Westchester Energy Company Faces State Lawsuit

Attorney General Spitzer today announced his intention to sue a Westchester County energy company for forcing residential customers to pay inflated heating oil prices.

The company -- WILCO Inc. based in New Rochelle -- is accused of reneging on fixed price contracts with dozens of customers during one of the coldest periods of the winter.

"There should be no confusion about the terms of a fixed-price contract," Spitzer said. "It means that a company must honor its commitment to customers whether it is convenient to do so or not."

In October 1999, WILCO began an advertising campaign for new customers in Westchester County. The company specifically targeted the customers of other energy companies with claims that it could beat competitors' prices on two-year fixed price contracts for heating oil delivery. Dozens of new customers signed up.

Just three months later, in January of this year, WILCO sent a notice to the new customers, informing them that the company would no longer honor the fixed-price deal. Instead, the company said it would, at least temporarily, be charging higher prices. Company officials explained that the sudden energy price spike this winter reduced their overall operating margin, leaving them no choice but to renege on the new contracts. Spitzer said that poor business planning is not an excuse to break a contract with consumers.

The Attorney General's lawsuit, which will be filed this week in State Supreme Court in White Plains, alleges that WILCO's unilateral abrogation of the contracts was a deceptive business practice that violated Section 349 of the General Business Law. The lawsuit further alleges that a flyer sent by WILCO to prospective customers in Westchester County in October 1999 constituted false advertising of services.

The lawsuit seeks a court order requiring WILCO to honor its fixed price contracts for the full two-year period, reimbursements for the amount fixed-price customers paid in excess of the contractual fixed price and unspecified costs and penalties.

The action against WILCO is the result of on ongoing statewide review of the home energy price increase that began in December. In a related action, the Attorney General announced today a settlement with an Ohio energy company that was accused of cutting off deliveries of propane to customers in the Rochester area.

"My office is monitoring the recent dramatic rise in energy prices, and is actively looking for situations in which companies take unfair advantage of consumers," Spitzer said. "We will be as aggressive as possible in these circumstances and pursue settlements or lawsuits, as appropriate."

The WILCO case is being handled by Assistant Attorney General Deborah Scalise of the Westchester Regional Office in White Plains. Spitzer also acknowledged the assistance of Elaine Price and Richard J. Linkowski of the Westchester County Department of Consumer Protection.

Consumers who have complaints against WILCO or other home energy suppliers may call the Attorney General's office at 1-800-771-7755. Consumer complaint forms may be downloaded from the Attorney General's website at www.ag.ny.gov.

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