‘Price Gouging’: CleanChoice Energy Facing Class Action Over ‘Exorbitant’ Electricity Rates in Massachusetts

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A proposed class action lawsuit alleges CleanChoice Energy tricks Massachusetts customers into paying “exorbitant” electricity charges by misrepresenting how its rates are calculated.

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The 51-page case takes issue with several allegedly false claims CleanChoice makes in its customer contracts, particularly the company’s assertion that its variable electricity rates are based on market conditions and the costs of providing energy supply services. According to the complaint, the “egregiously high” monthly rates Massachusetts customers pay for CleanChoice’s electricity are not determined by these two factors but instead stem from “unbridled price gouging and profiteering.”

The lawsuit further contends that CleanChoice—an independent energy service company (ESCO) whose services consumers can enroll in as an alternative to their local utility—falsely represents that the energy it supplies comes from “100% renewable energy resources,” such as wind and solar. In truth, the filing claims, the electricity supplied by CleanChoice is the exact same electricity provided by local utilities—“brown energy” generated from polluting sources like fossil fuels.

Rather than producing or procuring electricity from green sources, CleanChoice purports to offset customers’ electricity use by buying renewable energy certificates (RECs), credits that represent the property rights to the environmental benefits of wind or solar energy produced by a different entity, the case contends.

“Purchasing RECs to offset burning ‘brown’ electricity is not the same as providing ‘electricity from renewable resources’ or providing ‘100% renewable energy’ directly to customers’ homes,” the complaint argues. “Indeed, it is not possible for ESCOs to supply their customers with an energy mix that is any different from what customers’ existing utility supplies and delivers on the ESCOs’ behalf.”

The suit says CleanChoice’s electricity rates are not based on the pricing formula outlined in its customer contract, even when accounting for the costs of RECs. As evidence, the filing points to 24 billing cycles’ worth of rates paid by the plaintiff, a Massachusetts resident who received electricity from CleanChoice for his home from 2019 to 2023.

Per the complaint, the plaintiff was frequently charged rates that were double or even triple those of his local utility, EverSource. EverSource’s rates are considered an ideal benchmark, as they reflect monthly electricity rates based on market conditions and supply costs, the case argues.

“CleanChoice should have been able to procure electricity at a lower cost than the utility given its tactical advantages over EverSource,” the CleanChoice lawsuit contends, noting that ESCOs generally offer rates that are competitive with, if not significantly lower than, those of traditional utilities, since the deregulated electricity market of Massachusetts allows these companies more options and flexibility in sourcing energy.

“In theory, energy deregulation allows customers to shop for the best energy rates, and it allows customers to take advantage of market-based rates that decline when the wholesale cost of energy declines,” the case contends. “However, CleanChoice exploits deregulated markets by consistently charging its customers far more than the local utility for the same energy and failing to adequately disclose the truth about how its variable rates are determined.”

The suit alleges that the plaintiff was charged in one month in 2023 a rate that was a “staggering” 5.8 times higher than its market supply costs that period.

“In other words, CleanChoice marked up its price to obtain more than a 400% margin,” the complaint claims. “This is classic price gouging.”

The plaintiff contends that he and other customers would not have agreed to buy electricity from CleanChoice had they known its deceptive pricing practices would cause them to pay considerably more for the utility than they otherwise should have.

The lawsuit looks to represent any CleanChoice customers in Massachusetts.

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