Electricity and gas services have undergone deregulation in many markets in the past decades. Although some companies have been able to offer lower prices than the utilities serving the same market, many end up charging consumers substantially more. This class action brings suit against Direct Energy Services, LLC and NRG Energy, Inc., alleging they did not comply with the New Jersey Retail Choice Consumer Protection laws (Marketing Regulations) and charged consumers arbitrary and excessive variable rates for electricity and gas.
The class for this action is all current and former Direct Energy customers who paid a variable rate for electricity and/or natural gas in connection with a property located in New Jersey, at any time within the applicable statutes of limitations before the filing of this action through its date of judgment.
Direct Energy is a subsidiary of NRG and an energy service company (ESCO) or third-party supplier (TSP) that must obey the New Jersey Retail Choice Consumer Protection laws (the Marketing Regulations).
The complaint alleges that Direct Energy solicits customers by offering an initial teaser rate that is lower than the local utility company’s price but that switches in a number of months to a variable rate. Variable rates are supposed to fluctuate with the market price of energy and thus possibly offer consumers some savings at times, but the complaint alleges, “Direct Energy’s variable rates are substantially higher than the competing utilities’ market rates…”
According to the complaint TPSs that don’t offer fixed or guaranteed prices “shall describe in clear and conspicuous language the mechanism or formula by which the price is determined, and provide a detailed customer bill comparison” and in their terms and conditions to the contract must provide “a clear and unambiguous statement of the precise mechanism or formula by which the price will be determined[.]”
The complaint alleges that Direct Energy, in its New Jersey Residential & Small Commercial Terms and Conditions, does not do this.
Instead, the complaint quotes those Terms and Conditions for electricity as saying, “While taking service on a month-to-month basis, Direct Energy will charge you at a variable price per kWh based up generally prevailing market prices for electricity in the Electric Distribution Company load zone for the applicable period, plus an adder, determined solely by Direct Energy in its sole discretion.” According to the complaint, the statement for natural gas is similar.
These vague terms, such as “generally prevailing market prices,” the complaint alleges are not clear or unambiguous and therefore Direct Energy’s statements violate the Marketing Regulations.
The complaint alleges, “The entire purpose of the Regulations is to protect consumers from a TSP’s unfettered discretion in setting prices. The Regulations are also designed to inform a customer, ahead of time, of the precise formula by which the consumer’s rates will be determined.” Direct Energy’s violation of these regulations, the complaint claims, is a breach of contract and constitutes acting in bad faith.
Charts in the complaint show that Direct Energy’s rates are substantially more than the utility’s.
Article Type: LawsuitTopic: Consumer
Most Recent Case Event
Direct Energy Unclear Variable Rate Policies New Jersey Complaint
August 4, 2022
Electricity and gas services have undergone deregulation in many markets in the past decades. Although some companies have been able to offer lower prices than the utilities serving the same market, many end up charging consumers substantially more. This class action brings suit against Direct Energy Services, LLC and NRG Energy, Inc., alleging they did not comply with the New Jersey Retail Choice Consumer Protection laws (Marketing Regulations) and charged consumers arbitrary and excessive variable rates for electricity and gas.
Direct Energy Unclear Variable Rate Policies New Jersey ComplaintCase Event History
Direct Energy Unclear Variable Rate Policies New Jersey Complaint
August 4, 2022
Electricity and gas services have undergone deregulation in many markets in the past decades. Although some companies have been able to offer lower prices than the utilities serving the same market, many end up charging consumers substantially more. This class action brings suit against Direct Energy Services, LLC and NRG Energy, Inc., alleging they did not comply with the New Jersey Retail Choice Consumer Protection laws (Marketing Regulations) and charged consumers arbitrary and excessive variable rates for electricity and gas.
Direct Energy Unclear Variable Rate Policies New Jersey Complaint