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Pyramid Schemes A Black Eye for Power Retailing?

Fortnightly Magazine - May 1 1998

(em as long as it doesn't recruit distributors and sells products only to end users.

Setlin scoffs at the FTC's allegations, noting that in the week following the modified order, "we generated more than $400,000 in sales. I think that proves we're a legitimate retail business."

Whether the Future Group is a lawful electric reseller is harder to pin down. Although Setlin says a contract to sell energy services proves he is not using electricity simply as an enticement to lure people to pay $99 or more for distributorships, the actual energy services provider (em Eastern Pacific Energy (em doubts whether Future Electric Networks will be able to deliver any significant customer sales.

The multilevel marketer insists it's a legitimate reseller, yet it hasn't sold anything yet and its contract depends on resolving the FTC charges.

Future Electric Networks hopes to market to California retail and small business customers electric and green power services through Pacific Advantage, a sales affiliate of Eastern Pacific Energy. Setlin claims to have 10,000 customer letters of approval to switch service to Eastern Pacific Energy once deregulation becomes effective.

"Unlike Boston-Finney, I didn't spend $100 for a license so that I could claim to be an ESP," Setlin says. "I don't want to be in the electric business. I want to market it, so I signed a half million-dollar contract [with Pacific Advantage to act as its sales agent]. All my promotional materials will clearly state, in accordance with PUC requirements, that we're not in the electric business, that we are licensed to represent a company that has that expertise."

Jim Leize, CFO of Eastern Pacific Energy, stresses that his company's contract with Future Electric Networks is subject to how the FTC complaint is settled.

"Any violation of state or federal law automatically results in termination," he says. Even if Future Electric Networks wins a clean bill of health, Leize suspects Setlin is in for a severe reality check about how many customers he actually can get because costs savings for small businesses and residences will be minimal.

If Future Electric Networks should end up selling nothing, that's OK, the CFO says. His company wasn't going to target the residential market anyway. "Residential is a niche market for us, and if we do go ahead with them I think they've got a tough sale ahead."

A Major Endorsement?

Amway and Enron Link Up, Downplay Their Venture

TWO CORPORATE POWERHOUSES (em Enron Power Marketing and Amway (em appear to have joined forces to pursue power retailing activities, but are keeping a low profile for now, until the market heats up.

Neither, for example, mentions the relationship on its corporate web site. And both are silent on their sales activities to date, saying that although prospective customers have signed up in California, specific figures won't be released until customers finally switch.

Mark Talbott, an Amway senior marketer, shrugs off his company's reticence: "Electricity is just one small addition to the more than 4,000 products the company already offers." Enron spokesman Gary Foster adds: "Right now we're just in the