Green power supplier to refund customers under settlement

A “green” power supplier accused of making misleading marketing claims in Illinois must provide hundreds of thousands and perhaps millions in rebates to former and current customers under a settlement with Attorney General Lisa Madigan’s office.

The settlement, finalized Aug. 8, also will require Washington, D.C.-based Ethical Electric to change its marketing practices to make clear that its customers aren’t getting their power exclusively from renewable sources like wind and solar, as its previous materials appeared to claim.

In addition, if the company continues to make references to Commonwealth Edison’s prices in its marketing, it will have to provide side-by-side comparisons of its price to ComEd’s.

Ethical flooded the Illinois market in 2014 and 2015 with direct mail solicitations for a product it called the Clean Energy Option. The missives suggested that residents were required to choose a power supplier (people, in fact, can ignore such offers and stick with ComEd) and that a 100 percent-renewable-energy product could be had at a price only slightly above the utility’s.

In fact, Ethical’s price was routinely more than 5 percent higher than ComEd’s and often much higher. It also was locked in for only three months, after which it was reset monthly.

In September 2015, when Crain’s published a story on light state regulation of retail electricity suppliers that raised questions about Ethical, its three-month price was more than 30 percent higher than ComEd’s.

As of late last year, the Citizens Utility Board fielded far more complaints and questions about the company’s offers than any other supplier, even though Ethical Electric is much smaller than better-known providers such as Constellation and Direct Energy.

“Consumers deserve to know what they’re buying, and this company sold a product that was misleading to consumers interested in conserving energy and protecting our environment,” Madigan said in a release. “That type of blatant consumer fraud will not be tolerated.”

Among other things, the settlement requires Ethical to inform consumers that it is purchasing “renewable energy certificates” from wind farms and other qualifying clean-energy developers in order to describe itself as “green energy.” The electrons powering customers’ homes still will come from a mixture of power sources, including coal and nuclear.

Under the settlement, all former and existing customers will get a credit or a check for about $10 from the company. But customers will have the opportunity to fill out a claim form that could push those rebates far higher if they act. Ethical will have to shell out a minimum of just over $191,000, but the total could near $3 million if enough customers pursue claims, Madigan’s office said.

Ethical was founded five years ago by Tom Mattzie, former Washington, D.C., director of progressive advocacy group MoveOn.org. The supplier operates in Illinois and seven other states, mostly in the East.

In a statement, the company said it “fully cooperated in (Madigan’s) inquiry and voluntarily halted direct mail marketing in the state until reaching this agreement to make certain changes in our materials, and to provide at least $191,673 in refunds to our current and former customers. We believe this agreement will enhance transparency and allow us to continue providing renewable power to environmentally conscious consumers in Illinois.”

The company added that it had always purchased enough renewable energy certificates to cover all of the electricity it sold. “At all times, we believed that we were following marketing guidance provided by the Federal Trade Commission, the U.S. Environmental Protection Agency, Illinois law and the Center for Resource Solutions,” the company said.

“Ethical Electric is closing in on purchasing 1 billion kilowatt-hours of renewable energy from Illinois wind farms, which will directly support more widespread renewable energy efforts in Illinois,” the company said. “We are a net exporter of Illinois wind energy to other states, bringing millions of dollars into the Illinois economy every year.”

Ethical is expected to resume direct mail marketing in Illinois using its revised approach. Under the settlement, the company won’t be allowed to call its product the Clean Energy Option. It also won’t be allowed to market using its corporate name, Ethical Electric. The new name will be subject to Illinois Commerce Commission approval.

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