Duke looks to be more than your power company: Firm offers customers a home repair plan for a monthly fee

CHARLOTEE, NORTH CAROLINA - Duke Energy Corp., the power company that lights your home, also wants to help with bursting pipes, busted water heaters and other home repairs - all for a monthly fee tacked onto your electric bill.

Far afield from its core expertise, the Charlotte-based electric utility, with more than 2.1 million customers in the Carolinas, recently mailed another round of home repair sales pitches along with customers' power bills.

An advertising mailer, dated Nov. 16, comes as a signed letter from Ellen Ruff, president of Duke Energy Carolinas.

In the pitch, she offers a toll-free number to access repairmen for emergencies to fix or replace faulty home wiring, failed water pipes and broken water heaters. The home wiring plan covers simple repairs, such as light switches and electrical outlets that stop working.

Customers can choose to pay monthly fees up to $10.90 for various levels of coverage. The average power bill in the Carolinas is roughly $80. The company said 20,700 residential customers in the Carolinas are signed up for the plan, which contracts with an outside vendor that dispatches repairmen any hour of the day.

The Duke plan has some stipulations: Coverage begins 31 days after it is purchased and only applies to normal wear and tear of the equipment covered. And acts of God, such as power outages that result in frozen pipes that burst, are not covered. Neither is damage from failed equipment, such as flooding from a failed pipe or fire from faulty wiring.

The service receives rave reviews from customers who have used it and is a "natural extension" of providing electric power to homes, said Paige Sheehan, a spokeswoman for the utility. The program started in the summer of 2004, and is now available to all residential Duke customers in the Carolinas.

During the first six months of this year, the company took 1,700 calls under the program and from 80 percent and 90 percent of the problems were covered under the plan, according to Duke survey data, Sheehan said.

It's selling peace of mind, Sheehan said. But is it worth it?"You ask the question: How many times do your pipes burst in the middle of the night?" said Mark Cooper, director of research with the Consumer Federation of America. "The consumer has to really evaluate spending between $47 and $130 a year against the possibility that something will happen."

Lyle Walter, general manager of Adams Plumbing at 211 Main St. in Pineville, said some plumbing companies sell their own service agreements that cover routine once-a-year maintenance or for running repairs, like having a lawyer on retainer. But those plans don't cover the outright replacement of water heaters.

He said choosing to buy the Duke coverage is just a matter of personal preference and comfort.

Walter said that Adams Plumbing sells a $60-a-year service for yearly maintenance checks of water pressure and other heater operations. It keeps the water heater healthy, he said.

For an emergency, a typical service call is free for assessing problems and giving estimates. New water heater installation is about $400, and a 30- to 52-gallon heater, bought through Adams, runs from $250 to $400, depending on the model and if it's electric or gas, he said. The total bill might run to $800, he said.

Unlike traditional insurance, the Duke plan is unregulated. The utility says it's akin to an extended warranty or extra service plan purchased with an appliance.

Consumer Reports magazine has launched a public campaign advising consumers not to purchase extended warranties. The magazine, published by the nonprofit consumer advocacy group Consumers Union, says extended warranties and service plans are almost always a waste of money.

Cooper said that customers might already have coverage from existing warranties and even from homeowners' insurance.

The N.C. Department of Insurance doesn't regulate the service plans because they are not traditional insurance, said Kristin Milam, assistant public information officer for the state agency. The agency has not received complaints about the Duke plan, she said.

The N.C. Attorney General's Office, which has a consumer protection hotline, also has not received any complaints, a spokeswoman said.

It might seem an odd business for an electric utility, but the specialized industry has grown up around the marketing idea that utilities have access to millions of customers that can be pitched extra services.

Utility Partners of America, based in Greenville, S.C., is the vendor for Duke, and the companies split the monthly fees.

There isn't a charge to Duke for the service call or replacement parts and appliances. Neither would discuss revenues or the percentage split.

Mark Cale, chief executive of utility partners, said the plan works for people without cash on hand when their water heater breaks or they need other emergency repairs. For people with healthier incomes, his company sells the service as a convenience, he said.

"Everybody's water heater is going to go bad; it's not a matter of if, but when," he said.

Duke's Home Repair Plan

- Water heater coverage: $3.95 a month.

- Home wiring coverage: $4.95.

- Coverage against failing pipes, which must be bought along with one of the other plans: adds another $2.

- There is no deductible or extra charges.