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Energy Plus Faces Class Action over Rate Hikes

Newark, NJ: A consumer fraud class action lawsuit has been filed against Energy Plus Holdings LLC and Energy Plus Natural Gas LP (Energy Plus) for perpetrating an illegal bait-and-switch scheme that has deceived and defrauded thousands of New Jersey consumers of millions of dollars.

"Energy Plus promises customers competitive market-based rates and savings on their energy bills if they switch their accounts from other energy suppliers," said Mr. Wittels of Sanford Wittels & Heisler LLP, the lawfirm representing the plaintiffs. "In fact, any savings that occur are short-lived and effectively wiped out within one or two billing cycles as Energy Plus jacks up its promised rate, often by as much as 150%. Customers can end up paying two or three times more for electricity or natural gas than they did before switching their accounts to Energy Plus. Instead of getting the promised benefit, these customers incur a tremendous loss, to the tune of hundreds or thousands of dollars every year. Such business practices are not only illegal, they are unconscionable."

The lawsuit was filed on behalf of Kearny, NJ resident Yue Yu and a class consisting of thousands of New Jersey residents and businesses whom the Pennsylvania-based company deceives in New Jersey. Mr. Wittels added that Energy Plus is believed to engage in the same tactics in the other states where the company does business, including Connecticut, Illinois, Maryland, Massachusetts, New York, Ohio, Pennsylvania, and Texas.

Ms. Yu was enticed by Energy Plus' deceptive claims to switch her electricity and natural gas service to the company in September. Between November and April, she incurred more than $200 in overcharges for her energy supplies, billed at a rate about 70% above the market rates over the 6-month period. When she discovered the magnitude of the difference between the rates promised by Energy Plus and the rates she was actually billed, Ms. Yu switched her service back to PSE&G.

According to the complaint, Energy Plus takes advantage of the deregulation of energy in New Jersey by adopting fraudulent and deceptive business tactics. "The company misleads customers to believe that by switching to Energy Plus they will save money compared to receiving energy services from their local public utilities," said co-lead counsel Jeremy Heisler. "The company also represents that its rates are tied to market factors and are competitive, when in fact, they are not. It's a classic consumer fraud and scam."

The complaint asserts that Energy Plus' rates are "completely divorced from prevailing market conditions" and usually "skyrocket" within 60 days of customers' switching their accounts.

Ms. Yu says these corporations exploit customers by making ambiguous representations and agreements that create an expectation of savings that never materialize. "The company never discloses that its regular rates are nearly always substantially higher than its competitors and exorbitant when compared to the energy supply market," said co-counsel Grant Morris .

The complaint describes in detail how Ms. Yu and all members of the class suffered economic injury because they routinely paid substantially more for Energy Plus services compared to the cost of energy from their previous supplies.

The proposed class has two subclasses. The first subclass comprises New Jersey customers of Energy Plus Holdings LLC who switched to the company for electricity services; the second comprises New Jersey customers who used Energy Plus Natural Gas LP as their natural gas supplier. Ms. Yu's claims are typical of the claims of the class.

The complaint alleges that both Energy Plus companies violated the New Jersey Consumer Fraud Act, breached the covenant of good faith and fair dealing integral to all contractual agreements, and received unjust enrichment by taking money that belongs to Ms. Yu and the class members.

The complaint asks for a class action declaration; an award of compensatory damages to Ms. Yue and class members; treble damages, as allowable under state law; an order enjoining Energy Plus from continuing to implement its deceptive, illegal and unlawful trade practices and schemes; pre- and post-judgment interest on damages awarded.

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Last updated on May-2-12

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