Caveat Emptor (Let the Buyer Beware)
Teresa Hansen, Managing Editor
I am writing this editorial on the first full day of direct access operation in California. I, like many others, am anxious to see how things will work out, and if small business and residential consumers will benefit. I think it will be quite a long time before that becomes clear.
However, there are some like Michael Peevey, president and CEO of New Energy Ventures, one of the nation`s largest non-utility retail energy services company, who, even at this early date, seem quite positive that consumers will benefit. “The level of competition is intense, and that`s good for customers,” Peevey was quoted as saying in a recent news release. While I certainly believe the level of competition is intense, I am not so sure that`s going to be so good for customers, at least not initially.
The barriers to becoming an electric service provider (ESP) are low, leaving the door wide open for most anyone to hangout a shingle and begin offering electricity. While the California Public Service Commission (CPUC) is working diligently to make sure the state`s consumers are protected from companies that do not have their best interests at heart, that is not an easy job. According to the information on the CPUC`s web page, 59 ESPs met the requirements to serve the state`s electricity buyers on March 31. Although 59 is a pretty fair number, some predicted that there would actually be many more ESPs in California by this date. And, there would be if the commission had approved the other 50 ESPs listed on the CPUC website as having applied for approval. These 50, however, have not been approved because all failed to meet the requirements set forth in a consumer protection bill. If that isn`t scary enough, one ESP, Boston-Finney, a Harrisburg, Pa.-based firm, has been ordered by the commission to “cease-and-desist” its activities in California. This happened before the ESP ever actually began providing service in the state.
I believe that there are many credible and capable ESPs in this country that will provide quality services to California consumers, as well as consumers in other areas when direct access becomes available. However, I also believe that there will be many ESPs that will not be able to hold up their end of the bargain and will ultimately fail. Unfortunately, some innocent, unsuspecting consumers are likely to be hurt before these bad seeds are weeded-out. So, while direct access is touted as being a wonderful thing for electricity consumers–caveat emptor.