Verde Energy Unfair Variable Electricity Rates Class Action

Deregulation of electricity markets has not turned out as some consumers expected. The complaint for this class action alleges that Verde Energy USA, Inc. has “deceptive, bad-faith, unconscionable and unfair pricing practices” that have caused consumers to pay much more for electricity than they should have paid.

The class for this action is all residential and commercial consumers in the US who were charged a variable rate for electricity by Verde Energy USA.

Ohio deregulated its electricity markets in 1999. The intention was to allow consumers to benefit from competition and pay lower prices.

Utilities charge consumers something called a Standard Service Offer (SSO) for electricity.

Verde is not a utility but an electric services company (ESC). ESCs can obtain electricity in different ways. This flexibility was expected to allow ESCs to offer rates that were competitive with or even lower than utilities’ rates.

In fact, the complaint says that when plaintiff Joanna Speisman first signed up with Verde, in August 2016, it gave her fixed rates of 6.49 cents per kWh that were competitive with Ohio utility rates. However, Verde’s customer agreement specified that when her fixed rate expired, she would automatically be signed up for variable rates, which the agreement said “may change monthly with market conditions.”

In August 2017, her rate went up to 8.99 cents per kWh. By the time she canceled, in May 2018, her rate on the previous bill had gone up to 11.99. The complaint says that Verde’s variable rates “were substantially higher than both wholesale and retail market rates, and did not decrease when wholesale electricity market prices declined.”

The complaint features a chart in which Verde’s prices for different periods of time. The final column shows the “Percent Different” between the Verde’s “variable” price and the SSO, which goes up to 114.87%—that is, with Verde’s price slowly rising until it’s more than double the SSO.

“This gradual increase … is not reflective of increases in either wholesale or retail costs.” The complaint calls this kind of gradual but steady rise a “glide path,” “with the expectation that customers would not notice a gradual increase, is an unfair and deceptive practice and reflective of bad faith pricing.”

The complaint also contends that Verde’s “costs for serving variable rate customers and fixed rate customers are not substantially different. The only reason that Verde’s variable rates are so much higher than its fixed rates is that it engages in profiteering and price gouging with respect to its variable rate customers, a stark demonstration of its bad faith pricing practices.”

While Verde was increasing its price, the utility was lowering its price, from 6.33 to 5.58 cents.

Article Type: Lawsuit
Topic: Consumer

Most Recent Case Event

Verde Energy Unfair Variable Electricity Rates Complaint

July 13, 2020

Deregulation of electricity markets has not turned out as some consumers expected. The complaint for this class action alleges that Verde Energy USA, Inc. has “deceptive, bad-faith, unconscionable and unfair pricing practices” that have caused consumers to pay much more for electricity than they should have paid.

Verde Energy Unfair Variable Electricity Rates Complaint

Case Event History

Verde Energy Unfair Variable Electricity Rates Complaint

July 13, 2020

Deregulation of electricity markets has not turned out as some consumers expected. The complaint for this class action alleges that Verde Energy USA, Inc. has “deceptive, bad-faith, unconscionable and unfair pricing practices” that have caused consumers to pay much more for electricity than they should have paid.

Verde Energy Unfair Variable Electricity Rates Complaint
Tags: Energy, Unfair Charges, Variable Rates