 (Breach of Contract on behalf of the Class)    (Violation of N.J.S.A. 56: 8-1 et seq. on Behalf of the Subclass)   (Breach of Implied Covenant of Good Faith & Fair Dealing on Behalf of the Class)   10.  The new energy suppliers, who compete against local utilities such as Public  Service Electric and Gas Company (“PSE&G”), are known as energy service companies, or  “ESCOs.”  While ESCOs supply the electricity, local utilities continue to deliver the commodity  to consumers’ homes.  The local utility also continues to bill the customer for both the energy  supply and delivery costs.  The only difference to the customer is which company sets the price  for the customer’s energy supply.   12.  Consumers who do not choose to switch to an ESCO for their energy supply  continue to receive their supply from their local utility.     13.  In New Jersey, the NJBPU holds market-based auctions for utilities to purchase  electricity at wholesale on a three-year rolling basis on behalf of its customers.  Pursuant to the  Electric Discount and Energy Competition Act of 1999, the power procured by utilities must be  purchased at prices consistent with market conditions.  A third-party consultant manages the  auctions on behalf of the NJBPU, and the bidding processes and results are made publicly  available.  As a result, these auctions reflect market-determined prices.  Utilities then charge  their customers a rate based on market prices for supply obtained in the competitive wholesale  marketplace, plus other wholesale costs, namely transmission, capacity, ancillary, congestion,  and administrative costs as determined by the NJBPU -- without any markup or profit.  Because  New Jersey utility rates do not include any profits, they serve as pure reflections of average  market costs of wholesale electricity, and associated costs.     14.  ESCOs such as Gateway have various options to buy electricity at wholesale for  resale to retail customers, including: owning generation plants; purchasing from wholesale  marketers and brokers at the price available at or near the time it is used by the retail consumer  (i.e., the spot market); and by purchasing in advance of the time it is used by consumers, either  by purchasing energy to be used in the future or by purchasing futures contracts for the delivery  of energy in the future at a predetermined price (i.e., futures or swaps).  The purpose of  deregulation is to allow ESCOs to use these and other innovative purchasing strategies to reduce  electricity costs, and pass those savings on to consumers.     16.  As part of the deregulation plan, ESCOs (like Gateway) do not have to file or seek  approval for the electricity rates they charge or the methods by which they set their rates with the  41.  Plaintiff also brings this action on his own behalf and additionally, pursuant to  Rule 23(b)(2) and (3) of the Federal Rules of Civil Procedure, on behalf of a subclass (the  “Subclass”) of New Jersey Gateway customers who were charged a variable rate for residential  electricity services by Gateway from Novemvber 2012 to the present.   42.  Excluded from the Class and Subclass are Defendant; any parent, subsidiary, or  affiliate of Defendant; any entity in which Defendant has or had a controlling interest, or which  Defendant otherwise controls or controlled; and any officer, director, legal representative,  predecessor, successor, or assignee of Defendant.   44.  Defendant’s violations of N.J.S.A. 56: 8-1 et seq. are applicable to all members of  the Subclass, and its violations of the common law are applicable to all members of the Class,  and Plaintiff is entitled to have Defendant enjoined from engaging in illegal and deceptive  conduct in the future.  45.  Plaintiff repeats and re-alleges the allegations contained in the paragraphs  above as if fully set forth herein.   46.  Gateway customers in New Jersey, and others in other states, have customer  agreements whose variable rate terms are substantially similar.   47.  Plaintiff and the Class entered into valid contracts with Defendant for the  provision of electricity.     49.   Pursuant to the Agreement, Plaintiff and the Class paid the variable rates  Defendant charged for electricity.   50.  However, Defendant failed to perform its obligations under the Agreement to  charge rates based primarily upon electricity costs and the rates utilities and other ESCOs  chage.  Indeed, Defendant charged a variable rate for electricity that was untethered from the  factors upon which the parties agreed the rate would be based.   51.  Plaintiff and the Class were damaged as a result because they were billed, and  they paid, a charge for electricity that was higher than it would have been had Defendant  based its rate on the agreed upon factors.   52.  By reason of the foregoing, Defendant is liable to Plaintiff and the other  members of the Class for the damages that they have suffered as a result of Defendant’s  actions, the amount of such damages to be determined at trial, plus attorneys’ fees.  53.  Plaintiff repeats and re-alleges the allegations contained in the paragraphs above  as if fully set forth herein.   54.  Every contract contains an implied covenant of good faith and fair dealing in  the performance and enforcement of the contract.  The implied covenant is an independent  duty and may be breached even if there is no breach of a contract’s express terms.   55.  Under the contract, Defendant had unilateral discretion to set the variable rate  for electricity based on market conditions and other factors, such as the amount of profit  Defendant hoped to earn from the sale of electricity in a customer’s utility area.   57.  Defendant breached the implied covenant of good faith and fair dealing by  arbitrarily and unreasonably exercising its unilateral rate-setting discretion to price gouge and  frustrate Plaintiff and other Class members’ reasonable expectations that the variable rate for  electricity would be commensurate with market conditions.  58.  Plaintiff repeats and re-alleges the allegations contained in the paragraphs above  as if fully set forth herein.   59.  The Consumer Fraud Act prohibits, inter alia:  The act, use or employment by any person of any unconscionable commercial  practice, deception, fraud, false pretense, false promise, misrepresentation, or the  knowing concealment, suppression, or omission of any material fact with intent that  others rely upon such concealment, suppression, or omission, in connection with  the sale or advertisement of any merchandise. . . .   9.  In 1999, New Jersey’s legislature and the New Jersey Board of Public Utilities  (“NJBPU”) deregulated the market for electricity.  Among the goals of the reorganization were  increased competition and deregulation within the industry, with an eye towards achieving  greater consumer choice and an overall reduction of energy rates.  As a result, the State’s electric  industry is open to competition, and consumers may choose their supplier of energy.     The History Of New Jersey’s Energy Industry  