Contributors

Monday, March 01, 2010

The Gift That Keeps On Giving

I want to start off this post for thanking CenterPoint Energy for being such a great muse these last few months. Without them, I don't think I would've been able to cause so much cognitive dissonance within my very small (but loyal) readership.

As most of you know, I have talked a couple of times about how this company abuses its customers. They can do this because they are the only choice that most of us have for heating needs other than burning wood in the middle of our homes. Many might say that this is the fault of the government for legalizing this monopoly. As I have said many times, I don't doubt the government's involvement with this fact. Obviously, they pass the laws. But how did said law come to be passed?

The Energy Lobby. They are the ones that have the money to grease the politicians so, at the end of the day, they are the ones that are running the show. They can get a law passed, for example, that says that the CenterPoint has the right to come into my home and check the meter to make sure I am paying them every last cent they can get out of me. Yes, it is a court that is putting forth the order but they wouldn't be bothering with it unless someone was telling them to do so. That someone would be CenterPoint Energy.

Many here have also said that I still signed a contract so they have every right to do what they want. Again, what is my other choice for heat? There is none so basically I am beholden to them. So, when they call up customers and tell them, "Hey, we have this great way to reduce you energy costs every month by signing up for this fixed monthly payment" most people would jump at the chance, right? I, of course, did not and I'm glad I didn't.

Take a look at this article from the Mpls Star and Tribune. CenterPoint Energy, along with Xcel Energy, do not have to pay back the $33 million dollars in over charges as a result of their ironically named "no surprises" program. CenterPoint collected 26 million in fees for gas that was never used.

Altogether, more than 50,000 utility customers signed up for fixed-payment programs with CenterPoint and Xcel Energy, which charged customers the same amount each month no matter how much natural gas prices spiked. Xcel customers overpaid at least $7 million, or an average of about $683, according to the attorney general.

According to CenterPoint, that's not how the program works.

CenterPoint Energy and Xcel Energy say they don't have to pay any of the money back because the customers' contracts clearly indicated that they might pay more than the actual cost of the gas. The programs were pitched as "risk reducing," not necessarily cost-saving, the companies said.

Well, the customers did sign the contract but...

That's not how Al Stahlberg remembers it. He signed up for the program in 2005 because he thought it would "protect my pocketbook." Instead, over 19 months, he shelled out $313 that he would have saved under standard billing.

Basically, you need a team of lawyers to sign up for natural gas service. The people from CenterPoint and Xcel marketing this program lied about its purpose. And where is the government in all of this? State Attorney General Lori Swanson?

So far, however, none of the $33 million has been refunded, despite Swanson's conclusion that the two companies engaged in deceptive marketing and were not entitled to the windfall.

Swanson's investigators determined that customers were never told they overpaid for natural gas, and mistakenly believed they could quit the program whenever they wanted.

Though regulators agreed the two companies' billing practices were "disturbing," the commission said it didn't have enough evidence to force the two companies to make refunds, said Janet Gonzalez, the commission's energy manager. "We need a higher level of proof," Gonzalez said. "That's a real tough thing ... it's a difficult, difficult situation."

Yes, quite difficult when the Energy Lobby has unlimited legal resources and people like Al Stahlberg just have himself and...well...the government.

Stahlberg, who's 64 and retired in Fridley, doesn't understand why it took the commission so long to figure out he didn't deserve a refund. He said he still wants his $313.

"What bothers me is the state is not protecting the consumer," he said.

No shit. But, hey, let's continue to blame the government further so any small amount of power they did have is eroded completely. Ah, the Wrecking Crew...

7 comments:

blk said...

This was always a bogus program, and the state failed to protect consumers when it allowed it to go forward. The state did make them discontinue the program in 2007. However, I don't see the victims have any recourse.

People should be responsible for themselves, but the government should be responsible for making sure that companies don't screw over people who may not be able to make good decisions for themselves. For example, many elderly people might sign up for a program like this out of fear, even though they realize they might pay more than they. The media is always playing up things like gas price increases so much that it's very hard to gauge whether something is real or not.

Remember during the summer of 2008 when the Republican slogan was "Drill, baby, drill!"? Well, the price of gas has been so low since that the oil companies are no longer interested. But with all the media hype plenty of people were solidly convinced we needed to start drilling in ANWR and off the coast of Florida that instant or the price of gas would skyrocket to $10 a gallon. And, of course, they never mentioned that it would take 10 years or more for those oil fields to start producing. The whole motivation was to get sweetheart deals on leases so they could flip them at some future time.

But since the Pawlenty administration didn't properly regulate this when they should have (sound familiar?), I don't think the state has any grounds to force the gas companies to repay the money. This was essentially the same as buying life insurance, but instead it insured that the price of your gas wouldn't go up. It's bogus, however, because it's a potentially monumentally stupid business decision. If everyone in the state had signed up for it and the price of gas skyrocketed, the gas company would have gone bankrupt. If they had some controls to prevent that from happening (like only offering it to the elderly or poor), then they knowingly preyed on vulnerable populations.

What this tells us, however, is that these companies cannot be trusted. If this program didn't get state approval, a law should be passed that requires state approval for all contracts these monopolies have with their customers. If it did get state approval, there should be an investigation into the regulators to find out how this happened. It makes me wonder if the regulators or their bosses have some kind of political or financial connection to the gas companies. Regulators should not work for a regulated company for some period of years before and after their service. Monopolies and their executives should not be able to donate to political campaigns of those who regulate them.

If there was no collusion between regulators and regulated firms, the regulators who allowed this should be fired if they're still employed, or blacklisted if they're no longer serving.

rld said...

I remember when markadelphia was complaining about $2.75 gas prices during the Bush years on here. It's right up there again and not a word from any of you. It will take 10 years to start producing oil from those fields - and liberals were saying that same thing 10 years ago. Duh.

pl said...

The fun thing about reading responses from blk is that when you first read them you find so many things that sound compelling and authoritative. Insightful and damning. I commend the passion, if not the flaws in the logic.

"This was essentially the same as buying life insurance"
No, it was nothing at all like buying life insurance, and attempting to use that argument actually does a disservice to the argument you are trying to make. This was a company who was, in my opinion, flat-out taking advantage of ignorance of the general public.

"it's a potentially monumentally stupid business decision"
Again, no. This is a no-lose situation for CPE, as if the worst-case scenario with pricing occurs (best-case for the customer) CPE has covered their position in the futures market. Somebody takes a beating, but it would not be CPE.

"But since the Pawlenty administration didn't properly regulate this when they should have"
Can't resist taking that shot, can you? Well, supposing for a second this is true, this administration would actually be ahead of the game compared to other administrations around the country. Take a random sampling of states and see how many of them have cracked down on this practice. Take a look north of the border, too. If your experience is similar to mine you might want to revisit the condemnation of this administration on this particular issue. But that's your choice.

My prediction is that within a 2-3 year window we will hear of a suit, followed by settlement, wherein CPE agrees to apply some of the ill-gotten gains toward future costs. In the end, the problem will go away primarily through an accounting shuffle. M still won't be oppressed by companies. And blk will have long since moved on to the latest GOP punching bag.

juris imprudent said...

But, hey, let's continue to blame the government further so any small amount of power they did have is eroded completely.

Isn't that exactly what you and big Al are doing here - blaming the state for not protecting him?

You do realize what a non-story this would be if Al were still paying below market prices for his gas; what a shrewd consumer he would be hailed as!

If you ever checked in with reality M instead of the arguments inside your head, well, I guess I just shouldn't speculate like that.

BTW M, I see you posting but not answering my simple question about motorcycles and healthcare. Perhaps you forgot. Certainly would love to hear what you have to say about that.

-just dave said...

Mm, yes, most interesting...

In other news, the Obama administration is declaring its neutrality in a dispute that is brewing with the Argentines over the British intention to drill for oil off the Falklands.

Relatively minor perhaps, but let that sink in for a minute and then consider our country over the past year or so.

Our closest ally, a country we’ve bled side-by-side with in two world wars, Korea, two conflicts in Iraq and another in Afghanistan… We’ve shipped back a bust of one of their greatest leaders, provided the queen w/ an ipod of Obama’s greatest hits, refused their prime minister, generally ignored them and declared that when they’re in a dispute, well, we’re neutral.

We’ve canceled a missile defense system, thumbing our noses to our allies, Poland and Czech Republic to woo an increasingly hostile Russia.

Syria and other anti-west middle eastern nations see as much American outreach as does democratic Israel.

Obama seems more eager to appease communist Venezuela than to strengthen alliances with democratic Colombia.

Obama ignores the Dalai Lama and only grudgingly nods to Iranians, Cubans and Chinese struggling for freedom.

The Germans openly mock him in their yearly carnival (granted they’ll mock anything and everything else too). But Merkel and Obama seeing eye to eye? Not so much.

The French are the French which means they couldn’t care less about Obama as long as we continue buying their fabulous cheeses…which, if you’ve had a properly aged livarot, you would, even if they asked for the Statue of Liberty back. But I do seem to recall Sarkozy finding GW far more amicable.

Obama has symbolically tried to downsize the profile of the U.S. by downplaying the idea of an “exceptional” nation, bowing to foreign leaders, and apologizing for supposed past American sins.

Though EU leaders shudder at our financial policy, more importantly they’re left wondering if, when the going gets tough, will America be by their side or is it best to hedge their bets?

So I ask you…those of you who for years derided President Bush for “ruining America abroad”, what have you to say? Where’s the love in the world for the big O?

Kevin said...

We were neutral during the falklands war too, on Reagans watch.

-just dave said...

That's not entirely correct. Although the U.S. was not an active military participant, and though some administration officials were in disagreement, Reagan, Weinberger & Haig were decidedly pro-British, illustrated by intelligence, tactical and material support provided to the British.