Illinois bill aims to curb alternative energy scams by forcing transparency

Critics say deregulation has allowed energy resellers to dupe consumers into paying an estimated $600 million extra in recent years rather than lowering bills.

Print More

Photo by Bob Chiarito

Illinois Attorney General Kwame Raoul urged lawmakers to pass Senate Bill 651, legislation to reform the alternative retail energy market, accused of scamming consumers across Illinois, at an April 23 press conference.

For years, Fred Popolo, a 45-year-old union carpenter, had his bills set to pay automatically every month. When his gas bill got high, he’d lower the heat at his two-bedroom raised ranch in Bridgeport. That is, until a glitch in the system failed to charge him in February, driving his March bill to $671.

“I went into the account and checked it out and called People’s Gas. They said, ‘Our bill is really $123 but your other bill is $248 [for March]. Then, they asked if I was aware that I was signed up for this additional gas service, which is Just Energy. I was unaware and I asked what it is and how long have I been signed up for it.”

Popolo learned that he had been enrolled with Just Energy, an alternative retail energy supplier, for the last 10 years without his permission. After investigating, Popolo and his girlfriend, 40-year-old mechanical engineer Gina Kapernekas, estimate they were overbilled for the last decade more than $20,000. They say the contract Just Energy provided to show Popolo signed up was forged.

RELATED:

Alternative energy scams hit poor blacks and Latinos the hardest, complaints show

Popolo’s story, while extreme, is just one of hundreds from Illinois residents who claim to have been duped by alternative energy companies that promised to lower utility rates and ended up doing the opposite. Critics of alternative energy companies say they target poor black and Latino neighborhoods, as well as the elderly and communities where English is a second language. An analysis by The Chicago Reporter showed that 20 Chicago ZIP codes with the highest rates of consumer complaints against energy re-sellers are mostly non-white. These numbers mirror numbers released by Illinois Attorney General Kwame Raoul, who held a press conference April 23 to urge state lawmakers to pass Senate Bill 651, legislation targeting the secondary energy market sponsored by State Sen. Kimberly Lightford, who herself was the victim of a scam.

Lightford said she was at O’Hare Airport last summer when someone approached her about lowering her utility bills.

“Someone came up to me and said I’d save money and they offered frequent flier miles if I signed up,” Lightford said. Shortly after signing up, her bill shot up instead of going down.

“My bill went up but it was summertime, so I was thinking that maybe I did use a little more energy. But then the next bill was $800,” Lightford said, adding that her normal bill ranged from $130 to $140.

Reforming a deregulated industry

The alternative retail energy market was created in 1997 when the state legislature voted to deregulate the utility industry. The theory was that deregulation would lead to increased competition and result in lower bills to consumers, but critics say the opposite has taken place.

“The General Assembly created this industry with the idea of creating competition to drive down prices, but almost no one who signs up ends up paying less,” Raoul said.

SB 651, called the Home Energy Affordability & Transparency Act (HEAT), seeks to strengthen oversight by forcing alternative energy companies to be more transparent. The bill passed the state Senate on May 1, 2019, and now heads to the House for a vote.

According to materials supplied by Raoul, SB 651 would:

  • Protect public energy assistance funds like the Low Income Home Energy Assistance Program (LIHEAP) and Percentage of Income Payment Plan (PIPP) from being used to pay higher charges charged by alternative retail energy suppliers.
  • Require the utility’s comparison price to be included on all supplier marketing materials, during telephone or door-to-door solicitations and on every consumer’s utility bill.
  • Require suppliers to notify customers before their rates rise so consumers can take informed action.
  • Prevents suppliers from renewing a consumer’s contract and raising rates without notifying the consumer of the new rate and obtaining consent.
  • Requires suppliers to report their rates to the Illinois Commerce Commission and attorney general every quarter.
  • Improves the attorney general’s existing authority to protect consumers from suppliers’ unlawful and deceptive marketing practices.

Raoul estimates that over the last four years, consumers enrolled with alternative energy suppliers have paid more than $600 million more in electricity costs than consumers who stayed with their public utility.

Jim Chilsen, director of communications at the Citizens Utility Board, a nonprofit public watchdog group in support of SB 651, said the bill is similar to several over the last few years that failed, including one last year (SB 1531) that failed by four votes.

“I think the alternative suppliers have a strong presence and they lobby very hard against these measures. A lot of these bills over the years have been similar, but the difference now is that the problem has gotten worse,” Chilsen said.

Raoul said his office has taken action over the years against nine alternative energy suppliers, five of which were taken in the last three years, returning millions of dollars to consumers in the state. He added that there are approximately 100 registered alternative energy suppliers operating in Illinois. Among the companies that the state targeted was Just Energy, who Patricia McCracklin, a 70-year-old certified nursing assistant from Hazelcrest, says she signed up with after receiving a flyer in her mailbox promising reduced rates.

Instead, shortly after enrolling, McCracklin said the company doubled her electric bill and threatened to cut off her service in the middle of winter when she couldn’t afford to pay. McCracklin added that she enlisted the help of CUB who helped her get relief, but along with high bills, the company would send her bills that were hard to decipher and would not respond to her questions.

“I’ve lived in the same place for 23 years and I’ve never gotten electric bills that were like that,” McCracklin said. “I work nights so during the coldest portion of the day I’m at work and I always turn my thermostat down. It was the way they bill, I was not able to tell where I was being cheated by I knew my bill was exorbitant.”

She also said Just Energy extended her 6-month contract without her permission by forging a contract and tried to charge her $250 to get out of it.

“They produced, supposedly, documents that I had signed, but I hadn’t signed them at all,” McCracklin said. “They called it an early termination and wanted to charge me $250 and then when I protested they said they were going to cut off my service in the middle of 40 below weather. It was then that I called the Citizens Utility Board.”

Gina Kapernekas and Fred Popolo say they were overcharged by approximately $20,000 over the last 10 years by a secondary energy supplier they didn’t enroll with.

Popolo also alleged forgery by Just Energy, saying that he never signed up to begin with. He supplied a copy of a contract Just Energy sent to him, which lists the company as U.S. Energy Savings.

“I never sign or say Fred Popolo. I always write or say Fred J. Popolo and that’s not my signature or penmanship,” Popolo said.

A look at the last five months Popolo was enrolled with Just Energy showed that he was charged an average of $170 more than if he would have stayed with People’s Gas like he thought he was. Over the ten years he was enrolled without his knowledge, that number balloons to more than $20,000.

Chilsen said CUB could not provide exact numbers, but said his group is well aware of Just Energy.

“Just Energy has a long track record of getting in hot water in Illinois and in other states. It also has a long trail of unhappy customers,” Chilsen said.

In a statement to The Chicago Reporter, Just Energy said “Just Energy has always supported a strong regulatory approach that balances a healthy competitive market and best business practices that include appropriate protections for customers.” Just Energy did not address specific questions about the experiences of their customers quoted in this story.

Just Energy is just one player among many with questionable business practices, according to critics like CUB, the Public Interest Research Group, the Better Business Bureau and the AARP. They describe an industry rife with misleading and over-aggressive marketing, unauthorized switching, also known as “slamming,” in which a customer is switched from one provider to another without permission, extended contracts without permission and of course, bills that are a lot higher than expected by the consumer.

Rebecca Raines, a 36-year-old criminal justice chairperson of the West Side branch of the NAACP, said she was duped by alternative energy supplier Energy Plus.

“I was living in Matteson in 2012 when a friend of mine approached me at church and said I should switch over to help out a girl that she was working with,” Raines said. “I’m a millennial, I get all of my bills electronically so they would send me a bill but I didn’t actually look at my usage. For years, I just paid whatever they said.“

Raines said five years later, her electric bill at her 2-bedroom condo had skyrocketed. “I think I was paying around $50 and it jumped up to 90-something. A month later, I received a bill for $182.”

Raines said she has not received any money back and would probably count it as a learning experience.

Transparency in consumer choice

Raoul said one of the main goals of SB 651 is transparency. Higher bills do not necessarily equate to fraud, he said.

“There are some in the industry that argue that they offer a choice for consumers, for example, to embrace renewable energy sources. So, they argue that some may choose to pay more which is fine if there’s transparency,” Raoul said.

While critics argue that most people who sign up with alternative suppliers lose money, there are some in the industry who contend that they do help consumers.

Tina Geuder, who works full-time as a logistics professional, recently started a side-job with Xoom Energy. She said that her company is “completely legitimate” and that she has to work hard to overcome objections from potential clients who believe all alternative energy companies are scammers.

“If it was a shady company I’d walk away,” Geuder said. “We lock people into a fixed rate for a two-year term and to sign up, we ask four random questions only the customer would know such as what company holds your mortgage in order to ensure against any claims that someone signed up without permission.”

She added that customers who refer people to her get incentives and Xoom salespeople do not sell door-to-door, instead relying on personal networks. She also said Xoom is AAA rated with the Better Business Bureau. However, BBB spokesman Tom Johnson said the group is not aware of Xoom.

The Illinois Commerce Commission gave Xoom a two out of five star rating, which means they receive higher than the average rate of complaints, on its Electric Supplier Complaint scorecard for April 2018 through September 2018, the most recent data available from the group.

Constellation, an alternative supplier owned by Exelon, which also owns ComEd, is an example of one alternative energy supplier that has high marks. It has a five-star rating on the ICC’s most recent scorecard and is AAA rated by the BBB. And although CUB has received some complaints about Constellation, Chilsen said that complaints are not an indication of fraud and that companies rated highly by the BBB usually act to resolve issues quickly.

In a statement, the company said “Constellation has been working with the proponents of SB 651 to address the problems that occur when a few disreputable companies exploit the market … We look forward to reviewing the revised language and we continue to actively advance and support efforts to root out bad actors and strengthen consumer protections, while preserving consumers’ rights to choose their electricity supplier.”

Popolo also said he would be filing complaints with CUB, the ICC and the BBB to try and recover some of the thousands of dollars that he says was swindled from him.

McCracklin, who did get relief with the help of CUB, said she hopes SB 651 — which has a deadline of May 31 — is passed.

“Somebody should protect the public because anytime someone is threatening to cut off your service and signing your name to contracts that you didn’t sign, that’s just illegal,” McCracklin said. “Most of us don’t know how to fight companies like that. We get our bill and we pay it, but most of us know when we’re being taken for a ride. We aren’t stupid.”

This post has been updated since publishing.