A North Texas plastics company has filed a proposed class action lawsuit against Berkshire Hathaway’s MidAmerican Energy Services, alleging the electricity supplier passed through unauthorized fees to commercial customers with contracts marketed as fixed-rate plans.
MidAmerican supplies electricity to roughly 15,000 customers in Texas.
According to the filing in federal district court in Marshall, lead plaintiff J&M Plastics, located in Royse City northeast of Dallas, received a statement from MidAmerican in April that included eight line-item charges for “Supplemental Ancillary Services.” Those charges, assessed during the week of the February 2021 winter storm, totaled almost $54,000, more than three times the amount of the company’s typical monthly bill.
The MidAmerican contract states that the fixed-price plan includes “costs associated with line loss…all charges assessed by ERCOT…and other costs required to facilitate delivery of electricity to Customer’s Delivery Points.”
But according to the lawsuit, MidAmerican ignored the terms of its fixed-price agreement and informed customers that “MidAmerican Energy Services will not increase the energy component of your bill, however, non-energy costs such as ancillary charges billed by ERCOT and your local utility, are not fixed and are passed through on your bill.”
J&M management kept the 55,000 square foot facility heated during the storm to keep pipes from freezing but did not operate. The company employs more than 40 full-time workers and manufactures a variety of consumer products from recycled plastic.
“MidAmerican has already acknowledged that it can’t pass through these same costs to their residential and small business customers, because of the Public Utility Commission’s consumer protection regulations,” says Derek Potts of the Potts Law Firm in Houston. “But the company’s still trying to unlawfully use a statewide disaster to take advantage of and price-gouge thousands of larger commercial customers.”
“They can’t justify passing through these costs when J&M and other customers agreed to a fixed-price electricity plan, which specifically includes any ancillary and ERCOT-assessed charges,” says Potts.
The lawsuit alleges violation of the Texas Deceptive Trade Practices Act, among other claims for breach of contract, negligence and misrepresentation.
The lawsuit is J&M Plastics, Inc. v. MidAmerican Energy Services, Case No.2:21-cv-00206, filed in the U.S. District Court for the Eastern District of Texas in Marshall.
© 2021 David Mazor
Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell a stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.