Energy service companies owned by NRG Energy Inc. have agreed to refund $800,000 to New York consumers scammed by deceptive marketing.
New York state Attorney General Eric Schneiderman on Aug. 30 announced the settlement with Energy Plus Holdings LLC and Energy Plus Natural Gas LLC, collectively known as Energy Plus, that will see new restrictions imposed on the NRG subsidiaries to prevent future fraud.
“Thousands of New Yorkers were lured by Energy Plus’s false promises of savings, only to be stuck with more expensive energy bills,” said Schneiderman. “Our settlement means we'll be able to refund consumers who were illegally scammed by this company."
Via direct mailings, email advertisements and telemarketing, the two ESCOs were found to have lured consumers with false promises of savings only to then fleece them with significantly higher bills and deceptively hidden material terms, such as conditions for receiving cash back.
Despite ceasing many of the deceptive practices in 2012 and refunding $1.1 million in 2013, after settling a class action lawsuit, Energy Plus continued to inadequately disclose that its rates might be higher than those of local utilities and failed to disclose that cancellations could take months to process and even result in termination fees.
As part of the new restrictions, Energy Plus customer service representatives will undergo training and refrain from misleading advertising that implies savings. In addition, anyone violating the law will be subject to disciplinary procedures and customer service calls will be monitored.
"Energy Plus is pleased to have reached this settlement and [we] remain committed to serving our customers in New York in full compliance with the settlement," said NRG spokesman David Knox in a statement. "We are proud to offer options our customers value and entering into this agreement allows us to turn the page and focus on what is most important and always comes first — our customers."
Wider investigation into ESCOs
The payout by Energy Plus is the result of an ongoing investigation by Gov. Andrew Cuomo's administration into price gouging and deception by third-party electricity and natural gas providers that compete with utilities.
Government staff found that in a 30-month period leading up to July 2016, ESCOs charged residential and commercial utility customers about $817 million more for retail power than if they had stayed with their local utility. Low-income New Yorkers alone have paid an excess of almost $96 million.
So far, the state has returned more than $5 million in total to consumers, including nearly $2 million to customers of Columbia Utilities Power and more than $1 million to customers of Hiko Energy.
"Energy service companies should be put on notice: we won't allow them to exploit New Yorkers looking to save on their energy bills," said Schneiderman.
On Aug. 2, the state Public Service Commission rejected a request by the Retail Energy Supply Association, or RESA, to halt upcoming hearings into alleged overcharging and other abuses. The decision followed a June 30 ruling by a state Supreme Court judge that said the state's efforts could protect low-income households from higher energy bills, and a July 27 upholding of the ruling by an appellate court that determined regulators have the authority to cap ESCO prices at utility rates.
In December 2016 the commission sought to cut off access to New York's nearly 200 ESCOs for a third of the state's energy consumers by banning the retail energy suppliers from renewing or entering into new contracts with subsidized, low-income customers until new anti-fraud regulations were implemented. The ban sought to replace an early indefinite moratorium after it was challenged in court by RESA. This also follows a judge's overturning of new regulations from February 2016 that banned unwanted door-to-door soliciting by ESCOs and revoked their right to conduct business within New York if found to be in violation of the law.