A proposed class action lawsuit recently removed to federal court in New York takes on Xoom Energy, LLC and Xoom Energy New York, LLC on behalf of thousands of the city’s residents who the plaintiffs allege have paid “many millions of dollars more” than they should have for residential gas and electricity.
According to the lawsuit, independent energy service companies (ESCOs) like the defendants seized on the deregulation of state energy markets in the 1990s by touting how much consumers could save by switching over from a bigger utility company. The case claims the defendants play their part in this ecosystem by offering potential customers a teaser rate that is lower than that provided by their local utility. Once this rate expires, sometimes after a period as short as a month, however, the defendants will allegedly charge a customer a rate that’s “not based on supply cost” as contractually required, but instead one that stems from Xoom’s “price gouging.”
From the complaint:
The unlawful conduct of ESCOs like XOOM has been devastating to New York consumers. For example, ‘[a]ccording to the data provided by [New York’s] utilities, the approximately two million New York State residential utility customers who took commodity service from an ESCO collectively paid almost $1.2 billion more than they would have paid if they purchased commodity from their distribution utility during the 36-months ending December 31, 2016.’ ‘Additionally, small commercial customers paid $136 million more than they would have paid if they instead simply remained with their default utilities for commodity supply for the same 36-month period.’ Combining these two groups, New York consumers have been ‘overcharged’ by over $1.3 billion dollars over this time period.”