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Spark Energy “Competitive” Variable Rates Illinois Class Action

The complaint for this class action tells a familiar story: An alternative retail energy supplier encourages customers to switch from their old supplier by promising competitive variable rates. The customer switches, then discovers that rates are higher and seem to “vary” mostly in one direction. In this case, the retail energy supplier is Spark Energy, LLC. 

The class for this action is Spark Energy customers in Illinois who were charged a variable rate for its residential electricity services between March 2009 and the present.

In Illinois, alternative retail electric suppliers (ARESs) compete against utilities such as Commonwealth Edison, or ComEd. 

Utilities buy electricity at competitive wholesale prices on a multiyear rolling basis. Their rates are based on these wholesale prices, taking into consideration transmission, capacity, ancillary, congestion, and administrative costs, but without any markup or profit. The complaint notes, “Because Illinois utility rates do not include any profits, they serve as pure reflections of average market costs of wholesale electricity and associated costs over time.” 

ARESs such as Spark Energy have different options for obtaining electricity. The intention behind deregulation was that ARESs would find ways to obtain electricity at lower costs and pass those savings on to customers. Many ARESs do manage to do this. 

In February 2012, Spark Energy offered plaintiff Michael Harty a fixed rate for six months, which would then be followed by a variable rate. Spark gave him a Uniform Disclosure Statement and a Terms of Service document. 

The Terms of Service document said that, after the fixed-rate initial term of the contract, Harty would be put on a variable-rate plan where his “rate may vary according to market conditions.” Spark also later promised “competitively priced offers.”

However, the complaint alleges that Spark’s variable rates do not reflect changes in the wholesale price of energy and that its prices are “invariably substantially higher” than its competitors’ rates.

The complaint includes a table showing the previous 23 billing periods, the rates charged to Harty, and the rates ComEd would have charged during the same periods. In all but two of the included periods, Spark’s prices were more than double ComEd’s. The differences went as high as $138.83%. 

Also, the complaint alleges that Spark almost never lowered its rates, even when market prices were lower. For example, between February and April 2018, ComEd lowered its rates, but Spark increased its rates. Even in periods where the general trend was the same, Spark’s decreases were larger. For example, between August and December 2017, both companies did decrease rates, but ComEd’s decreased 6% while Spark’s decreased by less than 1%.

A second table shows the difference between Spark’s prices during the same periods and a weighted locational marginal price plus other wholesale costs. The differences are even larger.

The complaint alleges that Spark has engaged in deceptive acts or practices under Illinois state laws and breached its contracts as well as the implied covenant of good faith and fair dealing, among other things.

Article Type: Lawsuit
Topic: Consumer

Most Recent Case Event

Spark Energy “Competitive” Variable Rates Illinois Complaint

March 27, 2019

The complaint for this class action tells a familiar story: An alternative retail energy supplier encourages customers to switch from their old supplier by promising competitive variable rates. The customer switches, then discovers that rates are higher and seem to “vary” mostly in one direction. In this case, the retail energy supplier is Spark Energy, LLC. 

spark_energy_deceptive_marketing_compl.pdf

Case Event History

Spark Energy “Competitive” Variable Rates Illinois Complaint

March 27, 2019

The complaint for this class action tells a familiar story: An alternative retail energy supplier encourages customers to switch from their old supplier by promising competitive variable rates. The customer switches, then discovers that rates are higher and seem to “vary” mostly in one direction. In this case, the retail energy supplier is Spark Energy, LLC. 

spark_energy_deceptive_marketing_compl.pdf
Tags: Energy, Variable Rates