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City of Chicago, Citizens Utility Board demand electric market probe
Online Staff Report
The City of Chicago and the Citizens Utility Board (CUB) have formally requested an Illinois Commerce Commission (ICC) probe of the electric market — an unprecedented move prompted by reports of confusing offers from alternative suppliers, misleading pitches and prices up to six times higher than the utility rate.
The petition filed by CUB and the city calls on the ICC to investigate whether suppliers are complying with price-transparency provisions in Illinois’ Public Utilities Act (PUA). The PUA requires companies to provide customers with “written information that adequately discloses, in plain language, the prices, terms and conditions” of their offers.
Since 2010, more than 3 million Illinois consumers have switched to a company other than the regulated utilities (Commonwealth Edison or Ameren Illinois) to supply their electricity. The joint City of Chicago/CUB announcement is a follow-up to a report CUB released last month, warning consumers about the highest rates the watchdog group had ever seen from unregulated power suppliers operating in Illinois. The City’s Department of Business Affairs and Consumer Protection (BACP) is actively investigating a number of consumer complaints, and will prosecute those complaints involving consumer fraud.
The CUB and city petition focuses on variable rate plans, which can change on a monthly basis. Such offers have sparked complaints from the following:
• Electricity shoppers whose rates ballooned, without warning, to as high as six times the utility price.
• Consumers who didn’t even realize they were with an alternative supplier until they noticed another company on their electric bill.
• Unhappy customers who found it difficult to talk to a live representative.
“Many Illinois consumers want to be able to shop for a power supplier, but complaints suggest a disturbing trend of marketing abuses that hit customers hard in their pocketbooks,” CUB Executive Director David Kolata said. “This petition is a first step to reform Illinois’ power market and protect consumers from needlessly confusing, less-than-transparent offers.”
Chicago Mayor Rahm Emanuel (D) added: “I am committed to ensuring that Chicago ratepayers get the best deal possible on their electricity bills, whether it’s through the city’s coal-free municipal aggregation program that has saved residents and small businesses more than $30 million since February 2013, or by cracking down on energy companies who defraud their consumers. By partnering with the Citizens Utility Board, we will protect residents from supply companies that use misinformation to sell consumers a raw deal.”
While Kolata stressed that many companies are acting appropriately, from January through April, CUB saw a 115 percent increase in complaints/inquiries about unregulated electricity suppliers, compared with the same period in 2013. Most complaints were questions about power offers — reflecting confusion in the market.
Some of the worst cases CUB has encountered in Illinois’ electric market this year include the following:
• A Melrose Park woman said she was promised savings only to see her rate balloon to about 35 cents per kilowatt-hour (kWh), about six times ComEd’s rate at the time.
• A low-income senior citizen from Maywood was informed by CUB that her rate was about double the utility rate. “She doesn’t recall signing up with (the alternative supplier) at all,” the CUB complaint stated.
• A consumer from Charleston knew she was signing up for an alternative supplier, but not that the rate was volatile. “I had no idea that the electric rate was variable and had no idea of the possibility of my rate doubling and tripling,” she said.
• One Chicago consumer tried to get her son out of a rate that was nearly double the utility price, but encountered a common problem: “Customer states that she wants to cancel the account … but that she has not been able to speak with a live rep,” CUB’s complaint said.
• A Blue Island consumer said she called ComEd to see why her bills had gone up, only to learn her husband had signed a contract with an alternative supplier. The husband said he was told he would receive lower bills, but the couple ended up paying a much higher rate than the utility price.
The ICC is expected to rule soon on whether to open an investigation. If it moves forward with the probe, the ICC has the authority to order a supplier to correct any violations of the Public Utilities Act. Noncompliant companies face financial penalties of up to $30,000 per day until a violation is corrected and possible revocation of their state certifications to do business in Illinois.
For more about the CUB and city petition, alternative electric suppliers and tips on cutting electric bills, visit www.CUBSmartPower.com.
CUB, Illinois’ leading nonprofit utility watchdog organization, is celebrating its 30th anniversary. Created by the Illinois Legislature, CUB opened its doors in 1984 to represent the interests of residential and small-business utility customers. Since then, CUB has saved consumers more than $10 billion by helping to block rate hikes and secure refunds. For more information, call CUB’s Consumer Hotline at 1-800-669-5556, or visit www.CitizensUtilityBoard.org.
Posted June 12, 2014