[co-author: Stephanie Kozol]*
On April 16, Illinois Attorney General Kwame Raoul announced a $12 million settlement through a consent decree with Direct Energy Services LLC (Direct Energy). Direct Energy is an alternative retail electric supplier (ARES) and an alternative retail gas supplier (ARGS). Companies like Direct Energy are certified by the Illinois Commerce Commission to sell electricity and gas to residential consumers. This settlement arises from Raoul’s allegations that Direct Energy misled consumers, causing them to pay substantially more for energy than they would have if they had remained with their default public utility company. Specifically, Raoul alleged that Direct Energy falsely promised lower rates, while actually charging energy rates more than 230% higher than the public utility.
The $12 million settlement includes $9.3 million in restitution payments to Direct Energy’s current and former Illinois customers. Direct Energy will also be required to implement training procedures to ensure all sales representatives adhere to the obligations of the consent decree and several additional injunctive relief terms, including:
- Prohibited from marketing in Illinois until December 2025;
- Must not represent that its rates are “low”;
- Must not represent that it is an affiliate of the public utility company; and
- Must not enroll consumers without their express acknowledgment.
The Illinois AG reached this settlement with Direct Energy shortly after filing its complaint on April 11. The complaint alleged violations of the Illinois Consumer Fraud and Deceptive Business Practices Act and the Illinois Telephone Solicitations Act.
Why It Matters
AGs across the U.S. have been targeting perceived deceptive business practices in the alternative energy sector. This is because the industry has famously attracted some opportunists who choose to scam consumers instead of building reputable businesses. Raoul has been active, recently reaching settlements with two ARES: a $3.5 million settlement with Indra Energy in December 2024 and a $10 million settlement with Teleperformance in September 2024. Companies operating in the alternative energy industry should ensure full transparency with consumers to avoid similar consequences. In fact, transparency can serve as a competitive advantage in an industry facing increasing consumer skepticism, achieving two goals at once: reduced regulatory scrutiny and enhanced business opportunities.
*Senior Government Relations Manager
