May 23, 2013

PUC probing Electricity Maine for possible false ads

Did the company's ads give the impression it is the state's cheapest provider? Regulators ask for answers.

By Tux Turkel
Staff Writer

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In the winter, Electricity Maine began changing the focus of its advertising, Dean said. It shifted from price competition to other benefits of signing up, such as the company's fund that helps organizations in the Lewiston-Auburn area, including the United Way and Androscoggin Home Care & Hospice.

It's possible that some radio stations didn't update the ad copy quickly enough, Dean said. But it's hard to know, because the ad campaign involved thousands of spots over the time period. Recently, Dean said he sent the stations a note reminding them to keep the ad copy current.

"It's our intent to make sure what we're running is accurate and factual," he said. "But it's not as simple as turning things on and off."

One thing is clear in the three rate options on Electricity Maine's website: The company's latest rates don't beat the standard offer of about 6.8 cents per kilowatt hour.

The leading rate plan is called MaineStrong. "Our most popular rate, providing extended protection," the ad copy says. It has a term of 18 months and is set at 7.58 cents.

Although that rate is nearly a penny per kilowatt hour more than the standard offer, 70 percent of new customers over the past 30 days have chosen it, said Dean.

"I don't know why," he said. "Is it because they want to help their communities and create jobs, or want a fixed rate for 18 months?"

The second option is called MaineSafe. "Longer term, helps guard against rising electricity rates over the next year," the copy reads. It's a 12-month fixed rate, at 7.78 cents, almost a penny over the standard offer.

Dean was asked if the claim is misleading, considering that standard offer rates stay the same for a year so there's no danger that they will rise.

His explanation: It's nearly June, and the standard offer rate could rise in less than 10 months. MaineSafe guards against that possibility.

The third option is called MaineSaver. It's a six-month fixed rate that's basically on par with the standard offer, at 6.8 cents. "Our lowest fixed rate -- enjoy savings now!" the copy reads.

Comparing the claims is tricky, said Derek Davidson, director of the PUC's consumer assistance division. The standard offer could rise next year. If that happened, Davidson said, a consumer who signed up today for MaineSafe could pay less, but only for the two months after March of 2014.

"This is what we're trying to look at," Davidson said. "We're walking a fine line. We want them to be able to market, but we want them to be truthful."

The PUC also is trying to understand whether Electricity Maine's contract renewal policy automatically signs up a customer for another year, even if the new rate is higher. PUC rules require written notice, 30 to 60 days before a contract expires, but they don't spell out that the supplier must disclose the new rate, Davidson said.

Dean said Electricity Maine notifies customers of the expiring term, and does specify the new rate. But he said he thinks many people actually want longer-term contracts, regardless of a rate change, and he's trying to secure a two-year energy supply.

The challenge is getting suppliers to commit to a long-term price in today's volatile energy market, he said. He has been working most recently with Noble Americas Energy Solutions, a large power retailer in San Diego.

"People want to know they're getting a fair and competitive rate, and they don't want it to move around," Dean said.

The PUC maintains a Web page devoted to questions about competitive energy providers, at: whatsnew/index. php?topic =puc -faq&id=454603&v=article

The PUC and the Public Advocate's Office say they have gotten relatively few complaints. But electricity prices are tied strongly to the price of natural gas, which is used to generate half the power in New England. Falling wholesale gas prices helped lower the standard offer over the past two years, but that trend is changing direction.

That's why electricity customers should keep an eye on their contracts, and check the rates and terms for any automatic renewal, said Bryant in the Public Advocate's Office.

"If there's automatic renewal at a higher rate, there are going to be a lot of unhappy people," he said.


Tux Turkel can be contacted at 791-6462 or at:


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