Gordon Canning's article, "Entering the Appliance Repair Business" (Feb. 1, 1995), contains several inaccuracies. First, Mr. Canning asserts that "the residential customer views the utility as a preferred provider." This is not a universal given. Residential customers only view a utility as a preferred provider of appliance service if the utility is allowed to engage in nonutility business activities and to subsidize these services below fair-market value.
Second, his statement that "although many contractors have petitioned regulators and legislators, alleging cross-subsidization and unfair competition, no case has forced the utility to withdraw from the business" is in error. In fact, the New Orleans City Council, a public utility commission, barred the investor-owned local utility (IOU) from engaging in these activities (CNOR-90-575).
Third, Mr. Canning is also incorrect in his claim that "[u]tilities have been offering service contracts for 30 years; none has ever expanded into equipment sales from service contractors." Equipment sales from service businesses has evolved over the last 30 years and is authorized by the Louisiana Public Service Commission (LPSC G.O. U-18948).
Fourth, his assertion that "participating contractors receive a steady flow of new revenue (most unusual in their business), and position themselves to take over major repair work or equipment sales after the service contract runs out" is false. IOUs use the repair concept as a bait and switch to engage in larger and larger construction activities on private property, converting service contractors into utility-dependent sharecroppers.