A Philadelphia-based energy company that promises savings to New Jersey customers who switch from their current providers has been accused of running a “bait and switch” scam in a lawsuit that seeks class action status.
The lawsuit filed Wednesday in federal court in Newark claims that Energy Plus Holdings LLC and an affiliated company, Energy Plus Natural Gas LP, bilked their New Jersey customers out of millions of dollars by overcharging them for electricity and natural gas.
The lawsuit, filed by Sanford Wittels & Heisler of Fort Lee, says Kearny resident Yu Yue was persuaded to switch from PSE&G last year after reading an Energy Plus flyer that came in the mail with her Continental One Pass Mileage statement. The flyer said she if she switched she would receive mileage rewards and implied she would likely reduce her energy costs by 10 percent, the lawsuit said.
Yu’s electricity and natural gas rates declined in the first month, but then climbed 30 to 71 percent higher than the rates charged by her former provider, according to the complaint. Over a five-month period Yu was allegedly charged $247 more than she would have been charged if she stuck with PSEG.
The complaint says Energy Plus took advantage of industry deregulation to engage in “deceptive and unconscionable” practices in violation of the state’s consumer fraud law, which allows recovery of treble damages. The lawsuit seeks class action status for “thousands or tens of thousands of current and former customers in New Jersey” and says that each sustained damages of “hundreds or thousands of dollars annually.”
Energy Plus and its Princeton-based parent company, power plant owner NRG Energy, Inc. did not immediately respond to requests for comment. NRG Energy, which is not named in the lawsuit, acquired Energy Plus in September for $190 million.
The energy market in New Jersey was deregulated 13 years ago under Gov. Christine Whitman, to introduce competition. Third party suppliers such as Energy Plus are allowed to compete with utilities to supply energy, even as the utilities continue to provide delivery and system maintenance. Similar laws have been passed in a number of other states.
Energy Plus says on its web site that it was formed in 2007 and is “one of the nation’s fastest-growing energy companies” with more than 180,000 customers. The company is licensed to offer electricity in Connecticut, Illinois, Maryland, Ohio, New Jersey, New York, Pennsylvania and Texas. It offers natural gas services in New Jersey, New York and Ohio. The firm said its revenues in 2010 totaled $150 million, and that it employs 150 people.
The law firm Meiselman, Denlea, Packman, Carton & Eberz P.C. filed a similar action against Energy Plus last year in New York.