State Probe Targets Commonwealth Energy Billing
State regulators are investigating whether Tustin-based electricity marketer Commonwealth Energy Corp. illegally socked customers with extra bills and misrepresented savings promised in its ads and mailings.
A growing pile of consumer complaints, which numbered more than 159 by June 1, prompted the probe, California Public Utilities Commission officials said Thursday.
“(Consumers) felt blindsided and felt the company had misled them,” said Carol Dumond, an attorney for the commission’s consumer services division. “They don’t feel they have actually saved the money they were supposed to.”
Commonwealth Energy executives trace the problems to billing errors that occurred in the first six months after California’s electricity market was opened to competition on March 31, 1998.
After realizing it had mistakenly underbilled customers by $600,000 collectively, the company sent a second round of bills early this year to make up the difference, Chief Executive Fred Bloom said.
“We openly admit that early on we had some billing problems,” Bloom said. But the company has since fixed its accounting system and has not received subsequent complaints, he said.
More than 19,000 account holders, including many Southland residents, received notices. The company also issued credits or refunds to a handful of customers who had been overcharged.
The makeup bills ranged from a couple of cents to $2,000, the utilities commission said. Consumers called in bunches, questioning the company’s right to demand the additional payments without first warning of that possibility in its service agreements.
They also gave regulators company mailings that promised Commonwealth Energy could reduce energy bills 15% to 25%. The company initially delivered on its offer, but the supplemental bills erased the savings, customers claimed.
Bloom, however, said that even after administering the additional charges, Commonwealth Energy has made good on its discount guarantees “to every single customer, every single time.”
Commonwealth Energy is one of about three dozen service providers that have registered with the state since deregulation, providing new options to 10 million consumers served exclusively until then by Southern California Edison, Pacific Gas & Electric and San Diego Gas & Electric.
In the first four months after deregulation, more than 83,000 customers switched to the newcomers. Commonwealth Energy has emerged as the largest of them, grabbing 60,000 accounts with aggressive advertising touting its environmentally friendly energy sources.
The company gets its power only from renewable sources and is building a geothermal facility near Salton Sea that is scheduled for completion next spring.
Most of its customers reside in Southern California Edison’s territory, which stretches from Laguna Beach to Santa Barbara and includes most of Los Angeles and Orange counties.
The Public Utilities Commission has a year to evaluate consumer complaints against Commonwealth Energy, to hold hearings and to render a decision. If found liable, the company could be subject to fines of up to $20,000 per violation.
Bloom said that won’t happen.
“Everybody in the business experienced billing problems in the beginning, not just us,” he said. “We send out more than 50,000 bills a month now, and I’d match our customer service with anyone’s.”
