Illinois Attorney General Lisa Madigan announced a settlement on August 8 with Ethical Electric, an alternative retail electricity supplier (ARES), for misleading consumers about the source of the “green” energy provided through its Clean Energy Option product.
Madigan said that Ethical Electric’s direct mail solicitations promoted the company’s Clean Energy Option as electricity generated exclusively from renewable energy sources, such as wind and solar.
Instead, the electricity provided by the plan was sourced from a variety of sources from the electric grid; paired with the purchase of renewable energy certificates (RECs) – which represent proof that one megawatt-hour (MWh) of electricity was generated from a renewable energy source.
In addition, the AG alleged that Ethical Electric claimed the price of its Clean Energy Option product was comparable to Commonwealth Edison’s rates, when in fact it was routinely more than 5 percent higher than ComEd’s price and often was substantially more expensive.
As an ARES, Ethical Electric is certified by the Illinois Commerce Commission (ICC) to provide electricity supply to residential and commercial customers who can choose to purchase their electricity supply from an ARES rather than ComEd or their regulated public utility
“Consumers deserve to know what they’re buying, and this company sold a product that was misleading to consumers interested in conserving energy and protecting our environment,” Madigan stated, adding, “That type of blatant consumer fraud will not be tolerated.”
The settlement requires the company to:
- Issue as much as $3 million in refunds to customers in the Prairie State, depending upon the number of ratepayers who request payback;
- Discontinue the use of its “misleading product name;” and
- Provide more detailed information on the nature of renewable energy.
All Illinois residential customers who enrolled in the Clean Energy Option supply through a direct mail solicitation – whether they are still enrolled in the product or not – will automatically receive a refund of approximately $10 in the form of a credit for current customers and via check for former customers.
In addition, any customer who believes the marketing materials were misleading may request an additional refund for the amount paid over the ComEd price by completing and returning a refund request that will be mailed to all customers within the next 45 days.
Ethical Electric has agreed to more accurately describe the nature of the electricity delivered to its customers by disclosing the purchase of RECs in all solicitations and providing an explanation of RECs in all future direct mail solicitations. What’s more, the company will stop making inaccurate claims about the price of its product and explain how variable rates are determined. Ethical Electric also will stop using the misleading and confusing product name “Clean Energy Option.”
The ICC recently proposed new rules to limit ARES from marketing renewable energy as “green” and requiring them to provide more detailed disclosures about where the power is sourced, which Madigan has called a positive step forward in providing transparency and protecting consumers.
The settlement was handled by Assistant Attorney General Anna Crane for Madigan’s Public Interest Division, as well as Madigan’s Public Utilities and Consumer Fraud Bureaus.
Update: On August 10, Ethical Electric contacted Retail Energy Buyer with the following company statement:
“Ethical Electric is closing in on purchasing 1 billion kilowatt-hours of renewable energy from Illinois wind farms, which will directly support more widespread renewable energy efforts in Illinois. We are a net exporter of Illinois wind energy to other states, bringing millions of dollars into the Illinois economy every year. We remain committed to promoting a positive impact through cleaner air and healthier lives in the communities we serve and the world we live in.
“Ethical Electric has always secured Renewable Energy Certificates to match 100 percent of our electricity sales in Illinois and nationwide, with one REC for every megawatt-hour sold. At all times, we believed that we were following marketing guidance provided by the Federal Trade Commission, the U.S. Environmental Protection Agency, Illinois law, and the Center for Resource Solutions.
“We are pleased to reach an agreement with the Illinois Attorney General’s Office, without litigation, regarding direct mail marketing materials we once used. We fully cooperated with the inquiry and voluntarily halted direct mail marketing in the state until reaching this agreement to make certain changes in our materials, and to provide at least $191,673 in refunds to our current and former customers. We believe this agreement will enhance transparency and allow us to continue providing renewable power to environmentally-conscious consumers in Illinois.”