Energy Plus named in Class Action

Energy Plus
Not so surprising, Energy Plus, has been named in a class action based on a press release sent out by Sanford Wittels & Heisler LLP law firm.

The lawsuit makes the same assertion we have received numerous times on our website by Energy Plus customers.

In the allegation the typical scheme is recognized as found in the federal trade practices act known as a “bait and switch scheme”

The assertion is that customers are complaining that Energy Plus promises them competitive electric rates if they switch from their current provider.

The problem is that within 1 to 2 billing cycles the rate increases by as much as 150% completely wiping out the competitive aspect to the rate.

This class action is for New Jersey electric service customers although Energy Plus offers similar advertising campaigns through Best Buy in Texas and many other states. We have also seen Energy Plus advertise through the government college loan payback incentive program Upromise. Many people on the Upromise board complain that Energy Plus has scammed them. See for yourself click here – Update: It looks like Upromise no longer has a community forum. I am not surprised considering the amount of hate comments their Energy Plus program was getting with students that had tried the offer.

Some customers have complained that they have lost hundreds and sometimes thousands of dollars a year from switching to Energy Plus based on the “competitive rate” promise.

Energy Plus currently sells retail electric service in Connecticut, Illinois, Maryland, Massachusetts, New York, Ohio, Pennsylvania, and Texas.

NRG Energy the parent company of Reliant Energy bought Energy Plus just a few short months ago. We wondered if the marketing tactics would change now that they were under the larger authority brand of NRG Energy but it appears things did not change that much.

New Age Power Brokers and Glacial Energy not an MLM Company

New Age Power Brokers sounds a bit uhh? new age I guess 🙂 So they have a little bit of a hippie name so what lets learn more about this company. Apparently from what I can tell New Age Power Brokers primarily sells for Glacial Energy which is licensed to do business in quite a few states. Altogether it looks like they can sell natural gas and electricity service in the following states:

New York Connecticut Illinois Michigan
Texas Rhode Island Washington DC Pennsylvania
Maryland Massachusetts Delaware Coming Soon: California
New Jersey Maine New Hampshire Coming Soon: Ohio

Not an MLM Energy Company, More Like a Power Brokering Opportunity

New Age Power Brokers and Glacial Energy Brokering MCPE Prices for Commercial Businesses in Texas

New Age Power Brokers and Glacial Energy Brokering MCPE Prices for Commercial Businesses in Texas

New Age Power Brokers offers an opportunity that they say is not an MLM opp but instead 40% on the commission they receive when a sales associate of their’s brokers a commercial electricity deal for Glacial Energy through New Age Power Brokers. So basically it appears that New Age Power Brokers is building a large work from home commercial energy sales force using a straight forward business model of paying these sales associates a percentage on the commission Glacial Energy or another provider gives them. My only concern is that as a “broker” New Age Power Brokers should be going out to more electricity providers than just Glacial otherwise the term “broker” is a little misleading. We assume that New Age Power Brokers receives bids from several REP’s in the pricing process but the concern is not out of place as many brokers in Texas end up just being a shil company for one or two electric companies. We looked around on the web and found that Glacial Energy is the main brand being offered by New Age Energy Brokers and would like to know other REP’s they offer when pricing electricity rates for their customers. It is important that when using a broker a Texas business receives multiple bids to get a complete shopping experience.

After a closer examination it looks like they have a compensation plan they call a business to business referral program and according to commenter Stacy in the comment section below she explains that the New Age compensation plan is a “Direct Marketing Business Model”. “New Age is not an MLM because while they do earn a commission on sales, it is a set rate ALL the time. There are no levels. That is called a Direct Marketing business model.” The obvious thing people look at are the levels going down to 7 but what sets New Age a part from an MLM business plan is that there are no requirements for earning commissions on different levels. If your business referrals stretch down multiple levels you get paid on those without having to meet any additional requirements. The fact that it goes down to 7 levels which sounds a lot like several MLM companies I have heard about does not make it an MLM business plan but does share in the “direct marketing” aspect that both MLM and New Age’s compensation plan use. My previous question about how is this not an MLM company, am I missing something has been answered by Stacy in the comment section below? As you can see New Age does not offer an MLM compensation but a direct marketing sales compensation plan. The example chart showing a perfect world scenario of what the commissions could turn into do look a little sensational, I think everyone can agree that direct marketing will never have a perfect world result as in the example below.

To watch an educational video of what an MLM or pyramid related business is feel free to watch below.  Also look at their compensation plan and see how as the numbers get bigger the chart starts to resemble a pyramid. Although the New Age compensation plan does not fit in the MLM category you can see that the compensation structure looks a bit like a pyramid in their business direct marketing payment structure.
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How is this not an MLM Pyramid?

How is this not an MLM Pyramid?

Glacial Energy Offers MCPE Rates Which is a Texas Variable Electricity Price

Glacial Energy can be easily mistaken as Glacier Energy like the thing the Titantic ran into. Most people will need a reminder as it isn’t often that people refer to things as being “Glacial”. Another possible source of confusion is what exactly 40% of what is the commission a sales associate is paid? 40 percent commission is 40 percent of usually 3 mils if they charge industry standard commission. Some brokers charge whatever they can get away with although 3 mils is pretty standard. So lets figure out commission on a business using 400,000 kilowatt hours a year. We take .003 and multiply that times 400,000 = $1,200. The sales associate with New Age would get 40% of that which would be $480. If the sales associate signed up a commercial business like a hair salon or paint supply store the usage would be more like 40,000 kilowatt hours on the high end. Lets figure the commission on that. 40,000 kWh x .003 = $120. New Age will pay their sales associate 40 percent of that which would be $48. They will probably pay this out over the course of the year which means 48 divided by 12 months is $4 a month for a small retail store. If your not planning to sign up large commercial facilities you might get discouraged signing up the little retail shops like this.

Unbelievable Wholesale Prices or Just Your Standard High Risk MCPE Price?

Glacial Energy has unbelievable electricity prices as low as 4 – 5 cents per kWh according to what an energy consultant told me today that he heard from someone who just spoke with a Glacial rep. I also spoke with an MLM work from home junkie who mentioned the name Glacial Energy as a “wholesale electricity company” offering 4 cent rates and said that this is a new opportunity that pays 40% commission. Glacial Energy’s customer that called today believed they were on a fixed electricity price at around 4 cents per kWh. We were quite amazed as this is way outside the retail margins of the most business savvy Texas electricity provider. The company also offers no deposit commercial energy in Texas. Needless to say most of the energy consultants in the office made some kind of remark that the rates smell of something fishy. Giving Glacial Energy the benefit of the doubt we must assume their customers might be misunderstanding something. After closer examination it appears the 4.5 cent per kWh rate is an MCPE variable price. These prices fluctuate with the balancing energy market and can double and triple in price in just a few days. Last summer they doubled and tripled in price and stayed there for 3 – 4 months. When signing a customer to an MCPE price there are also TDSP charges and line loss and ancillary charges. I am not sure if Glacial Energy is including line losses or ancillary charges in their quoted price but we will assume they are unless we hear otherwise. MCPE is a great thing to sign up for as a commercial business but you definitely want to make sure you know the risks and what options are available to blend the MCPE price with a fixed rate. You could also lock in something called “heat rate” or lock in “natural gas” prices which is 45% of the fuel that generates Texas electricity. By doing a little hedging when signing up for a variable electricity price like MCPE a large commercial or industrial business can limit the amount of exposure of an MCPE electricity price.

More About MCPE Prices and Additional TDSP Charges

Usually when we get several customers calling us saying that they are receiving a too good to be true offer from a provider we see a few months later that customers are calling instead saying how they have been ripped off by that provider. It takes a few months for the customer to get the bill and notice that the price they thought they had is quite a bit higher. We see that Glacial Energy really is offering Texas electricity rates that are this low which is good news for those considering signing up with Glacial Energy. Based on what you can hedge energy for, 4 cents seems out of the ballpark unless it is an MCPE electricity rate. Since we now know Glacial Energy is advertising an MCPE rate we can recommend to potential electric customers that it is ok to sign up with Glacial on an MCPE price provided you understand the risks and check on what TDSP charges, line loss charges, and ancillary charges have been included in their rates. One way to check on these additional charges to be bundled onto the MCPE electricity price is to get a break down of their “energy only” price all “TDSP charges” and then the total “bundled electricity rate “including all fees and charges. Make sure anything that is obscure in the contract is explained in a dollar amount.  A provider should be able to break down all charges although the TDSP charges will be a very close estimate based on your previous years usage history or a close estimate on estimated usage if you are a new company just starting up.

Learn More About a Reverse Auction Process That Puts a Businesses Usage in a Competitive Bid Process

We encourage Texas electricity customers to check out Glacial Energy and see what their total bundled electricity price looks like compared to a few other providers. It could be that Glacial is offering an MCPE rate that is low cost by nature when fuel prices are low. The issue with MCPE is that if not combined with a fixed rate product can spiral out of control. Last summer (summer of 2008) MCPE prices reached triple their average prices. Texas commercial businesses that were not combining their MCPE rate with a fixed rate paid dearly. A risky MCPE electricity rate can be low risk for some smaller businesses that will only see a few hundred dollar price increase per month in their electricity costs but for a large business it could be several thousand dollars in unprepared for energy costs.

To learn more about wholesale electricity rates in Texas please visit our Texas commercial energy page and fill out our form. An energy consultant would be happy to take your commercial electricity usage through a reverse auction process with 10 – 15 different Texas electricity companies that will compete to win your business.

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