Third-Party Electricity Customers Sue Over High Bills

March 7, 2014 | Law & Public Safety
Two customers of Systrum Energy are suing the electricity provider.

By Christie Duffy

Hundreds of third-party electricity customers have logged complaints that they got bills for January that were over the top.

“I thought there was some type of computer error. I couldn’t believe the amount,” said Systrum Energy customer Robert Rashkes of West Orange.

Rashkes was charged more than two times his normal bill. And more than twice what PSE&G would charge him when he was their customer.

But a year ago he made the switch to a company called Systrum Energy. They’re based in Fairview and advertise 5 to 10 percent lower electricity rates than what the bigger utilities offer, like PSE&G, JCP&L and others.

“When the price spiked, people got their bill and they went, ‘Oh my god.’ Bottom line was the cost energy product very high,” said Systrum Energy Spokesperson J.P. Gibbons.

Two customers are now suing the third-party provider, looking for a class action lawsuit, alleging “Systrum falsely represented that its energy pricing would provide savings over the local utilities and that Systrum engaged in other misleading and deceptive conduct resulting in consumers significantly overpaying for energy.”

If the case reaches class action status, thousands of Systrum customers could be impacted.

“We do believe that over the period of a normal 12 month cycle, that you’re going to save 5 to 10 percent, absolutely, that’s the way historical data has indicated. Historical data never included the artic vortex that we all got hit with,” said Gibbons.

But Gibbons compares this to blaming the gas station attendant for the cost of your gas.

He says the raw cost of energy shot up from a little more than a nickel to a quarter per kilowatt when the polar vortex rolled into town. The lasting low temperatures spiking the cost of energy on what’s called the “spot electrical market.” Like the stock or commodity markets, that’s where Systrum buys its electricity. So when the market goes up, the company and its customers will feel the pinch. Which is why Systrum has turned most of its customers — about 80 to 90 percent — back over to traditional energy providers like PSE&G until the market stabilizes.

“We’re moving them over to protect them. We don’t want them to have a bill. We don’t make a lot of money when it goes up like that,” Gibbons said.

The question lies in whether Systrum fairly told consumers what they were getting themselves into.

As for Rashkes, he has decided to switch back to PSE&G. He says third-party electricity is too volatile a market for him.