2 Investigators: Gas Bills Soaring After Low Introductory Rates
CHICAGO (CBS) -- The 2 Investigators have been getting complaints from people who sign up for a deal they hope will lower their gas bills. But CBS 2's Pam Zekman reports their bills are, instead, soaring.
"To me it's price gouging, I can't put it any other way," said Alternative Energy customer Robert Smith.
Smith switched his gas service from NICOR to an alternative supplier called Energy Rewards, after the company offered a five percent discount over NICOR's rate.
"Over that 12 months, I had saved $25," Smith said. Not much to get excited about, he said.
When Smith's deal later switched to a variable rate, his charges crept up with no details on his bills about how much he was paying per therm.
"I had to build a spreadsheet and do some math," Smith said.
When he did the math, he said he thought there must be some mistake. By Smith's calculations, after eight months he was paying $0.99 a therm for Energy Rewards -- three times more than NICOR's rate of $0.32 a therm at the time. By January, his gas bill went to $405, when it would have been $130 at NICOR's rate.
"I was, like, irate. I mean, come on!"
James Kacena also switched his gas service.
"The sales guy says instead of paying $0.46 to NICOR, I'll be paying $0.38 to National," Kacena recalled.
But, after six months, his rate with National Gas jumped to $0.99 a therm, costing him $838 more than NICOR's rate would have cost him over the next nine months.
"Why can a company get away with, you know, ripping me off? Big bucks. To me, that's big bucks," Kacena said.
Experts say the promise of lower gas bills often convinces customers to sign up with alternative energy suppliers, but sometimes what looks like a good deal turns out to be a bad deal.
"There's no limit on what they can charge," said Jim Chilsen of the Citizens Utility Board.
Chilsen said that after an attractive introductory period expires, the customer's rates often times soar.
The customers CBS 2 talked to believe this is a scam.
"Well, if it's not a scam, it's a horrible deal," Chilsen said, adding Alternative Energy customers need to see the rate they are paying per therm on their bills in order to make an educated decision on whether to stick with the alternative gas company or return to Peoples Gas or NICOR.
"Would anyone in their right mind choose a rate that is three times the utility rate?" Chilsen asked. "That's absurd."
Meanwhile, Kacena says he's ready the next time he gets a similar pitch. "Man, slam the door in their face."
Both Energy Rewards and National Gas say Smith and Kacena were notified of the billing change prior to it taking effect with an option to change or cancel it. Both men say they did not get that notice. Both companies also say their variable rates are set in the company's discretion and factors include market conditions, operation costs and their profit margin.
To view the Citizens Utility Board tips for customers in the market for an energy supplier, click here.
