Misleading Electric Ads Make Case For Reregulation

The woman who says she represents North American Power is not telling the truth about the benefits of buying electricity from her company.

"You can save up to 10, 15, 20 percent of your bill, depending on your usage," she says in a telemarketing call to my house.

But the rate she eventually quotes is only about seven percent less than the standard price offered by Baltimore Gas & Electric Â— something the average customer would have no way of knowing. And of course the percentage savings won't vary even if my "usage" goes up to that of a steel mill.

This is a problem for North American Power. Recently, the staff of the Public Service Commission, having done its own investigation, challenged the company to show why it shouldn't be penalized for "committing fraud or engaging in deceptive practices."

The allegation "was pretty horrifying to me," company CEO Kerry Breitbart said in an interview. Any misrepresentations were "inadvertent," he said, adding that the company recently hired five new employees to make sure sales reps obey the rules.

But this is also a problem for the industry. As power companies plead with Annapolis, the capital of the U.S. state of Maryland, to maintain electricity deregulation, widespread misbehavior by people selling kilowatts to households furnishes another argument for scrapping the whole mess.

"There clearly is a problem with the way that price information and other information is being presented," says Maryland People's Counsel Paula M. Carmody, who represents residential consumers before regulators. "What we're finding more often than not is that the price comparison that we're seeing in ads is not transparent. It's not clear. It's not accurate."

A decade after the arrival of deregulation that was supposed to let everybody shop for power the way they buy laundry detergent, electricity shopping for households has truly, finally arrived in Maryland.

BGE and Pepco remain our utilities and will always deliver the kilowatts to your house, but these days you can buy the raw electricity from more than 10 independent suppliers. They try to beat the utility's standard price by getting a better deal in the wholesale market.