Lawsuits Against Deregulated Energy Companies

A number of class action lawsuits have been filed against independent energy companies claiming that they’re ripping off customers who switched from public utilities.

According to the suits, the energy companies enticed people with the false promises of electric and gas savings – but then charged them, in some cases, twice as much as public utilities. These companies often sign up new customers via unsolicited letters and phone calls – and even by sending door-to-door sales representatives to people’s homes.

What Companies Are Under Investigation?

Attorneys working with ClassAction.org want to hear from anyone who switched from a local utility to any independent energy company.

What’s Going On Exactly?

A number of states have deregulated the market for natural gas and electricity supply – meaning businesses other than local utility companies can supply energy. Theoretically, this enhances competition between energy providers and gives consumers the chance to shop around for the best rates.

What’s worse, the suits claim, is that these companies are generally not required to file their rates or the method by which they come up with their rates with the appropriate state agencies.

Complaints of Scams, Expensive Rates with Deregulated Energy Companies

One customer of Gateway Energy Services claims that she signed up for a fixed rate plan, but was then switched to a variable rate plan without any notice from the company. A class action lawsuit filed against the company provided a snapshot of the rates she was charged, compared to those of the local public utility.

Electricity

Natural Gas

Other complaints posted online from ESCO customers include [sic throughout, emphasis added]:

“I had a representative come to my home…He proceeded to confuse me, promised rebates and lower prices…The opposite happened. My bill is higher than ever. I am switching to a different provided ASAP.”
— A.Y., Kiwi Energy Customer, BBB.org

“The first 6 months our bill was ‘normal’, since then it has been outrageous…I'm sorry but it's nearly impossible to run 60,000 kWh a year…the bill was over $900 a month, every month. This company is greedy, and extremely unhelpful…Price gouging is against the law and someone needs to take a hard look at the way they run business.”
— Erin of Rock, West Virginia, American Electric Power Customer, ConsumerAffairs.com

“What a scam. They put our account into an outrageous rate tier at 14 cents per KWH vs. the average of 9.9. That gave us a $1000 electric bill !!...Why would anyone continue to do buiness with them?...I think a class action lawsuit is way overdue. Where do I sign? Avoid them at all costs.”
— Mantua, New Jersey, Clearview Energy Customer, PissedConsumer.com

“For the first month it was as promised, however, it sharply increased to be extravagantly more. For example, my bill for one light bulb in the hallway of my tenants went from $5 to $175 and then they back charged me the 5-month difference. I had a bill of $1,100 and was sent to a lawyer to collect it from me…When I went back to local electric my bill was cut in half compared to the rate from the ‘money saving’ company. I would suggest to no one, including my worst enemy, to use this company.”
— Nathan of Norwalk, Ohio, Constellation Customer, ConsumerAffairs.com

How Could a Class Action Lawsuit Help?

A class action lawsuit could help customers of deregulated energy companies get back the money they paid due to potentially excessive rates. A successful lawsuit could also require these companies to change their business practices.

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