AG Reaches Settlement With Retail Supplier Over Allegedly "Misleading Marketing", Includes Refunds

Illinois Attorney General Lisa Madigan announced a settlement with Ethical Electric Inc. for what the Attorney General alleged were, "misleading consumers about the source of the 'green' energy provided through its Clean Energy Option product."

According to the AG, the settlement requires the company to issue refunds to customers, to discontinue the use of its allegedly "misleading" product name and to provide more detailed information on the nature of renewable energy.

"Madigan estimates that the refunds could amount to nearly $3 million depending on the number of consumers who request them," the AG said in a news release

However, Ethical Electric said that the AG's $3 million figure represents what the AG estimates the refunds could be if all of the direct mail customers requested refunds. Ethical Electric said that it does not agree with the AG’s estimate, and that the estimate is, "false, misleading, and not supportable." According to the company statement, the refunds will amount to at least $191,673.

A full statement from Ethical Electric appears below

The AG said that the settlement stems from Ethical Electric’s direct mail solicitations promoting its Clean Energy Option product as powering customers’ homes with electricity generated exclusively from renewable energy sources like wind and solar.

According to the AG, "Instead, the electricity provided was a mixture of sources from the electric grid paired with the purchase of renewable energy certificates or RECs, which represent proof that one megawatt-hour (MWh) of electricity was generated from a renewable energy source."

Madigan alleged the company’s statements, "confused consumers and lured them into purchasing a product based on misrepresentations about what it means to provide renewable energy."

Ethical Electric said that, "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."

Madigan also alleged that, "Ethical Electric claimed the price of its Clean Energy Option product was comparable to ComEd’s when in fact it was routinely more than 5 percent higher than ComEd’s price and often was substantially more than ComEd’s price."

Under the settlement, 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 they were misled by Ethical Electric’s marketing materials may request an additional refund for the amount they paid over the ComEd price by completing and returning a refund request that will be mailed to all customers within the next 45 days.

The AG said that 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. "In addition, 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 AG said

Ethical Electric issued the following 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."