We’ve previously reported on energy companies that go door-to-door in West Philly to market PECO alternatives that allegedly save you money. Now, a Philadelphia law firm wants to take some of them to court, arguing that they deceive their customers by charging low rates in the first few months and then raising fees.

In August, the firm Kohn, Swift & Graf announced they are looking for customers to join a class action lawsuit. The firm specializes in class action, and they have already sued some of the companies involved in other states, like Just Energy in New York and Direct Energy in Illinois. In the latter case, KS&G argues that the Direct Energy is “luring consumers into switching energy suppliers with false promises.” The firm has previously reached a settlement with Pennsylvania Gas & Electric in a similar case. 

Attorney Kevin Laukaitis is currently looking into the following companies that he says operate or have operated in West Philadelphia and other parts of the city:

• Commerce Energy/Just Energy
• Direct Energy
• Spark Energy
• Xoom Energy
• Palmco Energy
• Green Mountain Energy
• Residents Energy LLC (see correction below)
• Smart Energy
• Sperian Energy
• North American Power
• AEP Energy
• Entrust Energy
• First Energy

Laukaitis is looking to sue some of these companies for breach of contract. He explained how it typically works: A customer signs a contract agreeing to a variable rate based on market factors, but then the rate goes up much more significantly than market forces would dictate. In KS&G’s eyes, that’s a violation of the contract’s terms.

To test the plausibility of this mechanism, West Philly Local examined a contract from Green Mountain Energy. It promises a “variable supply price in our discretion based on many different factors, including competitive prices, industry charges we are responsible for, applicable state and local taxes, profit margins, or other business conditions.” The contract guarantees that the rate will never increase more than 30 percent month-over-month, but that could more than double a customer’s rate in three months’ time.

In an email to West Philly Local, a Green Mountain Energy representative noted that the company does also offer fixed price plans that don’t vary month-to-month, and also said that Green Mountain Energy believes in customer choice. She didn’t comment directly on the alleged breaches of contract Laukaitis talked about.

Companies like Green Mountain Energy, Commerce Energy, and others are able to provide electricity to consumers as a result of deregulation in the 1990’s. There is some controversy over whether deregulation has had the intended effect of reducing prices, as these dueling op-eds in the Wall Street Journal show.

West Philly Local reached out by phone and email to several of the companies Laukaitis named. In addition to the comment from Green Mountain Energy, we received a response from Palmco, saying they had not yet been notified of any case against them.

Customers interested in joining a potential class action lawsuit can email: klaukaitis@kohnswift.com.

– Eduard Saakashvili

CORRECTION: Laukaitis clarified that Residents Energy is no longer among the companies KS&G is looking into for a future lawsuit.