BY THE END OF MARCH, CALIFORNIA, RHODE ISLAND, and Massachusetts planned to offer retail choice to customers. However, early signs suggest electric competition may fall short of expectations due...
Pyramid Schemes A Black Eye for Power Retailing?
idea. It proposes to require UDCs to maintain a database or record of "complaint" calls to their customer service centers, categorizing the complaints by type of conduct alleged, and recording name, address and telephone number. The PUC's Consumer Services Division would have access to the database. (See, Decision 98-03-072, March 26, 1988, pp. 99-100.)
Tom Boyd of Southern California Edison questions the idea of utilities policing ESP behavior.
"We provide advice about ESPs to our customers," he says. "In dealing with any third-party provider, we caution looking at the fine print, but as far as multilevel marketing companies go, we leave it to the PUC to determine if they are operating legally."
Pacific Gas and Electric spokesman Cory Warren agrees: "As long as they follow state requirements and those of the Power Exchange and the Independent System Operators, we'll enter into a service agreement."
Boyd doesn't consider ESPs, much less whether they are multilevel marketers, much of an issue. No one is jumping on the bandwagon of new providers. "Out of 1.2 million customers, we've only had 2,500 requests to switch," he says.
ESPs may not be able to keep a hands-off approach to the multilevel marketing business, however.
Eastern Pacific Energy, for instance, markets via independent sales affiliates. When its Pacific Advantage affiliate contracted with Future Electric Networks to sell residential and small commercial services, the company found itself thrust into a controversial arrangement it would just as soon have avoided.
Publicity about Boston-Finney's collapsed pyramid scheme and its false claims regarding energy savings prompted Eastern Pacific Energy to "sit Future Electric Networks down with the PUC to discuss what they could or could not represent to customers," Leize says.
"I think the problem with the multilevel marketing industry as a whole is that it tends to overly engage in hyperbole. That's a rascal we've got to work to keep in its cage if anyone in the electric business is ever to effectively partner with them." F
David Soyka is a freelance writer in Alexandria, N.J.
Guilty by Association?
Future Electric Networks Fights for Respect
IT REALLY IRKS ME that the press is lumping Future Electric Networks
and me in with Boston-Finney, " says Alan J. Setlin, chairman of the Future Group, formerly FutureNet Inc.
"I started this company in November 1997 with $2 million of my own money," says the self-described former insurance broker. "I've got 200 people directly on payroll and 40,000 square feet of office space, and 50,000 distributors nationwide. Anyone who comes down here to look at my facility can see I'm running a legitimate business."
The Federal Trade Commission claims that one aspect of Setlin's business (em a multilevel marketing program to sell Internet access devices (em is a pyramid scheme. (The FTC charged FutureNet with recruiting third-party distributors as Internet "consultants," who would then bring on more "downstream" paying members, so that the income from the plan would not depend on sales of Internet devices, but on recruitment.) Under a modified restraining order, however, the Future Group can now do business under a court-appointed monitor