CleanChoice Energy Hit with Class Action Lawsuit Over Alleged Price Gouging, ‘Exorbitant’ Rates

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CleanChoice Energy has been hit with a class action lawsuit alleging that the alternative energy supplier charges “exorbitant” energy rates and unlawfully misrepresents how such rates are calculated.

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The 44-page CleanChoice Energy lawsuit claims that the alternative retail energy supplier (ARES), which claims to provide “100% renewable energy,” makes false and misleading claims to consumers that its energy prices are based on factors such as costs to purchase renewable energy certificates (RECs), state and local taxes, generation and transmission charges, and other market conditions. However, the case alleges that CleanChoice’s pricing methodology is instead based on “maximizing profits” and is “untethered” from the factors the company claims its prices are based upon. Per the suit, CleanChoice has “fleeced” consumers by charging “exorbitant” rates as a result of “unbridled price gouging.”

According to the false advertising lawsuit, ARES such as CleanChoice—third-party electricity suppliers that purchase electricity from companies that produce energy and sell it to end-user consumers—compete with local utilities, purportedly utilizing “innovative purchasing strategies” to reduce wholesale energy acquisition costs and pass the savings along to consumers.

However, the filing alleges that CleanChoice has “lulled” consumers into switching to its energy supply by omitting its actual methods of calculating energy rates, which are “consistently and substantially higher” than those of other ARES and local utilities in Illinois and completely divorced from its actual costs.

The factors that ostensibly inform CleanChoice’s energy rates cannot explain its high prices, the case says. Per the lawsuit, CleanChoice’s costs to obtain RECs are minimal; similarly, other wholesale costs that purportedly affect its prices and might explain its high rates, such as local taxes or transmission charges, are “relatively insignificant” in terms of the overall costs incurred by ARES and tend not to fluctuate.

Variable energy rates for CleanChoice are among the highest offered by ARES in Illinois, with the company charging an average of 13.409 cents per kilowatt hour, as opposed to the average rate of 9.714 cents per kilowatt hour offered by 33 comparable ARES from 2017 to 2024, the filing states.

Moreover, when compared to contemporaneous data from ComEd, a public utility, CleanChoice’s exorbitant energy rates were more than double ComEd’s rates for eight out of 12 billing periods, the case conveys. The lawsuit says that CleanChoice’s rates defy logic and are a classic example of price gouging.

No reasonable consumers would expect ARES variable rates to be “artificially inflated beyond any resemblance to the local utility’s costs,” the filing asserts.

CleanChoice’s “oppressive” pricing scheme harms vulnerable consumers and has “devastating” consequences for families who struggle to pay their bills, per the complaint. The case says that when families must choose between paying their monthly electricity bills and basic needs such as food, medical care and transportation, their health and well-being are detrimentally impacted.

The suit says that after receiving a solicitation in the mail, the plaintiff switched from a public utility to CleanChoice, believing the energy supplier would provide clean, renewable energy at rates based on factors like costs for RECs, applicable state and local taxes, generation and transmission charges and market conditions. Instead, CleanChoice added “exorbitant and fluctuating” markups, resulting in the plaintiff’s energy rate being, on average, 67 percent higher than market supply costs, the case relays.

Notably, CleanChoice Energy has a “long record” of using deceptive practices, the case says; in 2016, the company entered an Assurance of Voluntary Compliance with the Illinois Attorney General stemming from allegedly false representations that it used green energy when it simply purchased RECs to offset its non-renewable energy sources, the complaint relays. The action also alleged that CleanChoice falsely claimed its prices were comparable to the local utility when they were typically over five percent more.

Additionally, in 2023, CleanChoice paid $600,000 in a settlement with the Illinois Commerce Commission and two consumer advocacy groups that alleged the energy company charged consumers premium prices for energy offset with RECs, but failed to provide “critical” information about what type of RECs were offered, where they were generated and sufficient information to compare prices, leaving consumers unable to evaluate the costs and benefits of the company’s offers, per the complaint.

The CleanChoice Energy class action lawsuit looks to cover all Illinois consumers who were charged for electricity services by CleanChoice from the earliest allowable date through the date of judgment.

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