This story was published in The Northwest Indiana Times on March 6, 2008. It was written for a class while Molly was attending Northwestern’s Medill School of Journalism.
After examining her late father’s utility bills, Lynda DeLaforgue noticed he had a contract with Houston-based U.S. Energy Savings Corp.
DeLaforgue estimates that the company charged her father — who was living near O’Hare Airport on a pension of $2,300 per month — about $2,000 more in two years than he would have paid under his former utility agreement.
DeLaforgue happens to be the co-director of Citizen Action/Illinois, which on Monday joined with Chicago-based Citizens Utility Board and AARP Illinois to file a complaint against U.S. Energy with the Illinois Commerce Commission. The Northwest Indiana Better Business Bureau has reported receiving more than 250 complaints about the firm.
U.S. Energy, a subsidiary of Energy Savings Income Fund, stated in a release Tuesday that it “denies the allegations raised and will vigorously defend” itself.
The company is an alternative gas supplier. It offers long-term, fixed-rate contracts, which are designed to protect customers from rising costs. U.S. Energy supplies the gas; a regulated utility such as Nicor Inc., Integrys Energy Group Inc. or NiSource Inc. delivers the product and makes money from delivery fees.
This distinction can create problems for customers.
“The bills that you get keep coming on your previous company’s letterhead and then it just says in fine print at the bottom of the bill that you’ve contracted for your supplier to be the U.S. Energy Savings Corp.,” DeLaforgue said.
The amount of gas a household uses is measured in therms. According to the coalition’s complaint, U.S. Energy sales personnel go door-to-door, asking customers to sign four- or five-year contracts with locked-in therm prices. The representatives play on fears of increasing costs of gasoline without clarifying that natural gas is a different product – with very different prices – than gas used in cars.
“It seems like they particularly prey upon seniors and people who don’t speak English,” DeLaforgue said.
U.S. Energy said in its press release that it offers “special protections to seniors and those whose first language is other than Spanish or English.” No one at the company could be reached for clarification on those protections.
This is not the first time the Citizens Utility Board and U.S. Energy have tussled. A 2006 complaint by CUB ended in a settlement, U.S. Energy admitting no wrongdoing, that provided refunds for customers who believe they were misled, and canceled some contracts without charging exit fees.
The 2006 press release quoted U.S. Energy CEO Brennan Mulcahy: “At the beginning of the contract term, the U.S. Energy fixed price is often higher than the floating utility price.” However, he added, “any premium initially paid compared to their local utility price, as of the end of fiscal 2006, substantially all customers who have completed a five year fixed price gas contract with us have saved money.”
Complaints against U.S. Energy increased 125 percent from 2006 to 2007, according to the Better Business Bureau of Chicago and Northern Illinois. Moreover, “the complaints for the first two months of this year versus the first two months of last year are up 250 percent,” said Steve Bernas, BBB’s president and CEO.
The BBB has about 200,000 reports on businesses in Illinois. In December 2005, the BBB listed U.S. Energy as unsatisfactory. About 30 percent of the companies covered have that rating. Companies are demoted because of unresolved customer complaints.
A month ago Illinois Attorney General Lisa Madigan filed a lawsuit against the company, accusing it of deceptive sales tactics.