Energy firms tackle image

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Tired of being lambasted in California, out-of-state power generators are fighting back.

Sacramento Bee

In the span of months, energy generators with headquarters outside the Golden State have gone from invisible players to public enemy No. 1.

Now out-of-state generators, vilified by the governor and consumer advocates, are fighting back.

“Being called a pirate and gouger doesn’t do much to improve one’s image,” said Gary Ackerman, head of the Western Power Trading Forum, a generators’ trade group. “It’s really important for some of our members to explain who we are and what we do.”

Since the energy crisis became the state’s all-consuming public policy issue, generators have beefed up their lobbying and public relations teams and launched paid advertising campaigns in an attempt to improve their image.

“A number of companies are being blamed…for causing a crisis that they, in fact, did not cause,” said Jan Smutny-Jones, who represents wholesale generators as executive director of the Independent Energy Producers Association. “This is to tell their side of the story.”

Erosion of an industry’s image is bad for business, say public relations specialists, even when the individual companies involved do not compete in a retail environment in which customers can shop around.

“I think they recognize they have a big PR problem,” said Medea Benjamin, founding director of the consumer advocacy group Global Exchange. “People are really angry with these companies. They are the poster child for evil corporations.”

More than half of Californians think out-of-state energy providers are doing a poor or very poor job helping the state deal with the crisis, according to a Field Poll released in late May.

Gov. Gray Davis has routinely lambasted out-of-state energy providers since his January State of the State address.

“Never again can we allow out-of-state profiteers to hold Californians hostage. Never again will we allow out-of-state generators to threaten to turn off our lights with the flip of a switch,” he said during the 35-minute televised speech.

The Democratic governor’s rhetoric didn’t sit well with North Carolina-based Duke Energy, but the company said it was driven to start its advertising campaign after the company was not allowed to speak at a legislative hearing when three former plant employees suggested the plant was mismanaged.

It was mid-June, and many within the state Capitol thought they had a smoking gun.

The governor and a powerful Senate committee took turns showcasing three former San Diego Gas & Electric employees who were in Sacramento to tell how a Duke Energy power plant lowered output in the midst of a Stage 3 power alert.

While the former assistant control room operator and mechanics told their stories inside a Senate committee room, Duke officials were on the outside. The committee decided Duke would tell its side of the story another day.

“We were not given a forum to respond, so we had to create our own forum,” said Duke spokesman Thomas C. Williams.

The Duke Energy ads, which ran in major newspapers across the state, used excerpts from newspaper articles to tell readers that the utility actually charged less for power than its competitors.

Another company, Atlanta-based Mirant, bought half-page ads that ran in The Sacramento Bee and other major newspapers in Northern California. “It’s going to be a long hot summer in California…but Mirant is going all out to help,” the ad read.

The company also aired radio spots in Sacramento and in the San Francisco Bay Area.

Image protection was the main goal of the advertising campaign, the companies said.

“Our reputation was being impugned. We take that very seriously,” Williams said. “We consider our reputation an asset.”

Mirant recently opened a satellite office in Sacramento and brought aboard Patrick Dorinson, who previously spoke for the state’s power grid operator.

Since the power crisis began, energy generators have increased their political presence at the Capitol, hiring additional lobbyists. Energy generators also have taken on more public relations people or worked existing staff overtime.

Williams, imported from North Carolina in 1997 to handle local press inquiries as Duke bought a plant from Pacific Gas and Electric, said he now talks to 50 to 75 reporters each week.

Last month, Mirant invited Capitol reporters out for free cocktails. The event was sparsely attended, but Dorinson said he was happy a handful of journalists were able to come. A couple of reporters agreed to go on a plant tour to learn how power plants work, he said.

“We want to show the public what we are trying to do, and talking to the press in those kind of forums is the best way to get the message to the public sometimes,” Dorinson said.

If an industry or company has a poor reputation, it can affect legislative behavior, local government action, judicial decisions and employee recruiting efforts, said Catherine A. Bolton, executive director of the Public Relations Society of America.

Power companies, like tobacco companies, would be wise to worry about the image of the entire industry, said a UCLA marketing professor.

“When the entire industry develops a bad reputation, you have that backlash,” said Dominique Hanssens, UCLA‘s Bud Knapp professor of marketing.

As tobacco companies’ image continues to be soiled, it is increasingly easy to pass laws and get court settlements against them, he said.

“If an industry is perceived as greedy, you will see democracy at work. Unhappy consumers can start to put pressure on politicians,” Hanssens said. Energy generators “need to do something so that the pressure to regulate does not build up.”

The Senate committee probing energy market manipulation has already found three generators in contempt, while lawmakers openly talk of seizing power plants or placing a windfall profits tax on generators.

If an industry’s or company’s image becomes so tarnished that people avoid investing in their stock, shareholders could lose millions, Hanssens said.

It’s unclear if the governor’s harsh words shaped the public’s perception of out-of-state providers or if the PR campaign is helping. But the companies’ strategy does not play well with consumer advocates.

“It (angers me) to see some of the money they have taken from us going back to try to brainwash us,” Benjamin said. “I think these ads will backfire. I think people see who is paying for the ads.”

The PR effort has a long way to go if you take Harvey Rosenfield’s word for it: “At the moment, I can think of no greater villain…no greater incidence of thievery than these guys,” said the president of the Foundation for Taxpayer & Consumer Rights. “No amount of propaganda is going to conceal their responsibility for this disaster.”

Consumer Watchdog
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