Energy Choice
                            

Matters

Court Dismisses Lawsuit Against Retail Supplier Over "Market Pricing" Claims (Had Sought Class Action Status)

June 22, 2015

Email This Story
Copyright 2010-15 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

A federal court has dismissed a lawsuit, which had been seeking class action status, against North American Power & Gas, LLC, finding that complainant's allegations concerning North American Power's rates were not factually supported.

The complainant had alleged that North American Power had engaged in "misleading" behavior because it described its rates as market-based, but such rates exceeded the Commonwealth Edison default service rate. The complainant alleged that, "A reasonable consumer would understand that the price the local utility or other ARES charges is part of prevailing market conditions and that a price based on prevailing market conditions would be consistent with the price charged by the local utility or other ARES."

However, a federal judge noted that the complainant conceded that North American Power disclosed that its rate was, "calculated in response to market pricing, transportation, profit and other market price factors, plus all applicable taxes," and could vary based on, "market prices for commodity, transportation, balancing fees, storage charges, [NAPG] fees, profit, line losses plus applicable taxes."

While the complainant alleged that North American Power's disclosures deceives the consumer into believing that NAPG's rates will always reflect the market price, i.e. a price related to the Commonwealth Edison price and the average wholesale price on the Intercontinental Exchange, the judge noted that the factors that NAPG identified as affecting price included factors not necessarily reflected in the prevailing market price, most notably profit

"The Complaint contains no allegations that support the inference that prices did not rise and fall based on these factors and therefore no allegations that could lead to a finding of deceptive practices by NAPG," the judge ruled

"[T]he Complaint contains factual allegations supporting only the conclusion that NAPG charged rates higher than Commonwealth Edison and the average wholesale price on the Intercontinental Exchange. These facts alone do not plausibly allege that the NAPG rate was guided by factors other than the ones in the disclosures," the judge ruled

"Nor does the Complaint allege any unfair practice on the part of NAPG. Nothing in the Complaint suggests that NAPG did not disclose the factors that could cause its pricing to vary," the judge said.

The judge dismissed the complainant's alleged counts of violation of the Illinois Consumer Fraud and Deceptive Business Practices Act, breach of contract, and unjust enrichment.

As an aside, the judge notably did accept the complainant's characterization that Commonwealth Edison and the average wholesale price on the Intercontinental Exchange roughly approximate the market price for electricity during the time period relative to the complaint, for purpose of the motion to dismiss. However, in doing so the judge noted, "it is somewhat perplexing that [complainant] would leave Commonwealth Edison, apparently dissatisfied with its pricing, to become an NAPG subscriber in hopes that NAPG's 'market' pricing would rise and fall to in tandem with the Commonwealth Edison pricing she had just switched suppliers to escape."

The judge also ruled that the federal court lacked jurisdiction to hear the complaint. "[T]he state law on which the Complaint relies vests exclusive jurisdiction over this type of claim with the ICC," the judge ruled

"The ICC also has exclusive jurisdiction over disputes relating to the contracts between ARES and their customers, which the ICC has interpreted to include unjust enrichment claims such as the one [complainant] has alleged," the judge ruled. "The ICC has jurisdiction over suits against ARES and public utilities alike when the dispute is 'essentially' a dispute about rates."

Case 1:14-cv-08370

ADVERTISEMENT
NEW Jobs on RetailEnergyJobs.com:
• NEW! -- Vice President, Global Regulatory Affairs -- Retail Supplier -- Houston
• NEW! -- Vice President - Supply, Pricing, and Risk Management -- Retail Provider -- Dallas
• NEW! -- Controller -- Retail Supplier -- Dallas
• NEW! -- Regional Sales Manager - Dallas, TX -- Retail Provider
• NEW! -- Senior Business Analyst -- Retail Provider -- Houston
• NEW! -- Billing Manager -- Retail Supplier -- Houston
• NEW! -- Business Development Analyst -- Retail Provider -- Houston
• NEW! -- Business Development Manager - Retail Energy