NEWARK (CN) – To “line its pockets at its customers’ expense” an alternative energy company promises lower rates and prizes if people switch to it, then jacks up its rates after the first month, a class action claims in Federal Court.
Lead plaintiff Yue Yu sued Energy Plus Holdings LLC and Energy Plus Natural Gas LP, electricity and natural gas suppliers licensed in New Jersey.
“In 1999, New Jersey deregulated energy supply in the state,” the complaint states. “Customers may now purchase electricity and/or natural gas through ‘alternative’ third-party suppliers while continuing to obtain delivery from their local public utilities. These private suppliers are not subject to oversight and regulation by the New Jersey Board of Public Utilities (BPU). For example, by law, the BPU has primary jurisdiction over all disputes concerning service, billing and payment by public utilities but not private suppliers such as Energy Plus. In contrast to public utilities, the BPU does not have oversight of the rates charged by Energy Plus. The intent of the deregulation law is to provide consumer choice and allow competition to drive down customer rates.”
Yu says she received a flyer for Energy Plus along with her mileage statement from (nonparty) Continental Airlines. The flyer said that in addition to receiving 12,500 miles for signing up with Energy Star, Yu would receive more reward miles for every month she paid her bill and that customers “likely would save 10 percent over their local utility company.”
“Energy Plus’ advertisements, website and customer agreements indicate that its rates are market-based and highly competitive,” the complaint states. “Energy Plus uniformly and consistently represents that its rates are ‘competitive’ and reflective of market conditions and that the company will provide ‘the best competitive rate possible.’ For example, the company represents in mailers that ‘Energy Plus offers a market-rate product, which means we buy electricity every day on the open market.’ Energy Plus’ website states that its rates are ‘market-driven’ – that they are ‘based on market prices and other factors’ and are calculated monthly using an average in the customer’s region. In this market-driven process, the Energy Plus website represents, the company scours the market to find the best rates for customers: ‘Our approach is to purchase energy from each of these markets on a daily and monthly basis, which allows us to incorporate the most-up-to-date energy costs from each market into our rates.’ The clear implication is that Energy Plus is purchasing energy at market rates, where vigorous competition ensures the lowest possible prices for its customers.
“Furthermore, the company’s salespeople represent to potential customers that, in addition to receiving incentive rewards, they should on average save on energy costs if they switch to Energy Plus. Salespeople even tell customers to expect a particular percentage in savings.”
In response to Energy Plus’ ads, incentives and website, Yu says, she filled out an online application and switched her gas and electrical supplier to Energy Plus.
“For the first month of Energy Plus service, Ms. Yu received a discount of almost 10 percent as compared to her former provider PSEG. Thereafter, the company jacked up its rates and charged her from 30 to 71 percent more than PSEG each month,” the complaint states.
It adds: “After the first month with Energy Plus, customers’ rates will never reflect going market prices. Like playing in a casino using a stacked deck, a customer who sticks with Energy Plus hoping to break even will only sink deeper into the quicksand and enable the company to further line its pockets at its customers’ expense. In fact, Energy Plus’ rates are not competitive with other suppliers or in line with market factors. Customers who switch to Energy Plus can wind up paying as much as two to three times above the going rate in the area. The company’s customers in New Jersey and nationwide regularly complain that Energy Plus’ rates far exceed that of any other supplier, that their rates have doubled or more after the first month, and that they are often being overcharged by more than 100 percent as compared to remaining with their local utilities. …
“Energy Plus does not disclose these material facts to its customers but actively encourages the false perception that switching to and remaining with Energy Plus will mean savings to the cost-conscious consumer.”
In the four months after her first bill, Yu says, she was charged a total of $247 more than a PSEG customer would pay.
“Had Ms. Yu know that the rates she would be charged by Energy Plus were in fact substantially higher than the rates she was paying her previous energy supplier, PSEG, she would not have enrolled with Energy Plus,” the complaint states.
She seeks class damages and treble damages for consumer fraud, breach of faith and unjust enrichment.
She is represented by Steven Wittels with Sanford Wittels & Heisler, of Fort Lee.