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 PointClickSwitch.com, 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.
Mounting energy use during the cold weather forced suppliers and utilities alike to buy more, Whitman said in an email.
"These incremental purchases resulted in wholesale costs dramatically increasing," she said.
As more of the country's power plants are fueled with natural gas, gas markets play a bigger role in the price consumers ultimately see for their electricity. And to say the natural gas markets were volatile in January is an understatement.
The "spot" — immediate delivery — price in the market that includes Maryland, D.C. and Pennsylvania ranged from under $5 per 1 million British thermal units to more than $120, depending on the day, according to commodity information provider Platts.
"That is an all-time high," said Samantha Santa Maria, managing editor for North American natural gas at Platts.
Recent prices have dipped below $5 again. But in January, "you see how panicked the market was," she said.
Winter's effects strained the grid, too. When electricity was most needed — as peak demand hit a winter record on Jan. 7 — 20 percent of the generation capacity in the multistate grid that includes Maryland was unable to produce any, according to grid manager PJM Interconnection.
PJM said it reduced voltage — a move often dubbed a "brownout" — at one point during the several-day effects of the polar vortex to ensure that everyone's lights and heat stayed on.
Judah Rose, a managing director at consulting firm ICF International, thinks the grid got too close to the edge. He doesn't want to see blackouts in the future.
"Power is critical during weather extremes," he said.
PJM said a variety of problems prevented generators from making electricity, both in early January and later as another cold snap hit.
Both reactors at Calvert Cliffs Nuclear Power Plant in Southern Maryland shut down late Jan. 21 — the day natural gas spot prices peaked — after an electrical malfunction. And one-sixth of the capacity out of service Jan. 7 was at gas-fired plants unable to get fuel to run.
Many plants have so-called "interruptible" contracts for natural gas, which are cheaper than contracts that guarantee delivery, Rose said. When demand peaked and space in the gas pipelines became scarce, he said, a lot of interruptible contracts were interrupted.
Large parts of the eastern United States' electrical grid are now dependent on interruptible gas supply, something that will intensify as planned coal plant retirements — including two in Maryland — come to pass, Rose said.
Ray Dotter, a PJM spokesman, said the industry is working to better coordinate between gas and electric players so plants aren't left without fuel.
"Obviously, January was a very unusual month," he said. "There were some lessons learned."
The lesson for some industry players: Plan for extremes, or else.
Clean Currents, a Silver Spring supplier of renewable energy, said the spike in wholesale electricity prices "fatally compromised our ability to continue to serve customers." It shifted its 8,000 consumers back to their utilities in February and closed.
Groundswell, which helps people in the Baltimore, Washington and Philadelphia areas get a better price on renewable energy by buying together, used Clean Currents for its most recent residential buying pool. Groundswell will put out bids for a replacement this spring.
"We found that other suppliers hedged their bets against this cold weather, so … we're not overly concerned that other suppliers are going to go out of business," said Elizabeth Lindsey, the nonprofit's chief operating officer. "It has been a rough time in terms of energy prices, there's no doubt about that."
Kumpar, the auto shop owner, doesn't doubt that either. If the variable rate he recently signed up for had doubled, he says he wouldn't be so upset.
But it went from 7.9 cents per kilowatt hour to 46.9 cents, a nearly sixfold increase.
His supplier, Blue Pilot Energy, did not respond to requests for comment. It had no statements on its website about price spikes, though it announced in February that it was negotiating to buy suppliers wiped out by the market gyrations.
Kumpar canceled his contract and switched back to BGE. He also filed a formal complaint with the Public Service Commission in the hope of getting help. He'd like to see Maryland officials take a page from Pennsylvania, which has both a review and rule changes in the works.
"This is legal extortion," he said. "And there's no recourse."
Utility bill spikes
Gas and electric bills have spiked during the freezing winter. Baltimore Gas and Electric Co. suggests calling right away for help if you're struggling to pay your bill: 800-685-0123.
The utility offers repayment plans for customers and budget billing for residents, which spreads costs over 12 months to avoid spikes.
Residents can retroactively include their winter bills by enrolling before June 1. Budget billing doesn't apply to energy costs for consumers using a third-party energy supplier, but BGE said some suppliers offer their own plans.
Low-income residents can qualify for energy assistance by calling the state's Office of Home Energy Programs, 800-352-1446 (410-396-5555 for Baltimore customers).Copyright © 2014, The Baltimore Sun