Bob Benton has received dozens of phone calls and mailings from power companies who want to sign up the Deerfield man as a customer.
He’s found some of the salespeople — like the one who promised him a lower rate, no contract and no switch-over fees — to be not only pushy but misleading. “I counted five lies in the space of five minutes,” said Benton, a village trustee who is well-versed in the newly competitive world of power supply.
That’s because Deerfield is one of about 250 municipalities across Illinois that have now given approval to electricity aggregation, which, in the Chicago area, allows communities to negotiate bulk contracts with power companies in the hopes of lowering rates for residents. As a result, many independent power suppliers are scrambling not only to win those potentially lucrative municipal contracts but also to sign up individual homeowners before aggregate power contracts go into effect.
That scramble has led to a new problem — many residents are complaining they are getting a slew of confusing and aggressive solicitations.
One common complaint — made by officials from various suburbs and heard by regulators and customer advocacy groups — is that the salespeople from energy retailers are implying during house calls that they are aligned with the municipal government in that community and then try to sign residents into individual contracts. Officials worry that residents could be misled into believing that they have to sign up individually to receive the lower, aggregated rate.
“Suppliers are going door to door saying, ‘We have a permit from the village,’ and giving the perception they have a contract with us,” said Buffalo Grove Deputy Village Manager Ghida Neukirch. “That’s alarming to us.”
But the independent companies say that while they don’t approve of misleading tactics, door-to-door hard sells have become a necessity — they’re simply trying to compete against a wave of aggregation that is cutting into their markets and profits.
Illinois has allowed independent companies to compete with ComEd for more than a decade. But it wasn’t until 2010, when the Illinois Commerce Commission allowed those companies to bill customers through ComEd — with ComEd continuing to deliver power — that dozens of power suppliers joined the market.
Now, homeowners in towns that have approved aggregation have several choices: They can do nothing and receive service from the power company that has been chosen by local leaders to aggregate power in that town. Residents can also opt out of aggregation and stick with ComEd. Or they can sign up for their own individual power contracts with independent suppliers.
But those choices have resulted in some aggressive marketing by independent companies, some towns complain. Among those who have sounded a warning about aggressive energy marketing is Palatine Village Manager Reid Ottesen.
“I had one elderly woman call me concerned that the (salesperson) left so upset that she was worried she was going to lose her power,” he said. “It’s just not right.”
It’s hard to tell whether such tactics amount to intentional deception or simple miscommunication, said Citizens Utility Board spokesman Jim Chilsen, who added that with the passage of municipal aggregation, the environment is ripe for misleading marketing and confusion. Residents aren’t clear on the issue and often get aggregation mixed up with alternative energy suppliers.
“It’s hard to know where potential confusion ends and misleading marketing begins,” Chilsen said. “The plain fact is that there’s a lot of room for confusion.”
The ICC, the state’s attorney general’s office and ComEd itself have reported receiving complaints about ploys aimed at recruiting customers to independent energy suppliers. But the ICC says it hasn’t launched any formal investigations because no single company has been the target of enough complaints to trigger a formal probe.
Oak Park was one of the towns that complained to the ICC.
Voters in Oak Park approved aggregation in April 2011, but many residents say they began receiving sales calls long before then from people implying they were with the village or its chosen supplier. The calls continued even after the supplier was chosen. In some cases, the salespeople asked for the homeowners’ ComEd account numbers, said village sustainability manager K.C. Poulos.
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She said some companies, which she declined to name, used those account numbers to contact ComEd, claiming the customer wanted to opt out of Oak Park’s new aggregation contract with Integrys. The ploy was discovered only after some residents received bills for a $50 opt-out fee from Integrys.
“People were calling and saying, ‘Why am I getting a bill? I thought I was part of the aggregation program?'” Poulos said.
Integrys ended up waiving the fee for people who had mistakenly opted out, she said.
As of mid-April, about 2,500 customers in Oak Park had opted out of aggregation, Poulos said, adding that she doesn’t know how many of them decided to stay with ComEd or go with another supplier — intentionally or otherwise.
Torsten Clausen, the ICC’s director of retail and market development, said the novelty of aggregation has contributed to the confusion.
“It’s a very new phenomenon,” he said. “There is this tension. A town wants to put in the most attractive pool of customers for better rates … but at the same time, you have 27 companies out there that didn’t win the bid trying to get customers.”
Representatives for some of those companies said they’re just trying to offer consumers a choice and compete in a crowded marketplace.
Spark Energy is one of the more visible of the independent suppliers, with a large door-to-door operation spreading across large areas of Chicagoland.
“We’re probably one of the companies that has the most feet on the street,” said company spokeswoman Lisa Dornan. But she added that “aggregation has not changed our approach.”
Still, she said misleading marketing is something the company takes seriously and has fired employees for in the past.
Julie Hendry, spokeswoman for Houston-based Direct Energy, said the company’s door-to-door salespeople are hired by an outside contracting firm but go through background checks, drugs tests and training. She said they have a complaint line for aggressive salespeople and have suspended or fired individuals for improper behavior, such as not identifying themselves properly or violating the company policy that the salesperson leave immediately if the resident declines to talk.
“We take all the complaints seriously,” Hendry said. “We always respond immediately and on a case-by-case basis. We have a zero-tolerance policy for stuff like that.”
Laurel Holub, an independent consultant for Ambit Energy, said municipal aggregation has made business harder, as she has to dig deeper to find customers in an already competitive market. Misleading marketing from what she called fly-by-night organizations doesn’t help. But she said local officials contribute to the confusion as well, unfairly shutting out power companies that don’t win aggregation contracts.
“I see it over and over again when I’m out talking to people; that’s one of the big concerns about aggregation,” she said. “The village people are telling everyone, ‘This is going to be such a great thing for you,’ but they’re not giving them anything solid where they can see this is actually what it’s going to be.”
For some residents, the big push to pick up customers is more annoying than anything else.
Mary Steveley said she was inundated with mailings and phone calls from power companies even before her community approved aggregation. The Hoffman Estates woman said she didn’t find their tactics deception, just aggressive.
“Considering I’m on a do-not-call list, I still get a lot of calls,” she said. “When you call me at 8 at night, the last thing I want to do is talk to a solicitor.”
Clausen, of the ICC, encouraged residents to contact the agency directly if they feel they have been on the receiving end of overly aggressive, or even deceitful, marketing. But with many communities still in the process of negotiating power contracts, Clausen said, “I think we are just getting started here.”
Tribune reporter Robert McCoppin contributed.