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Spark Energy Illinois Variable Electricity Rates Class Action

In deregulated electricity markets, how do consumers choose their provider? Usually by price. The complaint for this class action alleges that Spark Energy, LLC had a deceptive variable rate that did not vary with the market and charged customers administrative fees they were not expecting.

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

Utilities in Illinois buy electricity from wholesalers on a multi-year rolling basis in auctions. They then add additional amounts for transmission, capacity, ancillary, congestion, and administrative costs, but no markup or profit. The complaint says that these rates without profits “serve as pure reflections of average market costs of wholesale electricity and associated costs over time.” 

Alternative retail electric suppliers (ARESs) like Spark, in contrast, have more options as to how they buy the electricity. Deregulation is meant to let ARESs use those options to try to reduce costs for the benefit of consumers. Spark’s fixed rates during the class period were competitive with or lower than utility rates. 

Around February 2012, Spark offered plaintiff Michael Harty a low fixed rate for a time and then variable rates for electricity. The fixed rate was lower than he was then paying with utility ComEd. He accepted and was given a Uniform Disclosure Statement and Terms of Service, which said that after the initial period, the rate would become variable, and “your rate may vary according to market conditions.” As the fixed rate period was expiring, he was sent a uniform renewal letter saying that Spark had “competitively priced offers.”

The complaint claims that a reasonable consumer would believe that the primary driver behind the varying rates would be market conditions, “i.e., the rates Spark Energy’s competitors charge and wholesale costs for purchasing energy.” But in reality, the complaint says, this is not true.

A chart of Spark’s rates over twenty-three billing periods compares Spark’s rates with ComEd’s. For all but two months, Spark’s rates were more than double ComEd’s, and they did not move with ComEd’s moves. For example, when ComEd’s rates fell by 11%, Spark increased its rates by 6%. In another period, ComEd’s rates fell by 7%, but Spark’s rose. At yet another time, ComEd’s rates fell by 6% while Spark’s fell by less than 1%. 

The complaint claims that Spark’s rates never varied in keeping with wholesale market prices. At a time when the wholesale price fell by 26%, the complaint claims, Spark’s rates remained the same.

Spark also charged administrative rates, which the complaint claims were also “in direct contravention of the terms of Spark Energy’s contract.” It began charging this fee only after Harty was switched to the variable rate. They varied from $4.95 to $6.95 per month.

The complaint claims the company has engaged in deceptive business practices, violated laws on advertising of electricity rates, and breached its contracts, among other things.  

Article Type: Lawsuit
Topic: Consumer

Most Recent Case Event

Spark Energy Illinois Variable Electricity Rates Complaint

March 27, 2019

In deregulated electricity markets, how do consumers choose their provider? Usually by price. The complaint for this class action alleges that Spark Energy, LLC had a deceptive variable rate that did not vary with the market and charged customers administrative fees they were not expecting.

spark_energy_electricity_rates_compl.pdf

Case Event History

Spark Energy Illinois Variable Electricity Rates Complaint

March 27, 2019

In deregulated electricity markets, how do consumers choose their provider? Usually by price. The complaint for this class action alleges that Spark Energy, LLC had a deceptive variable rate that did not vary with the market and charged customers administrative fees they were not expecting.

spark_energy_electricity_rates_compl.pdf
Tags: Additional charges in breach of contract, Energy, Variable Rates