CUB files class-action lawsuit against Nicor Gas, sister company
The Citizens Utility Board (CUB) last Wednesday filed a class-action lawsuit accusing Nicor Gas and an unregulated sister company, Nicor Services, of deceptive marketing of the Fixed Bill plan, which is causing some consumers natural gas bills to more than double.
The lawsuit, filed in Cook County Circuit Court by CUB and the Chicago law firm of Macey, Chern & Diab, accuses the companies of violating the Illinois Consumer Fraud and Deceptive Business Practices Act. It asks that the companies be ordered to accurately describe the Fixed Bill plan in its marketing materials and that punitive damages be awarded to customers who were led to believe they would save money under the plan only to see their bills skyrocket.
Usually, customers are charged for their actual gas usage each month, but the Fixed Bill plan, which was first marketed to customers in March, offers to charge them 12 equal monthly payments, based on their gas use profile. Playing off the fear caused by unusually high gas bills in the winter of 2000-2001, the companies promise customers a bill that wont go up, regardless of gas prices or weather.
However, Nicor doesnt reveal that the Fixed Bill plan sets the monthly amounts so high that customers are likely to pay far more than if they stayed with the regulated utility. A sample of bills of consumers contacted by CUB showed that the Fixed Bill plan increased or would have increased annual bills by 88 percent to 134 percent.
Nicor Gas and Nicor Services are deceiving their customers, CUB Executive Director Martin Cohen said. The companies promise customers that the Fixed Bill plan will protect them from future price spikeswithout telling them that the plan itself has a built-in price spike.
Although the Fixed Bill plan is a Nicor Services program, Nicor Gas, the public utility, is included in the lawsuit, accused of conspiring with its sister company to defraud customers. Nicor Gas inserted Fixed Bill marketing materials into its customers
billing statements, agreed to add the Fixed Bill charges to its customers bills and collect those charges, and allowed Nicor Services to use the Nicor trademark to market the plan, the lawsuit said.
Shopping for natural gas is confusing enough for consumers without deceptive marketing by a company with the same name as the utility, Cohen said.
Don Ingle, director of Corporate Communications for Nicor, stated, We dont comment on pending litigation. But he could explain how the program works. The Fixed Bill is the simplest, easiest choice now that people have[one of] the different options through the deregulation which began in March, Customer Select. The Fixed Bill is just a very, very simple productan opportunity to look at one ratenot a rate per therm. Its one fixed bill. You can call and get an estimate. Thats how it works. It doesnt go up or down depending on how much you use or what happens to gas prices. This is not a low-price product per se. It is a peace-of-mind product, he added. It is a guarantee. There are other products that go up or down depending on usage. People that are on the budget planthat is re-evaluated every quarter, and people can go up or down. This is for people who dont want to worry about their gas bill. Its like the difference between a fixed rate and an adjustable mortgage.
CUB is a nonprofit statewide utility watchdog organization created by the state legislature to represent the interests of residential and small-business utility customers. For more information on CUB and its efforts to protect consumers, visit www.citizensutilityboard.org or call CUBs Consumer Hotline at 1-800-669-5556. CUBs address is 208 S. LaSalle St., Suite 1760, Chicago, IL 60606.