Regulators Investigating Insurance Mailers From North Dakota Utilities

North Dakota regulators are investigating utility companies over the use of logos on flyers that a complaint said could be misleading to consumers.

The state Public Service Commission received the complaint last year regarding a letter that promoted insurance coverage for home utility equipment such as gas and water pipes, wires, electric appliances and other products through a company called HomeServe.

Montana-Dakota Utilities, Otter Tail Power Co. and Xcel Energy — North Dakota's for-profit utilities — will have to submit written comments to the PSC by September regarding business arrangements with HomeServe or similar insurance companies and the use of their logos in the advertising of that service.

The letter promoting HomeServe had the utility Xcel Energy's logo on it despite the insurance service not coming from the utility, nor being mandatory to purchase, according to the complaint.

PSC spokeswoman Stacy Eberl said the agency has also received complaints from consumers about mailers with the MDU logo on them.

Otter Tail does not have a relationship with HomeServe or similar companies, spokeswoman Stephanie Hoff said.

Complaints about mailers are relatively rare. Eberl said that the PSC has only six complaints on file within the last decade.

Commissioner Jill Kringstad said the investigation is not into the quality of the insurance offered by HomeServe.

"None of that is within our jurisdiction; all this is focusing on is the first step in the process to get some additional information to evaluate the relationship with the utilities," Kringstad said at a PSC meeting earlier this month.

MDU and Xcel's websites both include information about HomeServe and specify that customers are not required to sign up for the service. Xcel's specification is on a frequently asked questions page, while MDU's is on a home protection plans page that can be found under a dropdown bar dealing with rates and services.

Karen Lusson, a senior attorney at the National Consumer Law Center, said the PSC should make sure that any billing and collection revenues the utilities receive from arrangements with insurance companies are included in filings when applying for rate increases.

"(This would) ensure utility customers are not subsidizing a service that has nothing to do with the utility's core mission: providing safe, reliable and least-cost utility service to all customers," she said.

Lusson said another concern related to arrangements between utilities and insurance companies is that the charges for two separate services could end up on the same bill. If the extra charge from the insurance becomes unaffordable, this could create the risk of consumers losing their utility services altogether, she said.

The PSC regulates how much utilities can charge consumers for their electricity and gas use, but the agency is not involved in regulating insurance.

"If I only send in (money) for my essential utility service portion of the bill, does that keep me protected from a disconnection? We would argue that a customer certainly should not be paying some surcharge that has nothing to do with essential utility service," Lusson said.

She said consumers should review their existing insurance policies and product warranties if they are considering these services.

North Dakota Insurance Department spokesman Jacob Just said the state agency does not have any complaints about HomeServe on file.

Just said he cannot otherwise speak to the insurance product offered by HomeServe, but the department would offer assistance to the PSC for the investigation.

Xcel spokesman Theo Keith in a statement said the utility sold its insurance company HomeSmart to HomeServe last year.

Customers who have signed up for HomeServe after the sale of HomeSmart are billed directly by the insurance company, Keith said, while those who signed up before the sale get the charge on their energy bill. All the insurance services are administered by HomeServe.

"The mailers are meant to explain the optional protection plan’s potential value to customers — to minimize unexpected repairs on the customer side of the electric and natural gas meters and/or water service lines. HomeServe is an independent company separate from Xcel Energy, and as is stated in the mailers, the service is entirely optional and a customer’s choice of whether to purchase a service plan will not affect the customer’s electric or natural gas service from Xcel Energy," Keith said.

He said the terms of the financial arrangement between Xcel and HomeServe are confidential.

MDU spokesman Mark Hanson said the company is still working through the response process.

Information about the plans on MDU's website reads: "All plans purchased through HomeServe will be billed on your monthly Montana-Dakota utility service bill. Paying your monthly statement in full by its due date each month will ensure continued utility services and HomeServe coverage."

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