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.

TXU Energy Lost 8 Percent of Their Customers in 2011

Based on TXU’s parent company report from Energy Future Holdings the energy division known as TXU Energy lost 8 percent of their customers during 2011. I have to assume the reason TXU is losing so many customers has to do with how competitive the retail electricity markets have been in 2011.

There are many retail electric companies that actively send people on the street knocking on doors at homes and businesses offering incentives to sign up with their electric company.

TXU Energy and Reliant Energy feet on the street crews have been seen in each others backyards offering offers to switch away from the other service to theirs but even still when 10 other providers are doing the same thing and offering even cheaper prices it is hard for customers to stay loyal to such an old trusted brand name like TXU Energy.

I look back at some of the ad campaigns I have seen from TXU and I must admit they seem smart such as when they tried to differentiate themselves as the company with only fixed rates that do not change.

I remember seeing ads that made it clear that a customer can find price predictability and assurance that their rate won’t change when on TXU. The safety of a locked in secure rate that will not fluctuate sounds great to me and a good way to set yourself a part from the competition but it seems to have not had the desired effect.

An 8 percent drop in customers is significant for a company like TXU that has over 1 million retail electricity customers.

Even with a loyalty rewards program that offers customers prepaid VISA gift cards ranging from $50 – $150 customers still were leaving TXU.

The assumption is that when the economy gets hard people start to look at the bottom line numbers and the simple quick solutions.

Customers may not make the most rational decisions in a quick fix and so rather than wait for a year to get a customer rewards VISA card many want that immediate cheap bill.

With so many competing electric companies offering an immediate lower electric rate compared to TXU many customers simply choose to compare and switch away at whatever rate they deem to be the cheapest.

The negative to the customer is that if they pick a short term variable rate with a different electric company they compare against TXU it will likely go up on them even higher than what they paid with TXU.

The reason the price increases is because a variable price is usually only locked in for 1 month and than goes up.

If customers do decide to switch away from TXU it is important that they compare their fixed TXU rate with other fixed rates provided by competing electric companies.

By comparing fixed rates with fixed you will end up saving money over TXU and will not end up on a quick savings offer that saves you money for only 1 month.

Reliant Energy’s Parent Company NRG Energy Gobbles up another Provider, Energy Plus

I found out today that Reliant Energy’s parent company NRG Energy now owns Energy Plus. A year or two ago Reliant’s parent company NRG Energy bought Green Mountain Energy and now with Energy Plus NRG Energy has gobbled up a couple of the top marketers in the retail electric provider space.

I believe Green Mountain Energy has done the best job of differentiating themselves from their competition which makes their purchase by Reliant Energy’s parent company NRG Energy a smart one. Energy Plus marketed their service through places like the government student loan rewards program Upromise and through Best Buy in several deregulated states including Texas.

I remember reading that Energy Plus was one of the fastest growing retail electric providers in the country and it likely has to do with how aggressively they worked out partner joint ventures with companies like Best Buy. I personally have received at least 3 different mail outs coming from Best Buy to switch to Energy Plus.

Here you have an old school company like NRG Energy buying up good talent in two separate buy out deals in which both companies have shown exceptional skill at leveraging the power of joint venture partnerships and brand differentiation.

When it comes to price Energy Plus has continuously been scolded online by their past customers for advertising that they are “competitive” and yet the customers standard complaint is that they pay more with Energy Plus than they did with the company they were with previously.

Through further research we have found that the reason for these complaints has simply to do with the type of plan many people switch to when choosing this company. The popular plan they advertise is a variable rate plan and so there is no guarantee how long the price will remain competitive and so it is easy to see why people turn on this new provider when their electric bill goes way up.

We are interested to see if NRG Energy (the parent company of Reliant Energy) changes the marketing tactic currently being used by Energy Plus or leaves things basically the same.

Energy Plus Holdings LLC became owned by NRG Energy on September 30 2011 and it is reported that they will not have any technical or managerial qualification changes but will have the ERCOT financial requirements handled by NRG Energy.

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