CUB Warns Chicago Region: Beware Of Bad Deals In Gas Market

News provided by

Apr 01, 2014, 10:20 ET

CHICAGO, April 1, 2014 /PRNewswire-USNewswire/ -- Sparked by a six-fold increase in complaints about unregulated natural gas suppliers in 2014, the Citizens Utility Board (CUB) on Tuesday issued a warning for Chicago-area consumers to beware of bad deals in the gas market.

The watchdog group is concerned that frigid winter weather and recent increases in rates offered by the regulated utilities—Peoples Gas, North Shore Gas and Nicor Gas—have created fertile ground for rip-offs. Alternative supplier offers that look good now may turn out to be money-losers in the long run, CUB warned.

"It may be April Fools' Day, but now more than ever consumers need to be wise about their gas bills and beware of bad deals," CUB Executive Director David Kolata said. "We understand utility gas prices have skyrocketed in recent months, but consumers who consider switching to an unregulated supplier need to ask some hard questions before they make the leap."

Since around 2000, northern Illinois consumers have been allowed to choose a company other than the regulated utility to supply them with natural gas. In past reviews, CUB has found that about nine out of 10 plans it has tracked were money-losers, compared with utility rates.

So far in 2014, CUB has received nearly 200 inquiries or complaints about alternative gas suppliers. That is about six times the number of complaints (about 30) the group saw in the same period last year. Complaints have included:

*A Chicago woman said her Polish-speaking mother was "slammed"—switched to a gas supplier without her permission—after "two young ladies" spoke to her mom through her screen door and asked to see her gas bill.

*A consumer said that her 85-year-old grandmother received a $1,030 gas bill because an alternative supplier "has taken over her account without her permission."

*A consumer said he was not aware that he was with a new gas supplier, until he noticed that he was being charged $1.52 a therm. CUB has seen rates as high as $1.77 a therm.

*A woman complained to CUB that she was not aware she was with an alternative supplier, but she discovered that she was paying about triple the Nicor Gas rate.

CUB recommended asking these five questions before signing up for any offer:

1) How does the rate compare with current utility rates? The utilities' rates fluctuate monthly, and as of April 1 Nicor Gas is charging 68 cents per therm, North Shore Gas is charging $1.21 a therm, and Peoples Gas $1.19 a therm. CUB warned consumers that alternative offers that look good now compared with high utility rates could turn out to be money-losers in the long run.

2) Does the offer change? Find out if the rate is "variable," meaning it changes on a monthly basis, or "fixed," meaning it is set for the length of the term.

3) Is the rate "introductory" or "promotional"? A seemingly low initial rate may rise significantly after the first month or few months. Find out how long a promotional rate lasts, and what the rate rises to after that period.

4) Is a monthly fee attached to the rate? Make sure to ask if there are any fees attached to the plan, and factor in how that impacts the per-therm rate.

5) Is there an exit fee? Many suppliers charge customers an "early termination" or "exit" fee if customers want to get out of the offer before the contract is up. Under state law, gas suppliers are not allowed to charge an exit fee of more than $50.

CUB warned consumers to not give out personal financial information—including a gas bill or account number—to anyone who calls or knocks on the front door, claiming to be from the "gas company."

"Remember, you don't have to switch to another supplier," Kolata said. "If you do switch, pay close attention to your bill. History has shown you're likely to pay more."

The watchdog group urged consumers to visit its website, www.CitizensUtilityBoard.org, to view fact sheets that allow Peoples, North Shore, and Nicor customers to make apples-to-apples comparisons between utility prices and offers by alternative gas suppliers. Consumers with questions or complaints can call CUB's toll-free hotline, 1-800-669-5556.

CUB, Illinois' leading nonprofit utility watchdog organization, is celebrating its 30^th Anniversary. Created by the Illinois Legislature, CUB opened its doors in 1984 to represent the interests of residential and small-business utility customers. Since then, CUB has saved consumers more than $10 billion by helping to block rate hikes and secure refunds over the years. For more information, call CUB's Consumer Hotline at 1-800-669-5556 or visit CUB's award-winning website, www.CitizensUtilityBoard.org.

SOURCE Citizens Utility Board