On the heels of a scathing report by state regulators, Central Hudson is facing a class action lawsuit alleging that the company engaged in deceptive billing practices and other violations of state business law.

If successful, thousands of Central Hudson customers who may have been overbilled by the utility starting in August 2021 could be entitled to damages.

The lawsuit was filed in State Supreme Court in Dutchess County by the law firm Lowey Dannenberg PC. The White Plains-based firm specializes in antitrust, securities, privacy and consumer protection litigation. The action was filed on behalf of six Central Hudson customers who claim they were overbilled after the company rolled out new centralized billing system in August 2021. But the suit also seeks relief for “similarly situated” Central Hudson customers, which means that anyone who experienced similar billing issues will automatically be eligible to share in any eventual settlement.

The lawsuit comes one month after the state Public Service Commission issued a report detailing failures of the new billing system which began immediately upon its launch and continued, the report claims, at least until the fall of 2022 when hundreds of Central Hudson customers were issued erroneous termination notices. The new system was intended to replace a 30-year-old mainframe computer and allow the company to better process “complex billing scenarios” like Community Choice Aggregation programs. The new system was also intended to support the utility’s recent practice of reading electric meters every other month and using “estimated usage” to bill in the intervening months.

But, the report found, Central Hudson rolled out the new billing system despite repeated warnings from project managers and frontline workers that it was plagued by technical glitches. Central Hudson staff also complained that they had not been adequately trained on the new system. At least one employee reported that they were “petrified” that they would mishandle a 911 call or gas leak because of “rushed” training on the new system.

Over the next few months, Central Hudson customers experienced a litany of billing issues. In some cases, customers were not billed for months then hit with enormous bills that, if they were enrolled in the company’s autopay program, completely drained their bank accounts. In other cases, the autopay system improperly took thousands of dollars that were not owed at all from customer bank accounts. Other customers reported receiving multiple bills each month with different amounts due or wild, unexplained fluctuations on their monthly bills.

The plaintiffs in the class action lawsuit illustrate the depth of the problems with the billing system. One of them, Greg Walker of Kingston, shut off power in his home and unplugged all appliances after his monthly bill more than doubled and the company was unable to provide a justification for the increase. The next month he received another bill that failed to reflect the change.

Other plaintiffs reported being hit with huge increases in their gas and electric bills without explanation. In some cases, those charges were reversed, again with no explanation from the utility, the suit alleges. By December 2022, investigators estimated that at least 11,000 Central Hudson customers had been impacted by billing system problems. The PSC report also found that in response to a swelling chorus of complaints, company officials misled customers by downplaying problems with the billing system and blaming price fluctuations on volatility in global markets and the war in Ukraine.

“From August 2021 to present day, Central Hudson has engaged in deceptive and improper billing practices affecting consumers who reasonably expected their electricity bills to coincide with market rates, New York State revenue taxes, their average electrical energy consumption, and other factors, as represented to them by Central Hudson in the agreements between them and the Company,” the lawsuit reads. “In reality, however, the electricity and gas bills that Central Hudson issued to consumers grossly deviated from commodity market prices and did not coincide with changes in the market price for electricity.”

The legal filing lays out six “claims for relief,” including deceptive billing practices, breach of contract, unjust enrichment and negligence. The suit asks the court to declare Central Hudson customers impacted by the billing problems as a class for the purposes of obtaining relief as well as attorney’s fees, damage awards for plaintiffs and class members and an injunction barring Central Hudson form engaging in further deceptive practices as alleged in the complaint.