When consumers in Pennsylvania receive unsolicited calls, door-to-door visits, or mailers from retail electricity suppliers, they face a decision that most are ill-equipped to make wisely. A growing body of research from a team of scholars at Lehigh University and The Ohio State University suggests that often switching from a regulated utility to a competitive supplier costs them money.

Samantha Fox, assistant professor of anthropology in the Department of Sociology and Anthropology at Lehigh University, is leading the social analysis component of a multidisciplinary project examining the equity, justice, and efficiency implications of retail electric deregulation. The project spans the Lehigh Valley and several small Ohio cities and brings together researchers from Lehigh’s Colleges of Arts and Sciences and the John Glenn College of Public Affairs at The Ohio State University.

“Together we’re able to be greater than the sum of our parts,” Fox says of the collaboration, which pairs her ethnographic and community-engagement methods with the econometric analysis led by Alberto Lamadrid, professor of economics in Lehigh’s College of Business.

A Market Tilted Against Consumers

Since the passage of the Energy Policy Act of 1992, 13 states and the District of Columbia have allowed companies to purchase electricity from wholesalers and sell it directly to consumers, bypassing the traditional monopoly model in which a single regulated utility controls generation, transmission, and distribution. Proponents of deregulation argued that competitive retail markets would drive down prices and spur innovation. The emerging evidence from Fox’s research complicates that narrative.

In a published paper co-authored by Fox, Lamadrid, and Ohio State collaborators, the team analyzed hundreds of retail electricity offers available on each day over a 10-year period across six service territories in Ohio, comparing those offers against the standard service offer — the regulated utility rate available as a default.

“By engaging in these markets, the odds are you are probably paying more for electricity than you need to be,” Fox says. “If you throw a dart at the marketplace, 72% of the time it is going to land on an offer worse than the standard service offer.”

Targeting the Information-Poor

Fox is a member of Lehigh's Small Cities Lab (SCL), where her social analysis focuses on the communities most vulnerable to the risks of these markets. Small Cities Lab produces community-facing, action-oriented research on urban change in American cities with populations under 250,000. SCL partners with local leaders and residents to tackle their toughest challenges. By providing the tools and expertise they need, their work helps cities build a future that is fair, inclusive, and achievable for everyone.

The team’s preliminary research findings indicate that third-party suppliers concentrate their marketing efforts in lower-income, higher-density neighborhoods, where residents may be elderly, have limited English proficiency, or have less experience navigating complex consumer markets. These populations, Fox argues, are particularly susceptible to misleading claims. Consumer advocacy groups have documented numerous instances of deceptive and unauthorized enrollment practices. Suppliers have been found to sign customers up for service without their consent, to misrepresent themselves as employees of the local utility, and to advertise introductory rates that automatically convert to substantially higher variable rates after an initial period. Because regulatory oversight of these claims is limited, consumers have few practical safeguards. “These companies make claims that are often unverified and prey on people who are information-poor,” Fox says. “There is not a robust regulatory body that assesses the claims being made.”

Understanding Why Consumers Participate

A central question driving Fox’s social analysis is behavioral — why do consumers engage with third-party suppliers even when doing so is not in their financial interest? To investigate, the research team developed a structured interview instrument and partnered with a professional recruitment firm, 10K Human, to achieve a target of approximately 400 interview respondents.

Following the interviews, participants completed a discrete choice experiment in which they evaluated pairs of simulated electricity contracts and indicated which they would select. The exercise was designed to probe whether stated preferences — for green energy, for example, or for contract stability — align with actual decision-making under realistic conditions. The team hypothesizes that many participants may be attracted to short-term incentives, such as a one-time cash-back offer, without accurately assessing the net long-term cost of the contract.

“We want to know why people are making decisions that are not in their economic best interest, and then what they are doing when they find themselves paying extremely high amounts for electricity,” Fox says. “How is that affecting their lives?”

Policy Implications and Next Steps

Two additional papers from the project are currently under peer review. One examines the gap between consumers’ stated preferences for green energy and their revealed preferences in actual contract selection. The second analyzes market and regulatory failures in deregulated electricity markets across multiple jurisdictions and proposes policy interventions for public administrators.

The paper identifies a range of structural failures, including consumer inattention to price and plan attributes, limited enforcement of regulatory violations, high barriers to market entry, and the high costs of switching providers. It also cites deficiencies in public administration, such as low transparency around billing practices, contract terms, and the compliance histories of suppliers.

The research has a practical dimension as well. Fox and Lamadrid have conducted community workshops and distributed educational materials to help Lehigh Valley residents understand how to use state-run comparison tools, such as Pennsylvania’s PA Power Switch website, to evaluate offers from third-party suppliers against the regulated utility rate. PA Power Switch is administered by the Pennsylvania Public Utility Commission and allows consumers to compare current offers by provider, contract length, and price per kilowatt-hour. Fox cautioned that even motivated consumers face meaningful obstacles. Utility rates adjust twice yearly in response to wholesale market conditions, meaning that a locked contract rate that appears advantageous at signing may prove costly if wholesale prices subsequently decline. 

The research team is now beginning the formal analysis of interview data, which will provide the qualitative community perspectives that have so far been absent from the study. Fox expects that the completed analysis will yield a richer account of how deregulated electricity markets intersect with income, housing tenure, language access, and broader socioeconomic vulnerability.

For Fox, whose primary scholarly work has focused on urban planning and architectural history in post-reunification Germany, the electricity project represents a methodological as much as a substantive departure. It also reflects a broader intellectual commitment to questioning received assumptions about markets and governance.

“The idea that greater competition creates better outcomes for consumers is a canonical assumption in economics,” Fox says. “As an anthropologist, I approach that inductively. If we are seeing competition and we are actually seeing worse outcomes for consumers, then maybe we cannot accept that as a valid assumption.”