Why Should Delaware Care?
Electricity costs have risen sharply across the country and in Delaware in recent years, primarily because of the growing demand for power from data centers. Gov. Matt Meyer’s veto of a bill regulating third-party electric suppliers shows a split in how Delaware officials think about spiking prices in one corner of the market.
Last year, outgoing Rep. Debra Heffernan (D-Bellefonte) heard from constituents whose electric bills had skyrocketed after signing up to buy power from companies other than Delmarva Power.
The stories were all similar, she said. Salespeople from third-party electricity suppliers promised a discounted rate, but her constituents did not know it was just temporary. So they signed on for a gift card or a rebate on their power bill, without realizing it locked them into a contract with another supplier.
When they figured it out, they then faced cancellation fees and other barriers to ending the contract.
“And now they were being taken advantage of. Their power bill was more expensive than it had been before,” Heffernan said.
Other lawmakers heard similar stories, and in response Delaware legislators last spring overwhelmingly passed Heffernan’s House Bill 393.
The bill would have required third-party suppliers to charge the same or less than Delmarva Power had over the preceding year, unless they were offering all renewable energy. Delmarva Power operates as the regulated monopoly in much of Delaware.
The bill also would have prohibited cancellation fees, required customer signatures for rate changes and mandated monthly reports showing how much the companies charged.
But last week Gov. Matt Meyer vetoed that legislation. He said he supports the consumer protection elements of it, but argued that the price cap would have squashed competition, which could ultimately raise electricity prices.
He pointed to a recent bill in Maryland as a cautionary tale. Third-party electric suppliers left the state after it passed.
“Delaware families are already being squeezed by rising electric bills, and the last thing we should do is take away their choices and strengthen Delmarva’s monopoly,” Meyer said in a statement.
The veto of HB 393 highlights a larger national debate about the role of third-party electricity suppliers in states with highly regulated electricity markets. While those suppliers say they provide alternatives to monopoly utilities, critics argue that third-party providers generally charge higher rates and should be prevented from doing so.
Limiting consumer choice or lowering prices?
Proponents argue that third-party electric suppliers often charge a higher rate because regulated utilities, such as Delmarva Power, can’t profit off of supplying energy.
Instead, Delmarva Power earns a legally guaranteed profit from upgrades to the infrastructure needed to get electricity from power plants to homes and businesses. What the utility charges its customers for electricity is the same amount as its cost to purchase it from power generators.
Third-party suppliers can purchase and sell electricity differently than Delmarva Power. Sometimes they generate their own electricity, which Delmarva can’t do. Sometimes they offer long-term contracts that lock in a price for months or even years, while Delmarva’s rate changes based on current market conditions.
Laurel Peltier, chair of the Maryland Energy Advocates Coalition, pointed to her analysis showing that Delaware residents using third-party suppliers paid on average 34% more for electricity.
Peltier said the companies often attract customers with low upfront rates, then raise them later and make it difficult to cancel. Sometimes, they target low-income families who don’t have time or the resources to research the contracts, she said.
“It’s knowingly taking advantage of an uninformed marketplace and monetizing inattention,” Peltier said.
The price cap in House Bill 393 was meant to address that by forcing third-party suppliers to charge the same or a lower price as Delmarva Power had over the preceeding year.
But Frank Caliva, spokesperson for the advocacy group Retail Energy Supply Association, which advocates on behalf of third-party suppliers, said the price cap is unfair to companies whose business models work differently.
Prices from third-party suppliers are forward-looking, making it impossible to compete if they are limited to price levels from the previous year, he said. And some customers may want the peace of mind that a fixed rate brings, even if it is higher than the current average price.
“We’re talking about different products, and we’re trying to compare them as if they’re the same product,” he said.
Meyer wrote a two-page letter to the Delaware General Assembly explaining his veto of HB 393. He raised similar points about third-party suppliers being unable to compete and the value of a fixed rate.
What happened in Maryland?
Both Meyer and Caliva referenced a similar bill that passed in Maryland in 2024 to explain their opposition to HB 393.
Malcolm Augustine, Maryland’s Senate President Pro Tem and prime sponsor of his state’s bill, said he heard stories similar to those told to Heffernan about constituents unwittingly signing up for higher electric bills. So he shepherded legislation through Maryland’s General Assembly that had a similar price cap.
Many third-party electric suppliers stopped offering services to households in Maryland almost immediately after it took effect. And that sparked anger among some residents about losing their choice of where to buy electricity.
Maryland’s legislature recently raised the price cap, allowing third-party suppliers to charge 10% more than regulated utilities, to account for the different price structure.
The suppliers have not yet returned, although the change only took effect at the beginning of this month.
Caliva, the industry spokesperson, said he doesn’t think any price cap can work because the third-party suppliers are taking on the risk of losing profits if the price of energy goes higher than anticipated.
“There’s not really a number at which it [a price cap] makes sense because we don’t know what the market is going to do,” he said.
Asked if he thinks his bill was a success, Augustine said yes, even if the third-party suppliers don’t come back to the state.
Heffernan said she also would not mind if third-party electric suppliers decided to leave the state entirely because of the price cap.
“If they don’t want to be here because we’re trying to make them follow rules, then I don’t think we want them in Delaware,” she said.
Augustine also warned against relying on consumer protection measures to resolve the issue, as Meyer suggested. He said he tried to make similar reforms for six years before deciding to add the price cap to his bill.
“I got nothing but lip service after lip service after lip service,” he said.
