A large number of Nicor Gas customers are overpaying for a repair service that is rarely used, according to consumer advocates who argue that utility is improperly selling the service through an unregulated affiliate to divert revenue to the utility.
About 20 percent of Nicor customers are signed up for the service — Gas Line ComfortGuard — which covers the cost to inspect and repair a gas leak in a home. They pay $4.95 per month, but just 2 percent of those customers ever need the service, and the average payout is just 10 cents per month per customer, according to an analysis by consumer watchdog group Citizens Utility Board.
Nicor Services, the unregulated Nicor Gas affiliate that sells ComfortGuard, strongly disagreed with the claims, saying the service provides “real value” to and protects consumers. Since its inception 12 years ago, ComfortGuard customers have received 65,000 repairs and 11,000 inspections from the service, the company said.
Nicor is legally obligated to investigate gas leaks for free and shut off the gas if necessary, but according to testimony filed with the Illinois Commerce Commission by CUB and the Illinois Attorney General’s office, customers have been misled into believing that if they don’t enroll in the service, the utility won’t inspect or repair gas leaks.
An analysis of 2009 Nicor customers found:
– The annual cost of ComfortGuard is $59.40; yet, customers who weren’t enrolled paid just $47 per year on average for gas-leak related repairs.
– For non-ComfortGuard customers, less than 3 percent of gas leaks repairs were more than $100.
– The utility is pulling in more than $2 million in revenue per month from the subscription service while spending less than $50,000 on repairs.
Nicor spokeswoman Annette Martinez called CUB’s profit claims “widely inflated” with “no basis in reality.” She said revenue from the program helps lower utility bills, and marketing materials are clear about what the service does and does not provide.
An ICC ruling to determine the fate of the program is expected in early 2011.
$1,950,000 in monthly profits from concerned customers…hmm…
Hello,
Please also investigate the obscene gross profits generated by the mandated monthly service fee charged each month to small businesses whether or not ANY of the product is used.
@Larry, the utility companies realized decades ago that conservation was going to lower their revenues, so they began adding fixed fees for every imaginable component of their service. If you or I managed to reduce our natural gas or electricity usage by 10%, we’d be lucky if we saw a 2% drop in our bills.
Our consumption could drop to ZERO, and we’d still be billed, and they’d still make money.
RegularGuy has it right. They tell you to conserve to save money while they go to the ICC for rate increases. Again, the little guy gets it.