The Illinois Commerce Commission (ICC) has fined Peoples Energy affiliate Peoples Energy Services (Pesco) $40,000 for violating the consumer protection provisions of the state’s Alternative Gas Supplier Law by selling gas customers a “fixed rate” plan with prices that were not fixed and with other inadequately disclosed provisions, such as a clause that allows the company to drop the customer because of high gas supply costs.

The ICC also initiated an investigation into the marketing practices of all the other retail marketers in the state.

Illinois-based Citizens Utility Board (CUB) said the ruling against Pesco should help to prevent future wrongdoing by gas marketers. CUB filed the original complaint against Pesco last October. That complaint argued that the company misled consumers into signing up for a plan that promised a fixed rate of 62 cents per therm for two years, but failed to disclose key provisions that allowed the company to raise the price at any time.

“The ICC’s decision to fine the company sets a standard for alternative gas suppliers and their marketing materials,” CUB Executive Director Martin Cohen said. “No gas supplier — especially one with the same name and logo as a utility company — should be allowed to mislead consumers.”

In its complaint, CUB argued that the company, which is an unregulated affiliate of Chicago-based Peoples Energy, failed to adequately disclose that customers on the plan would pay a monthly fee and that an escape clause allowed it to cancel the contract or raise the price at any time. Consumers who wanted out of the agreement had to pay a “termination fee” that could cost them several hundred dollars.

CUB also argued that by using the same name and logo as the regulated utility, consumers were led to believe the offer came from their regulated gas company and not an unregulated sister company.

Last year, Peoples Energy Services advertised the offer in a letter to consumers that warned of impending high natural gas prices. The company stopped offering the 62-cent plan in November 2003, after CUB filed its complaint with the ICC.

“We hope the ICC’s ruling will help protect seniors and others on fixed incomes who can be vulnerable to this type of misleading marketing because they are so desperate to lower their gas bills,” Cohen added.

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