Federal Trade Commission Urges Green Mountain Power To Review Advertising Practices

Feb 9, 2015

The Federal Trade Commission has decided not to open up an investigation into allegations of deceptive advertising at Vermont’s largest electric utility. But the FTC is asking Green Mountain Power to be more careful about its communications with customers in the future.

Professors at the Vermont Law School say Green Mountain Power has been violating federal law by falsely telling its customers they were providing them with renewable energy. On numerous occasions, the professors say, GMP has said that wind energy projects on two mountains in Vermont are fueling the delivery of green, renewable energy to local ratepayers.

But GMP sells the renewable energy credits generated from those projects to out-of-state utilities. And according to Vermont Law School’s Pat Parenteau, the moment GMP chose to sell those renewable energy credits – known as RECs – is the moment they lost the right to advertise their own power as quote “renewable."

“What GMP has been doing has not been reducing Vermont’s carbon footprint. We’ve been importing carbon fuel from out of state by selling these RECs,” Parenteau says.

"What GMP has been doing has not been reducing Vermont's carbon footprint. We've been importing carbon fuel from out of state by selling these RECs." - Pat Parenteau, professor at Vermont Law School

Parenteau and fellow VLS professor Kevin Jones filed a petition with the FTC, asking the federal regulatory body to open an investigation into the alleged claims.

But while the Federal Trade Commission has found some fault with GMP’s advertising practices, FTC said in a letter released Monday morning that the transgressions don’t merit an investigation.

GMP spokeswoman Kristin Carlson says the sale of RECs has allowed the utility to invest in important renewable energy projects, without adversely impacting customers’ electricity rates. GMP generated about $30 million in REC revenue this year alone.

"The important thing to understand right now is that the FTC has looked at this and has decided that it’s meritless and it’s not needed to open up an investigation, which we are very, very pleased about." - GMP spokeswoman Kristin Carlson

“The important thing to understand right now is that the FTC has looked at this and has decided that it’s meritless and it’s not needed to open up an investigation, which we are very, very pleased about,” Carlson says.

Parenteau has a far different reading of the FTC’s letter, and says the federal commission, while stopping short of an investigation, is hardly siding with GMP. Parenteau notes that FTC staff expressed concern with what it called “problematic claims” made by GMP about the green qualities of its power.

In its letter, the FTC urges GMP to explain more clearly to customers in the future that when the utility sells RECs, it forfeits the right to claim that power derived from those generation facilities is in any way renewable.

The FTC also says that “if we identify concerns in the future, we reserve the right to take further action.”

“This is a warning letter –that’s the way I interpret it,” Parebteau says. “I suppose the easiest example is if you’re caught speeding, the cop gives you a warning ticket.”

Carlson says the FTC letter is a vindication of GMP’s current advertising practices. And she says the utility will heed the commission's advice on improving its communication with customers in the future.

“So we appreciate that the FTC staff is encouraging us to always do better with communications, and we take that as a really good positive,” Carlson says. “And we appreciate that they want us to be clear with how we communicate with customers – that’s what we always strive to do.”

Lawmakers are expected to approve a renewable energy mandate this year that would clarify utilities’ responsibility for contributing to the green energy mix.