Verde Energy Class Action Alleges Bait-and-Switch Scheme

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Verde Energy has been overcharging Illinois utility customers in what amounts to a bait-and-switch scheme, according to a new class action.

According to plaintiff Tracey Mercado, defendant Verde Energy USA used false promises of lower, market-based rates to lure customers, then charged them an artificially inflated rate that had no connection to the market price for electricity.

By using a business model “primarily based on deception,” Mercado says Verde Energy gets away with charging customers more than they should have to pay.

Verde Energy is an alternative retail electric supplier, a company that purchases wholesale electricity from producers and sells it to end users at a markup rate. The Connecticut-based company sells electricity in the Illinois market, which has been deregulated since 1997.

Customers who choose Verde Energy as their supplier continue to have their electricity delivered by the local utility, which also continues to bill them, Mercado says. The only difference these customers see is in the price they pay for electricity.

As part of Illinois’ deregulation, suppliers like Verde Energy are subject to minimal regulation, Mercado says. They do not have to seek approval of the Illinois Commerce Commission for their rates or for the ways by which they determine their rates.

Illinois and other states that deregulated their electricity markets did so under the rationale that it would introduce competition that would drive retail prices down, benefitting consumers like Mercado. Verde Energy allegedly promised utility customers that it would charge market-based rates, which on the whole would be lower than those charged by their local utilities, Mercado says.

But that apparently did not turn out to be the case for Mercado and her proposed Class, according to this Verde Energy class action lawsuit.

Mercado says she switched to Verde Energy in November 2014. Relying on a Verde Energy representative’s assurances that she would pay less for electricity, Mercado says she chose to leave her local utility company Commonwealth Edison.

After four months at a steady introductory rate, Mercado says she switched to a variable rate that would supposedly “change monthly with market conditions.” Once that change kicked in, Mercado claims, her monthly rate increased whenever the market increased, then remained high even when the wholesale price of electricity fell.

The plaintiff says that in several months, the rate she paid exceeded Commonwealth Edison’s rate by over 45 percent. When she discovered the alleged discrepancy in August 2017, she cancelled her Verde Energy service and went back to Commonwealth Edison.

Mercado is proposing a statewide plaintiff Class that would cover all Verde customers in Illinois who within the applicable statutory limitations period were charged a variable rate for electricity.

She seeks an award of restitution, compensatory and punitive damages, court costs and attorneys’ fees.

Mercado’s attorneys are Richard L. Miller II and Edward A. Wallace of Wexler Wallace LLP, Jonathan Shub and Kevin Laukaitis of Kohn Swift & Graf PC, Daniel K. Bryson of Whitfield Bryson & Mason LLP, Gregory Coleman of Greg Coleman Law PC, and Jason Brown of JTB Law Group LLC.

The Verde Energy Deceptive Pricing Class Action Lawsuit is Mercado v. Verde Energy USA Inc., Case No. 1:18-cv-02068, in the U.S. District Court for the Northern District of Illinois.