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Warnings about Unethical Electricity Marketing Practices
Pennsylvania Ag Connection - 07/10/2019

In recent years, electricity customers across the United States have seen an increase in marketing materials promising lower electricity rates. Penn State Facilities Engineering Institute (PSFEI) is offering precautionary advice to its customers and prospective clients about calls, letters and emails they may be receiving from companies promising lower costs.??

"I'd like to be able to say the old adage, 'If it looks too good to be true, it probably is,' fits here," said Kevin Dean, PSFEI energy management consultant, "But, the truth is, some of the language used in the letters and emails our clients have been forwarding to us appear to be pretty legitimate to the average person."

Dean warns that misleading language --including phrases such as "your authorized consultant by the Public Utilities Commission (PUC)," "electric rates are skyrocketing," and "up for renewal" -- is one of the ways electricity suppliers and brokers are using unethical marketing practices to entice some of the organizations and state and local agencies currently under contract with PSFEI.

According to Dean, electricity rates are not actually skyrocketing. Many of the customers targeted by the marketing campaigns didn't even have contracts that were up for renewal, nor was the sender an authorized consultant of the PUC.

"We've been receiving calls and emails from current clients questioning our contract terms, electricity rates and telling us about the information they've been receiving from brokers," Dean said. "When we started receiving these types of calls and emails more frequently, we thought it would be a good idea to make sure other customers and potential clients know what to look for when they receive these kinds of marketing pieces."

As the primary adviser to the Commonwealth of Pennsylvania for electricity and natural gas procurement and account management activities, the PSFEI energy team suggests following the below guidelines before replying to or accepting an offer for energy management services:

Beware of cold calls offering rebates or renewals on your energy bills. Such terms may be misleading. The PUC released a Secretarial Letter in April discussing the issue, which will hopefully help cut down on deceptive marketing practices.

Always shop around for energy supply. As one would shop for gasoline or groceries, energy shopping should follow the same logic. A list of licensed energy suppliers can be found on the Pennsylvania Public Utility Commission's website along with current pricing offers for residential consumers.

Avoid shopping too far into the future. While current energy markets are yielding potentially lower pricing for longer terms, beware that significant variations in usage, like those caused by the installation of a solar project or energy efficiency improvements, can enable the supplier to change the contract price. Make sure to examine the contract terms and conditions closely to ensure they meet current and future needs.

If a broker or consultant is desired, customers should inquire about the service fee. Brokers and consultants act as conduits to a pool of suppliers. However, they don't perform this service for free. The fees are generally added into the energy rate behind the scenes and not easily visible to the customer.

Current PSFEI clients with questions or concerns about marketing materials they may have received from electricity brokers are encouraged to contact Dean at ktd5015@psu.edu. Prospective clients may visit psfei.psu.edu for more information about PSFEI Energy Management and other services the PSFEI offers.

The Penn State Facilities Engineering Institute provides education programs, energy services, engineering services and?facility condition assessments to Pennsylvania state agencies, the federal government and nonprofit organizations. The organization aims to advance its customers' facilities engineering objectives through applied research, education and innovation.

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