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Q&A: The Attorney General’s Settlement with Ethical Electric

Illinois Attorney General Lisa Madigan has reached a settlement with a Washington, D.C.-based  alternative electricity supplier, Ethical Electric Inc., for misleading direct mail solicitations of its “green” offers.

Under the settlement, Ethical, which has been a top source of consumer questions or complaints to CUB, promises to pay customers refunds.

What was wrong with Ethical’s offers?

The Attorney General’s office said the company misled consumers about its “Clean Energy Option” offer, making it appear that customers would get power exclusively from renewable sources, like wind and solar power.

The company also made it seem as if its price would only be slightly higher than ComEd’s price, when in fact it was at least 5 percent higher, the attorney general said. CUB has discovered Ethical prices that were more than 30 percent higher than the utility price. The offer would only stay fixed for a few months, before switching to a variable rate that changed monthly.

What are the terms of the settlement?

Ethical must……

  • issue refunds to customers
  • discontinue use of the product name “Clean Energy Option”
  • provide clear and detailed information on what its “green” energy plan actually is.

Also, if the company references ComEd’s prices in its marketing, it will have to provide a side-by-side comparison of its price with the utility’s rate, under the settlement.

Who is eligible to receive a refund?

Residential customers in Illinois who enrolled in the Clean Energy Option through Ethical’s mailings will automatically receive a refund of about $10. That will be in the form of a credit for current customers and via check for former customers.

Customers who believe they were misled by Ethical Electric’s marketing materials may request an additional refund for the amount they overpaid compared with ComEd’s price. All customers will be mailed a refund-request form within the next 45 days, Madigan said.

Crain’s Chicago Business reports that Ethical will have to pay at least $191,673, but the Attorney General’s office estimates that the refunds could amount to nearly $3 million, depending on the number of consumers who request them.

What is a green offer?

Attorney General Madigan said Ethical’s Clean Energy Option solicitations gave customers the false impression that their homes would be powered exclusively by renewable energy, such as wind and solar. In reality, it’s impossible to guarantee that.

The electricity that gets pumped into your home comes from a mixture of sources, including nuclear and coal plants, as well as renewables. As with all green plans, Ethical’s so-called “Clean Energy Option” offered renewable energy certificates or “RECs.” Basically, that’s a promise that for the electricity you use, an equal amount will be used somewhere on the grid.

Read CUB’s fact sheet on RECs. Also, read our electricity shopping guide for ComEd and Ameren customers.