Constellation NewEnergy Facing Class Action Over ‘Excessive’ Retail Service Charges

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A proposed class action alleges Constellation NewEnergy has charged thousands of residential and commercial energy customers across more than a dozen states a retail service charge that exceeds the cap stipulated in its contracts. 

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According to the 31-page complaint, Constellation’s standard contract outlines that its retail service charge “will not exceed $0.065 kW/h.” In reality, the case alleges, Constellation “ignores the language of its contract” and charges more than $0.065 per kilowatt hour, hitting customers with electricity and natural gas rates consistently higher than what they were charged by their existing utilities. 

The suit claims Constellation has also violated several disclosure requirements mandated by New Jersey law, the purpose of which, the filing relays, is to protect consumers from price gouging and deceptive marketing by an energy service provider. Such regulations are also designed to inform the consumer in advance of the nature of the rates they will pay and how they compare to those charged by local utilities, the case adds.

“Constellation’s overcharges were not mere happenstance, as Constellation’s conduct is designed to take advantage of consumers’ good faith and their lack of knowledge about, and access to, accurate wholesale and retail energy pricing information,” the complaint contends. 

The lawsuit shares that in many states, residents and businesses can choose to buy natural gas and electricity from an unregulated energy service company, such as Constellation, instead of from their local utility. While the market pricing offered by unregulated energy providers can create opportunities for savings for consumers, particularly when market rates go down, market volatility can cause price spikes, the suit states.

Per the case, Constellation offers customers a market variable rate based on actual market pricing but with a cap on certain wholesale costs and margins, apparently to offer some protection against significant price increases. 

In its customer contracts, Constellation promises that it will set electricity and natural gas rates based on the actual cost of wholesale electricity, pursuant to applicable wholesale market price indexes, and a retail service charge comprised of “secondary energy-related charges” the company incurs, plus a “reasonable margin,” the complaint says.  This retail service charge is to be capped at $0.065 per kW/h, the suit reiterates.

“As a result of Constellation’s unlawful acts described herein, thousands of unsuspecting consumers have been, and continue to be, harmed by Constellation’s failure to abide by its contractual terms and other unlawful conduct,” the case alleges. “Defendant’s conduct, which often affects society’s most vulnerable citizens, is immoral, unethical, oppressive, and unscrupulous.” 

The filing claims Constellation customers in Connecticut, Delaware, Georgia, Illinois, Indiana, Kentucky, Maryland, Massachusetts, Michigan, Nebraska, New Jersey, Ohio, Pennsylvania, Texas, Virginia, Washington, D.C., and Wyoming have been impacted by the company exceeding the contractual cap on its retail service charge. 

The lawsuit looks to cover all Constellation NewEnergy residential and commercial electric or natural gas customers nationwide whose contracts included variable pricing terms consisting of a usage charge and a capped retail service charge. 

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