Pa. electricity supplier North American under scrutiny

Posted: January 28, 2011

In the new world of competitive electricity markets, one alternative power supplier has attracted the attention of regulators in two states.

North American Power, a Connecticut company, is facing a deceptive-practices complaint from the Maryland Public Service Commission that could lead to the loss of its license there.

And in Pennsylvania, North American's salespeople have raised eyebrows with aggressive tactics, including a website apparently designed to look like papowerswitch.com, the Pennsylvania Public Utility Commission site aimed at assisting customers with deregulated markets.

"Oh, wow, this is a concern," Irwin A. "Sonny" Popowsky, Pennsylvania's consumer advocate, said after viewing the copycat website, which uses the name papowerswitch.org instead of ".com."

North American Power officials, responding to questions from The Inquirer on Thursday, scrambled to assure the PUC and Popowsky that the imitation website was not sanctioned by it but had been put up by one of its brokers, who receive commissions for signing up customers.

"Consistent with North American Power's zero-tolerance policy for these violations, North American Power has terminated the independent representative and taken steps to have the site taken down," said Carrie Waible O'Brien, a company spokeswoman.

Jennifer Kocher, the PUC's spokeswoman, said the commission was reviewing its legal options.

"PUC regulations and our marketing guidelines dictate that the license holder is responsible for any fraudulent, deceptive, or unlawful marketing acts performed by its agents or representatives," she said.

The incidents underscore a fear held by regulators in states that have embraced deregulated energy markets - that competition would unleash unscrupulous sales tactics on utility customers unaccustomed to having a choice.

"Anything that damages the reputation of the competitive market harms not only consumers but also all suppliers participating in the market," the commission said in November when it adopted strict guidelines on supplier marketing practices.

Those guidelines require salespeople to wear badges clearly identifying themselves and to fully disclose the terms of contracts.

In deregulated energy markets, utilities like Philadelphia's Peco Energy remain as electric distribution companies. But customers are free to shop around for the company that generates the power.

More than 20 companies have increased efforts to sign up Peco's 1.6 million customers since the utility entered a fully competitive market on Jan. 1. Many are offering discounts off Peco's rates.

In Maryland, where markets have been deregulated since 2005, the state has adopted consumer-protection rules on sales practices similar to Pennsylvania's.

On Jan. 7, the Maryland PSC filed a complaint against North American saying it had "committing fraud and engaging in deceptive practices" and violated its sales practices.

Among the alleged violations was that a North American broker allegedly appeared at the door of a PSC employee and presented himself as a representative of the commission. The PSC also complained that North American's advertisements and contracts were misleading and incomplete.

The Maryland commission Wednesday continued a hearing on the issue until March, said Terry J. Romine, its executive secretary.

Though PSC complaints against suppliers are infrequent, Romine said, the commission issued the year's second deceptive-practices complaint Wednesday against Viridian Energy. Viridian, like North American, relies on a large independent sales force to acquire customers.

In Pennsylvania, no formal complaints have been lodged against suppliers operating in Peco territory, said Kocher.

But North American Power was familiar to the PUC staff before the papowerswitch.org website appeared.

Last week, several North American brokers had to be escorted out of a Jan. 19 event at the King of Prussia mall that the PUC held to explain electric deregulation, Kocher said.

The PUC had invited suppliers to attend the event, but only corporate representatives. North American declined the invitation, Kocher said.

But about seven North American brokers showed up, she said, and were attempting to sign up some of the 2,000 people who attended.

Several brokers left at the PUC's request, she said, "but others were informed by mall security that they needed to vacate" for unauthorized sales activity.


Power Shopping

Pennsylvania's Public Utility Commission explains electrical choice and lists alternative suppliers at www.papowerswitch.com

The Pennsylvania Office of Consumer Advocate will mail a Peco shopping guide free: 1-800-684-6560

Peco Energy responds to customer questions at www.pecoanswers.com


Contact staff writer Andrew Maykuth at 215-854-2947 or amaykuth@phillynews.com.

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