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Deregulation scams warning
1 January 1998
Electricity deregulation may well provide an opportunity for consumer and business fraud in the country's huge $200 billion electricity market, warns James Doyle, President of the National Association of Attorney Generals (NAAG) and Attorney General of the state of Wisconsin. He was speaking in November, about a month before America's largest state, California, became the first to start deregulating its market and shortly after the state launched a public education campaign. "The con artists are going to be on the prowl and California will see it first," said Doyle. People could get "slammed," a type of fraud fairly common in the US phone market whereby customers are unknowingly switched to another supplier. About one million Americans complain annually that their phone service has been slammed -- and that market is just one-third the size of the country's electricity market, says NAAG. More than 200 companies have registered to provide electricity to California customers, and the California Energy Commission says it will not finish checking them all for legitimacy until March. Because of the potential for fraud, the NAAG is forming a task force to monitor the practices of electricity providers. Consumers are also being told to be wary of misleading promotional material -- such as on how much "green" electricity is being provided -- hidden fees and multi-level marketing schemes. Others, though, do not believe the problem will be huge since prices cannot drop much because consumers must pay the "stranded costs" of former monopoly utilities, so discounted rates will be hard to offer.
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