just want to make a pretty good assessment that you're ending up on the right website," Kinchen said. "If somebody sends you a link in an email that might not be safe to click, you might want to go to Google or type in their URL and just make sure you get to the correct website. Then, you won't have a problem."
Deregulated environments give consumers a bit more to think about. Customers will have more options, which also means more opportunities for fraud or being taken advantage of. Kinchen recommends consumers focus on their state's official comparison site when shopping around. In Texas, for example, Texas' Power to Choose is the official electric choice website run by the Public Utility Commission of Texas.
It's often the case with energy policy and decision-making: When in doubt, trust the public utility commission of your state.
When should you file a complaint about your energy company?
If you're having an issue with your energy company, your first step should probably be to contact that company itself. Not only could it provide a faster resolution to your problem, you may end up with a little bit of a bonus for your troubles.
"Most of the time, the penalties for these companies getting it wrong are so severe, they would rather fix it," Kinchen said. "Sometimes, they'll even give you a bill credit. If you say, 'I signed up for this rate and you guys messed up booking that rate,' the penalty for them is bad. They don't want to be in trouble with that stuff, so most of the time…we resolve almost all of our problems before it gets to an official utility complaint."
But that doesn't mean people should be overly hesitant to file that complaint if the company doesn't resolve it. Complaints can be a key way for public utility commissions to realize there's a problem. Kinchen said for most companies, there are either very few complaints or "a whole bunch" that lead to the company being shut down.
"If you're a consumer and you feel wronged, you can absolutely file a complaint," he said. "That doesn't mean the resolution won't be against you -- you might not win your complaint. … But if you've signed up for a contracted rate and you don't receive that rate, that's absolutely a complaint."