McGuireWoods Lawyers Review Decision on Variable Rate Charges for Natural Gas

September 24, 2021

McGuireWoods partner J. Brian Jackson and associates Andrew F. Gann Jr. and Mitchell Diles co-authored an article in the Institute for Energy Law’s September 2021 Oil & Gas E-Report. Gann also serves as an editor for the e-report.

The authors analyzed Burger v. Spark Energy Gas, LLC (2020), a decision by the U.S. District Court for the Northern District of Illinois on variable rate charges for natural gas. As the authors explained, the plaintiff filed a putative class action against an alternative retail natural gas supplier (AGS) alleging violations of the Illinois Consumer Fraud and Deceptive Business Practices Act (ICFA) and breach of contract and the implied covenant of good faith and fair dealing, among other claims.

The court dismissed the plaintiff’s ICFA claims without prejudice for failing to adequately plead that the defendant’s representations proximately caused her damages. According to the court, an ICFA claim must allege (1) a deceptive or unfair act or practice, (2) intent that a consumer rely on the deceptive or unfair practice, (3) that the deceptive or unfair practice occurred while conducting trade or commerce, and (4) actual damage caused by the deceptive or unfair practice.

The court also concluded that the defendant made no guarantee about how it would set rates and therefore did not breach any contractual promise.

Although the plaintiff’s claim alleging breach of the implied covenant of good faith and fair dealing can proceed, the authors noted, she would need to demonstrate that the defendant exercised its discretion in setting variable rates “in bad faith, unreasonably, or in a manner inconsistent with the reasonable expectations of the parties.”