An ESCO Company May Be Raising Your Electricity Rates

An ESCO company could be raising your rates now that a number of states have deregulated their electric utilities.

If you switched from your local utility to a new “deregulated” seller with the promise of lower monthly bills and ended up actually paying more, you may have a legal claim. Even if you have since left the deregulated supplier, you may have a legal claim in an ESCO company lawsuit.

More and more states are deregulating utilities, which means consumers are now being offered the choice to continue using their old utility supplier or switch to a new utility supplier, also known as an ESCO company.

Customers report that the new companies often advertise aggressively, promising low rates to get customers to switch away from traditional utilities. Often, an ESCO company will promise customers a low rate that is “locked in” for a specific period of time. Allegedly, when this period is over, the rate can then be raised significantly — often higher than the rate offered by the old company.

Some customers have said that they feel like they’re being “legally robbed” by an ESCO company that hikes energy rates. Allegedly, these companies do not warn customers that their rates may increase dramatically after the “locked in” rate period when the customer first signs up with the company.

Around 28 states have deregulated energy, and the number has been rising, so many people may be subjected to this problem and not even realize it. Sometimes, customers may not look closely at their energy bill, and may not realize that they are being hit with higher rates than they were promised.

Overview: Energy Deregulation

Utility deregulation was supposed to provide customers with more options, allowing them to shop around for better rates. However, the system may have more drawbacks than benefits for consumers, because customers are subjected to rate hikes at the will of an ESCO company.

ESCO companies often justify rate hikes by saying that the rates change with market demand, but customers say that the rate hikes are unfair.

In contrast, traditional regulated utilities usually have to justify an increase in their energy prices to state regulators and to the public before they are permitted to increase rates.

Deregulation gave rise to energy resuppliers who don’t necessarily produce energy themselves but buy gas and electricity and resell it to consumers. ESCO energy companies don’t have to justify rate hikes like regulated utility companies.

Some well-known energy resellers include:

• Constellation
• Reliant Energy
• Verde Energy
• Spring Energy

In response to the undisclosed rate hikes from third-party energy resellers, many customers have complained to their state’s Public Utilities Regulatory Agency.

In Connecticut, such was the case. Eli Katz, head of Connecticut’s Office of Consumer Council, cautions that in many cases, an ESCO company will especially target vulnerable potential customers like low-income households and the elderly. In an attempt to entice these customers into making a switch for lower energy rates, the companies reportedly make their messaging confusing, or worse, even intimidating.

Join a Free ESCO Energy Class Action Lawsuit Investigation

You may qualify to file an energy service company class action lawsuit if you bought utilities through a deregulated energy supplier such as:

• Constellation
• Reliant Energy
• Verde Energy
• Spring Energy

Learn More