Electric markets attract the good and not so good

HARRISBURG, Pa. -- Christopher Mee charged 8,000 people $300 each for the right to sell power in California when the state opens its electricity market to competition next month.

Mee likely won't deliver a single kilowatt. The state says he's a fraud and yanked his license to sell power, along with the licenses of dozens of other companies.

California, Massachusetts and Pennsylvania are the first states with plans to end the monopolies of the U.S. utilities that sell $200 billion a year in electricity. Competition means customers can buy power from any company, which would deliver electricity over existing lines. The lure of this vast market is drawing plenty of legitimate businesses as well as some that skirt the law, regulators say. "When you have a virtually open market, it's going to attract some criminal elements," said Wilson Lewis, acting supervisor of the enforcement branch of the California Public Utilities Commission. California says that Mee's Harrisburg company, Boston-Finney, is an illegal marketing operation that makes its money by charging sales agents sign-up fees, not selling power. Besides, the state says, Mee couldn't deliver electricity even if his marketing program was proper. California will hold a hearing next month on whether to slap him with as much as $160 million in fines. Mee, a 19-year-old college dropout, says he's done nothing wrong. A company called Big Planet, which is controlled by personal-care products marketer Nu Skin Asia Pacific, may be in for similar complaints. The Provo, Utah-based company says some of its agents may have misrepresented Big Planet's plans in recruiting new sales agents. Big Planet said it has asked them to stop. California regulators declined to comment on the company. Dwayne Lee Porter also wants to sell electricity in California. One drawback: He's a convicted felon. There's no rule barring someone who broke the law from selling power in California. But when regulators questioned him, he said he was convicted not once, but twice -- of burglary and assault to commit rape. Porter said the convictions were 16 years ago and that he's been out of trouble since then -- sort of. His right to sell power was revoked not because of his criminal background, but because he was caught three times driving with a suspended license. Concern about the potential for fraud is so high that attorneys general from seven states met in San Francisco last month to lay out a battle plan. They expect some of the same illegal or improper marketing and billings practices that plague the long-distance telephone industry, deregulated in 1984. To combat the problems, states are passing laws and stepping up scrutiny of power sellers. At first, California gave anyone who paid a $100 fee and filled out an application the right to sell electricity. More than 300 companies signed up, hoping to compete with PG&E, San Diego Gas & Electric and Southern California Edison. Now the state is cracking down as March 31 approaches, when the market is thrown open. California has already suspended the licenses of more than 50 companies that either failed to show how they will deliver power to customers or used questionable marketing practices. Pennsylvania, which plans to begin opening its power market next year, took a tougher stand from the very start. It requires power sellers to post a $250,000 bond and submit to rigorous background checks. This makes it hard for a company like Christopher Mee's Boston-Finney, or other small companies, to do business. That may be just what Pennsylvania regulators had in mind. "Boston-Finney is only three blocks from my church," said Kevin Cadden, spokesman for the Pennsylvania Public Utilities Commission. "But they won't get near my meter." The state already is taking on Big Planet's parent company, Nu Skin. In a lawsuit filed earlier this week, state Attorney General Mike Fisher accused Nu Skin of using illegal marketing practices in electricity sales. Though Massachusetts only charges $100 for a license to sell power, it too has stricter rules than California. More stringent regulations are in the works. These include disclosure of all criminal records of companies and their workers. Massachusetts Attorney General Scott Harshbarger also wants fines of as much as $5,000 for each violation of consumer fraud laws. "We've learned from California," said Theo MacGregor, acting director of electric power at the Massachusetts Department of Telecommunications and Energy. Rules can only do so much -- and that may not be enough. Though banned in California, Boston-Finney says it's going ahead with plans to sell power in Massachusetts and Pennsylvania.

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