Energy Supplier Agrees to Compensate Customers for Not Delivering on Price Cuts

Tom Johnson | January 9, 2015 | Energy & Environment
Third-party supplier HIKO Energy agrees to pay $2M to consumers who expected to lower bills but saw huge price spikes instead

The state has negotiated an agreement with an energy supplier to pay $2.1 million to settle allegations that the company misled thousand of customers by telling them it would lower their energy bills.

In an agreement reached with the New Jersey Attorney General’s office, the state Board of Public Utilities, and the Division of Consumer Affairs, HIKO Energy LLC agreed to spend up to $1.8 million to compensate customers who were hit with huge spike in their bills despite promises by the company to that they would spend less on energy.

A consumer affairs spokesman could not project how much HIKO customers would receive in rebates.

The case is the first to be settled by the state after it filed civil complaints against three alternative energy suppliers, most of whom promised big savings but failed to deliver when an extreme cold wave last year sent electric and gas bills soaring

“HKO aggressively solicited consumers with written guarantees and verbal representation about its monthly prices for electricity and natural gas service — promises the company failed to fulfill, resulting in significant financial losses for New Jersey consumers,’’ said Acting Attorney General John Hoffman.

Hoffman said his office is continuing to pursue action against the two other energy suppliers mentioned in the civil complaint, which was filed in June.

As part of the settlement, HKO agreed to make significant changes to its business practices, including revising its website, contracts, and related documents to provide clear and precise information about the company’s billing and pricing practices.

Those steps are in line with efforts by the BPU to provide more concise and clear information to consumers who are contemplating switching energy providers.

“To ensure that consumers receive clear and accurate information about the terms of energy-supply contracts, the board recently ordered all third-party suppliers (which provide energy rather than incumbent utilities) to provide a standard one-page summary of the key terms of the agreement, including price, length of contract, and whether the rate is fixed or variable,’’ said BPU President Richard Mroz.

The latter issue is important because many consumers who switched to third-party suppliers under variable pricing contracts did not realize the promised savings would not materialize if power prices unexpectedly rose—as they did when unusually cold weather blanketed the state.

“Consumers switched energy suppliers due to the promise of reduced monthly bills — but instead found their bills spiraling out of control last winter,’’ said Division of Consumer Affairs Director Steve Lee.