The Illinois Citizens Utility Board (CUB) charged Wednesday that Peoples Energy Services is misleading consumers into signing up for a “fixed price” natural gas plan until 2005, even though the price isn’t fixed.

The company, which is an unregulated affiliate of Chicago-based utility Peoples Gas Light and Coke, made the offer in a letter sent to consumers in September, CUB said. The letter warns customers of impending high natural gas prices and offers to lock in a price of 62 cents/therm for two years.

However, CUB, a non-profit utility watchdog, charged that the two-year contract customers are asked to sign contains an escape clause that allows the company to cancel the contract or raise the price at any time. Consumers who want out of the agreement must pay a “termination fee” that could total several hundred dollars, depending on when they cancel it, said CUB.

CUB filed a complaint with the Illinois Commerce Commission (ICC), charging that the Peoples marketing plan violates the state’s Consumer Fraud Act. It asks ICC to order Peoples to stop the misleading marketing, honor the advertised price and allow customers who already have signed up to cancel their contracts without a penalty.

“Peoples Energy is using sales tactics usually associated with fly-by-night companies,” Martin Cohen, CUB executive director, said. “This type of behavior is not just dishonest, it’s illegal and the ICC should put a stop to it immediately. They’re not peddling magazine subscriptions here, they’re selling a vital commodity that every household in the region depends on.”

The company’s marketing of the plan cautions that only the first 2,000 customers who respond to the offer will get the fixed price, but a Peoples Energy spokesperson said publicly that the company may offer it to more than 2,000 customers, according to CUB. Such a false claim, according to CUB’s complaint, also violates the Consumer Fraud Act.

“By using the same name and logo as Peoples Gas, consumers are misled into thinking the offer comes from the utility, which is regulated by the ICC,” CUB said in a statement. “In fact, Peoples Energy Services is an unregulated company, whose rates and offerings are not overseen by the commission.”

Under Illinois law, the ICC has the authority to ensure that the marketing materials of alternative gas suppliers like Peoples Energy Services “adequately disclose the prices, terms and conditions” of the products or services being offered. The Peoples Energy materials violate this mandate, CUB’s complaint concluded.

In addition to halting the misleading marketing of the plan, CUB is asking the ICC to fine the company $100 per solicitation, up to $1 million, and to rule on the case in an expedited proceeding.

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