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New law aims to crack down on third party energy retailers overcharging customers

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BALTIMORE — Utilities are one of the biggest expenses in a family’s budget.

Some third-party energy companies take advantage of that, selling people on lower rates, then jacking up the prices.

It’s a bait and switch, signing people up for what they think is a cheaper energy bill.

Until the teaser rate goes away and the cost shoots up.

“The customer doesn’t realize that they’re being charged this really high rate or it may take them some time to realize they’re being charged this really high rate and then it may be challenging to get off that rate," said David Lapp, Office of the People’s Counsel.

According to a 2022 study from Energy Supplier Help Desk, Marylanders with third party energy paid an average of $500 more a year than people getting energy from their local utility, accounting for hundreds of thousands of Maryland families.

“What is clear is hundreds of thousands of Marylanders are paying more than $150 million more than they would’ve over the course of a year," said Senator Malcolm Augustine, the lead sponsor of Senate Bill 1, meant to combat this.

At times the third-party company could be deceitful.

“A retail supplier might for example pretend that their the utility going door to door," said Lapp.

In steps Senate Bill one.

Starting January 1, the company can’t charge you more than the rate of a local utility.

“Those teaser rates will be unlawful as of January 1, 2025 so customers should not be being offered those rates and if they are they can file a complaint and get out of that contract," said Lapp.

Third party energy companies were put in place as a competition to local energy companies.

Though their rates are unregulated, unlike local utilities.

“We still haven’t changed that, there’s a competitive market for retail energy which was established some 20 years ago but what we said is that you can’t get charged more than if you just went to the utility in the first place," said Senator Augustine.

There’s a carve out in the legislation to allow for renewable energy to cost more.

"If our constituents are willing to pay more for that green energy, we think that’s appropriate," said Augustine.

Several retail energy companies came out against the bill saying it could end their operations in Maryland and cost people jobs.

None of them agreed to an interview for this story.