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Should You Switch To An Energy Service Provider?

 

 by Barbara Nevins Taylor

When our friend Judith asked us about quitting her utility, Con-Ed, to switch to an energy service provider that promised to lower her gas and electric bills, we suggested she wait awhile. We knew that class action lawsuits and investigations alleged that some of these energy resellers, or ESCOs, didn’t deliver what they advertised.

ESCOs sprang up as a result of deregulation in the 1990s. They don’t own or operate the distribution and transmission systems, but they buy energy and theoretically may offer discounts or lower rates if you sign on with them as a supplier. They have used aggressive telemarketing and online campaigns to lure customers. 

New York State Attorney General Eric Schneiderman’s most recent investigation resulted in a settlement with Energy Plus Holdings LLC and Energy Plus Natural Gas LLC “Energy Plus.”    The company will pay $800,000  for false advertising and charging people more than it promised. 

The attorney general said that Energy Plus charged its customers much higher prices than they would have paid if they purchased energy from their utilities. In many instances, consumers who received services from Energy Plus paid hundreds more per year than they would have with their local utility company.

As a result of the settlement, consumers who signed on with Energy Plus will get refunds. So far, more than $5 million has gone back to New York State consumers because of Schneiderman’s investigation, including nearly $2 million to customers of Columbia Utilities Power LLC and more than $1 million to customers of HIKO Energy, LLC.

 In 2013, Energy Plus settled a class action suit based, in part, on Energy Plus’s claims that consumers would pay less with Energy Plus than with their utilities. It provided $1.1 million in refunds and stopped some deceptive practices.

But the attorney general charged that Energy Plus continued to fail to adequately disclose that its rates might be higher than utilities’ rates and failed to disclose that cancellations could take months to process and could result in early termination fees.

Attorney General Schneiderman said, “Thousands of New Yorkers were lured by Energy Plus’s false promises of savings, only to be stuck with more expensive energy bills Energy service companies should be put on notice: we won’t allow them to exploit New Yorkers looking to save on their energy bills.”

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Barbara Nevins Taylor

As the winner of 22 Emmy Awards and a slew of journalism honors and awards, I created ConsumerMojo.com to give you the straight story about complicated stuff. Tell us what you want to know and we'll get you the answers.

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