Con Edison Charged Customers Improper Gas Rate, Claims Milberg Class Action

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May 25, 2022

by Brian Eckert

Consolidated Edison charged some of its customers a higher gas rate than it was legally permitted to charge them under its utility tariff, resulting in the company reaping windfall profits, claims a recently-filed Milberg class action lawsuit. The lawsuit seeks to establish a class of customers located in the State of New York and recover damages—including refunds—on their behalf.

Customer Gas Rates Determined By Utility Tariff

Con Edison, one of the largest energy companies in the country, provides gas service to customers in New York City and Westchester County. This service is bound by the terms and conditions of a gas tariff filed with the New York Public Service Commission. The gas tariff is part of the contract between Con Edison and its customers. Con Edison charges different rates to customers depending on the service classification that it assigns.

Con Edison generated millions in unjust revenues by billing customers under an improper rate classification, alleges Milberg’s class action lawsuit.

The appropriate service classification is determined by Con Edison when a customer signs up for its gas service. Classification is based on the use and characteristics of the subject building or unit. Con Edison has four service classifications: SC-1, SC-2, SC-3, and SC-14. Per the terms of Con Edison’s service, customers are billed under the SC-2 classification unless the customer meets criteria for service under SC-1, SC-3, or SC-14.

Lawsuit: Con Edison Overcharged Customers Using Improper Rate Classification

The SC-2 rate classification, compared to the SC-3 classification, is almost universally the more economical gas rate classification for Con Edison customers. It is thus most advantageous for customers to be billed the SC-2 gas rate instead of the SC-3 gas rate. But for Con Edison, the opposite is true. That is, by charging customers the higher SC-3 rate, the company can generate additional revenue.

That is what Con Edison did, according to Milberg’s lawsuit, filed in U.S. District Court for the Southern District of New York.

“Con Edison has improperly billed thousands of customers who do not meet the criteria for the SC-3 rate classification (and who instead should receive gas service under the SC-2 rate classification) a SC-3 gas rate,” the complaint states. “This has resulted in Con Edison generating millions in unjust revenues from unsuspecting customers who are unaware that Con Edison is billing them under an improper rate classification.”

Milberg’s class action complaint also alleges that Con Edison is aware of its “unlawful and deceptive” overcharges. On at least seven occasions, the complaint says, the utility was notified that it charged SC-3 rates to customers that were eligible for SC-2 rates—and then corrected the affected customers’ billing to the correct SC-2 rate. However, “Con Edison has failed to retroactively correct past gas rate billings and refund customers their overcharges.”

Class Action Seeks Damages, Refunds on Behalf of Con Edison Customers

The lead plaintiff in the lawsuit is a New York property management firm and a customer of Con Edison. Plaintiff alleges that Con Edison charged them a gas rate under the SC-3 service classification despite the fact that its building is only eligible for SC-2 classification. This resulted in Plaintiff “paying Con Edison significantly higher gas rate charges than Plaintiff should have been properly charged under a proper SC-2 gas rate service classification.”

Milberg’s class action complaint proposes the following class, subject to court certification:

All Con Edison customers in the State of New York who, at any time within the applicable statute of limitations preceding the filing of this action through and including the date of judgment, have been charged a SC-3 gas rate by Con Edison but meet the disqualifications under Leaf 239(1) and do not meet the exceptions set forth in Leaf 239(1)(a)-(c).

The lawsuit, which sets forth breach of contract, fraud, and unjust enrichment claims against Con Edison, seeks actual damages and refunds, injunctive relief, and attorneys’ fees and costs on behalf of Plaintiff and the proposed class.

Milberg Is a Recognized Leader in Class Action Litigation

Milberg pioneered federal class action litigation and remains a national leader in class action and consumer services lawsuits. For the latest firm news, follow us on Facebook and Twitter. To discuss a possible violation of your consumer rights, please contact us.