CHICAGO (WIFR) -- The Illinois Attorney General’s office and the Citizens Utility Board (CUB) on Tuesday issued a consumer alert about “Gas Line ComfortGuard,” a lucrative pipe-repair service that has drawn hundreds of thousands of Nicor Gas customers despite the fact that it is overpriced, rarely used, and the plan’s annual cost is more expensive than average repairs, according to testimony filed with state regulators.
In fact, the list on Nicor’s website of what ComfortGuard does not cover is longer than the list of what it does.
Illinois Attorney General Lisa Madigan's office and CUB have uncovered evidence showing that while the service rakes in revenue of more than $2 million a month, it is so rarely useful to customers that its monthly repair benefits have averaged less than 10 cents per home.
At $4.95 per month, ComfortGuard, marketed as Nicor’s “most popular and affordable plan,” is offered by Nicor Services, an unregulated affiliate of the natural gas utility. It covers the cost of inspection and repair of potential gas leaks with exposed pipes and appliance connectors inside a home, up to $600 per incident.
ComfortGuard is the focus of a case before the Illinois Commerce Commission (ICC) in which consumer advocates argue that the service is overpriced and its marketing misleading. Also, they allege that even though Nicor Gas, the regulated utility, largely promotes the program, Nicor sells the service through an unregulated arm and improperly diverts ComfortGuard’s abundant revenue to its affiliate. This tactic prevents that revenue from reducing rate hikes proposed by the utility. Revenue is a key factor the ICC considers when it rules on rate-hike requests.
"Nicor's ComfortGuard service does not live up to marketing promises that it will save money for consumers," Attorney General Madigan said. "Consumers looking for comfort should carefully review their gas bills to determine whether they really need to pay an extra $4.95 a month."
“With another expensive winter bearing down on us, gas customers can ill afford to burn hard-earned money on unnecessary services,” CUB Executive Director David Kolata said. “Take a look at your gas bill, and if you have ComfortGuard, ask yourself if you really need it. The numbers indicate that ComfortGuard is of much greater value to Nicor than its customers.”
Testimony filed by CUB and the Illinois Attorney General’s office shows that in 2009:
-20 percent of Nicor customers, about 440,000 people, were enrolled in ComfortGuard, yet not even 2 percent of them had repairs performed under the program.
-The annual cost to ComfortGuard customers is $59.40, but the average cost of a repair for non-ComfortGuard customers was only about $47. Less than 3 percent of gas-leak repairs made by Nicor for non-Comfort Guard customers were more than $100.
-Nicor Services brought in more than $2 million a month in ComfortGuard revenue, but spent less than $50,000 per month—or under 10 cents per ComfortGuard customer—on actual repairs.
The testimony, written by David J. Effron, a New Hampshire consultant on utility regulation, also estimated that the actual price of ComfortGuard should be just 30 cents a month, not $4.95 a month, based on estimates of the costs of providing the service.