Instead, customers received higher bills than they should have, Schneiderman found. Consumers were also locked into a 12-month contract they couldn't cancel, he said.
“These are difficult economic times, and predatory companies that exploit New Yorkers looking to save their hard-earned money will be held accountable,” he said in a statement. “This settlement puts energy providers on notice that these kinds of consumer frauds will not be tolerated.”
According to Schneiderman, Columbia was able to charge its customers more money because there is no readily available way for consumers to compare prices between their local utility and independent energy service companies (ESCOs) under the Public Service Commission.
While state-mandated tax breaks provide ESCO customers small savings, roughly 2 or 3 percent of their bills, Columbia's noncompetitive commodity prices eliminated those tiny savings, Schneiderman said.
In New York City, 375 customers in Queens will receive refunds, and 473 in Brooklyn, according to his office. Under the settlement, Columbia is required to refund the $2 million. In addition, Schneiderman said before the settlement was reached, the company agreed to change a number of its practices.