Public Utilities Reports

PUR Guide 2012 Fully Updated Version

Available NOW!
PUR Guide

This comprehensive self-study certification course is designed to teach the novice or pro everything they need to understand and succeed in every phase of the public utilities business.

Order Now

Pyramid Schemes A Black Eye for Power Retailing?

Fortnightly Magazine - May 1 1998

"With electricity I may have to sign fifty to a hundred contracts," says Mark Calkins, marketing vice president for Big Planet, explaining why his company has decided to go slow on plans to enter the electric market.

That said, however, Calkins admits that electricity is still attractive to marketers because it can compliment other offerings as such long distance, mobile telephone, and Internet access. "One-stop" billing is the goal. Consumers might not care if they pay more for electricity, so long as they can write one check for all their technology services.

Despite his experience at Boston-Finney, Eric Borgos still sees opportunities in energy: "The problem right now is that there isn't a product to sell. Once deregulation is more widespread, I think more multilevel marketing companies are going to be interested."

Jim Leize of Eastern Pacific Energy, a California ESP that has a relationship with Future Electric Networks, adds that the multilevel marketer's interest in electricity is to gain a gateway to customers and sell additional services. He confirms that role in energy markets for multilevel marketing: "Almost a day doesn't go by when I don't get a phone call from some multilevel marketing company wanting to represent us. Multilevel marketers are not going to go away."

Setlin, at Future Electric Networks, for one, intends to be in the thick of the new business, just as soon as other utility services and commodities are deregulated (em and, of course, after the FTC case against him is settled.

"The whole world is going to deregulate," Setlin says. "Electricity is just the start. In 1999, billing and metering in California are going to be opened up, and then there's water and other utilities. I'm getting into electricity as a way to get a jump into all these other markets."

Consumer Safeguards:

What Role for Regulators?

In California, Boston-Finney became a registered energy service provider by filling out a form and paying a $100 license fee. It didn't participate in the initial pilot program on electric customer choice in its home state of Pennsylvania. There, it may have been deterred by the much more intensive review of its business capabilities required under Pennsylvania law, including a mandatory a $250,000 bond, says Irwin A. "Sonny" Popowsky, Pennsylvania consumer advocate.

Now, however, things have changed in California.

In Decision 98-03-072, the California PUC adopted new interim standards affecting registration of and technical qualification for energy service providers. Moreover, it also approved a redesigned ESP registration application form, requiring ESPs to submit additional information regarding financial, technical and operational abilities. Each ESP must have executed a service agreement with each utility distribution company in whose service territory it (the ESP) expects to offer services. ESPs must also: (1) post a $25,000 security deposit for financial guarantee bond; (2) submit a copy of all agreements with scheduling coordinators (unless the California Independent System Operator names the ESP as an SC itself); (3) name key personnel involved in technical and operations aspects of the business, and describe their working experience; and (4) supply customers with a uniform notice of