Electric Bills Gave Them Shock: Biz Owners Hoped to Cut Costs but New Supplier Was No Deal
Daily News, 2/12/2007 By RONG XIAOQING
Electric bills doubled for Changsheng Yang.
Lin Min was stunned when he got his electric bill.
It sounded like a smart business decision to Changsheng Yang: Switch from Con Edison to an upstart supplier and potentially save thousands of dollars a year on electric bills for his Brooklyn restaurant, Ruby.
Since the late 1990s, when government-ordered deregulation forced big utilities to offer various services separately in hopes of lowering customers' bills, consumers have been encouraged to shop for their own energy supplier, even though they'd still use Con Ed's pipes for delivery.
But for Yang, the bargain promised by U.S. Energy Savings was no deal: After a few months, his bills had doubled.
"The sales agent told me I could save at least $200 a month," said Yang, who has run the Prospect Heights take-out restaurant for seven years.
He also was told the "price is fixed for five years, so I could save even more in the future." So when his monthly bill shot to $1,400, he thought there'd been a mistake. Then he learned only a portion of the bill was fixed, while an item labeled "customer charge" varied wildly. After two months, the amount jumped from less than $100 to an average of more than $1,000.
Yang's ordeal has been encountered by other restaurant owners and shopkeepers who recounted similar stories to the Daily News.
They say they were lured by the promise of long-term fixed prices and immediate savings when sales agents visited last spring or summer. Some acknowledged they signed a contract they didn't fully understand, adding that being less than proficient in English may have contributed to their troubles.
When Vincent Lau, owner of CA First Trading, a warehouse in Greenpoint, Brooklyn, tried to cancel his contract with U.S. Energy, he was told the fee to do so would be more than $10,000.
And when shocked customers called to complain or cancel their accounts, some say they were referred to Con Ed, whose logo appears on the bills.
But Con Ed told them it wasn't responsible, noting that the only reason there's a link is because U.S. Energy uses Con Ed's extensive delivery infrastructure.
"Con Ed now makes very little electricity and basically is the pipes and wire company that delivers electricity," Con Ed spokesman Chris Olert said.
Nadine Evans, director of marketing for U.S. Energy's parent company, Toronto-based Energy Savings Group, said the contract marketed to businesses in New York locks in a price which may seem high now, but will not rise for the five-year term.
"The customer should understand that the value proposition isn't in the first year," she explained. "I know right now there is some confusion about how electricity prices are generated in New York, but we really feel that offering customers stability for their electricity prices has a lot of merit."
U.S. Energy Savings began selling its plan in the New York market in 2005. Between it and its parent company, it has 1.6 million customers in Canada, New York, Indiana and Illinois.
The manager of the New York market for U.S. Energy Savings, Lindsey Huculiak, added that customers had been told there were penalties for cancelling.
But Xianfeng Zou, a lawyer hired by the New Tung Yi Fung Restaurant in Flushing, Queens, after it was hit by a U.S. Energy Savings customer charge of more than $7,000, said the terms weren't made clear to customers. "The contract seems to me like a game of words," Zou said.
"I feel like a ball being pushed back and forth between these companies," added Min Lin, owner of Da Wong Kitchen in Bushwick, Brooklyn.
City Councilman John Liu (D-Queens) said, "This is not the only time we have seen this pattern. ... Whether these unscrupulous practitioners misrepresent the contract in different languages or in plain English, this is still dishonest."
Last December, U.S. Energy settled a case with Chicago's Citizens Utility Board, which filed a complaint against the company for misleading customers, many of whom are nonEnglish speakers who signed long-term contracts. U.S. Energy admitted no wrongdoing, but agreed to cancel certain contracts without penalties and give refunds to customers who believed they had signed a fully fixed-price contract.
State records show there were 52 consumer complaints filed against the company last year, the third-most among the 30 energy service companies in the New York area.
A company official said complaints in the New York market are being addressed case-by-case, and that Yang will be allowed to terminate his deal without penalty.
"I'll stay with Con Ed and never transfer anymore," Yang said. "It's not worth it."
Think before you switch
Services offered by your utility have been split into two parts: power generation, also known as supply, and delivery. If you live in the five boroughs, Con Ed likely delivers your power, but because of state deregulation intended to lower prices, you are encouraged to consider choosing a different supplier.
Before making a change, ask:
* If the company offers fixed prices for gas and electric, or market prices that may fluctuate.
* If there's a longer-term contract that offers a lower price.
* If there's a monthly service charge.
* If the prices quoted include taxes.
* If there's a fee for terminating the contract.
* If you will receive one combined monthly bill or two separate bills.
* If a security deposit is required.
* About discounts, incentives or free services, such as boiler/air-conditioning maintenance packages, and discounts on other goods and services.
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