Dive Brief:

• Illinois Attorney General Lisa Madigan's office has reached a settlement with Ethical Electric Inc., an alternative retail electricity supplier, over direct mail marketing the state believes was misleading in terms of both price and the mix of generation customers were purchasing, Crain's Chicago Business. 
• Ethical Electric was purchasing renewable energy credits to offset its supply, and its service was routinely 5% above Commonwealth Edison's price despite promises to be comparable.
• The Washington, D.C.-based supplier, which operates in eight states, will have to issue refunds for almost $200,000, but that figure could rise to $3 million depending on customer response to the settlement.

Dive Insight:

Ethical Electric is a much smaller supplier of electricity that Constellation or Direct Energy. And yet, Crain's Chicago Business reports complaints about the provider produced far more complaints about its business practices, drawing scrutiny from the Attorney General's office.

“Consumers deserve to know what they’re buying, and this company sold a product that was misleading to consumers interested in conserving energy and protecting our environment,” Madigan said in a statement. “That type of blatant consumer fraud will not be tolerated.”

Refunds will begin at $10/customer, totaling about $190,000, but could go much higher depending on the number of customers who request it. Maximum refunds would be $3 million. The company will need to rename its product name under the settlement. 

Madigan said the settlement stems from Ethical Electric’s direct mail solicitations promoting its "Clean Energy Option." Instead of exclusively using wind and solar, as advertised, the company purchased RECs to offset a mix of generation that included nuclear and coal. And prices, instead of being comparable to ComEd's, were routinely 5% higher and could go far beyond that, in rolling three-month schemes.

Ethical Electric issued a statement saying "we fully cooperated with the inquiry and voluntarily halted direct mail marketing in the state until reaching this agreement to make certain changes in our materials, and to provide at least $191,673 in refunds to our current and former customers." 

The discovery comes as some rural electric co-ops and local utilities are eyeing companies similar to Ethical Electric to meet their customers' growing demand for renewables.