Constellation NewEnergy class action claims company falsely advertises rate cap

Constellation NewEnergy lawsuit overview:

• Who: Plaintiff Yitchok Birnhack filed a class action lawsuit against Constellation NewEnergy Inc.
• Why: Constellation NewEnergy allegedly falsely advertises a rate cap but ignores its promises and overcharges customers.
• Where: The Constellation NewEnergy class action lawsuit was filed in New Jersey federal court.

Constellation NewEnergy Inc. dupes consumers by falsely promising to implement a cap on service rate prices then charging them prices over the cap limit, according to a class action lawsuit filed Aug. 23 in New Jersey federal court.

“This action seeks to redress Constellation’s deceptive, bad faith, and unlawful pricing practices that have caused thousands of commercial and residential customers in New Jersey and other states to pay considerably more for their electricity and natural gas supply than they should otherwise have paid,” plaintiff Yitzchok Birnhack says in the Constellation NewEnergy lawsuit.

Birnhack explains that consumers in many states can choose to purchase gas and energy from unregulated energy service companies (ESCOs) instead of their local utility. ESCOs are the result of deregulation efforts in the 1990s to allow competition with utilities to ideally reduce energy prices for end users, the Constellation NewEnergy class action lawsuit says.

However, “unregulated energy pricing is subject to market volatility leading to price spikes any reasonable end user would want to avoid,” Birnhack asserts.

The Constellation NewEnergy lawsuit alleges the ESCO exploits consumers’ desire to take advantage of price drops in the market while having protection against potential price spikes. Therefore, Constellation NewEnergy offers a variable market rate product with a cap on certain wholesale costs and margins.

Constellation NewEnergy rates exceeded the contractually-set cap, plaintiff alleges

Birnhack says he enrolled in a Constellation NewEnergy rate plan with a fixed rate in 2010. In 2012, Constellation NewEnergy allegedly began charging a variable rate for electricity at rates that were higher than contractually allowed.

Birnhack points to his Constellation NewEnergy rate contract, which reportedly states that the retail service charge “will not exceed $0.065 per kW/h.” However, Constellation NewEnergy allegedly ignored the contract language and charged him a retail service charge in excess of the promised $0.065 per kW/h  cap.

The Constellation NewEnergy lawsuit alleges the company takes advantage of consumers’ lack of knowledge about retail energy pricing information. 

Constellation NewEnergy also violates several disclosure requirements in New Jersey that are designed to protect consumers from deceptive marketing and price gouging.

Birnhack filed the Constellation NewEnergy lawsuit on behalf of himself and a proposed class of all Constellation’s residential and commercial electric or natural gas customers nationwide whose contracts included variable pricing terms consisting of a usage charge and a capped retail service charge.

Constellation was hit with a class action lawsuit in 2017 that alleged the energy company used bait and switch tactics to entice customers by promising low rates but increasing the rates dramatically.

Have you experienced Constellation NewEnergy rate price spikes? Tell us about it in the comments!

Birnhack is represented by Jessica L. Hunter and J. Burkett McInturff of Wittels McInturff Palikovic and D. Greg Blankinship and Erin Kelley of Finkelstein, Blankinship, Frei-Pearson & Garber LLP.

The Constellation NewEnergy class action lawsuit is Yitzchok Birnhack v. Constellation NewEnergy Inc., Case No. 3:23-cv-08337, in the U.S. District Court for the District of New Jersey.

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