In response to a Dec. 24 City Paper news feature about a marketing contract that Charleston Water System signed with oft-maligned private warranty company HomeServe USA, the public utility's CEO, Kin Hill, sent out an e-mail to the Board of Commissioners Wednesday announcing plans to "improve the perceptions of their future mailing to our customers."
Under the terms of the marketing agreement, CWS has allowed HomeServe USA to use the utility’s logo on advertisements that the company mails to potential customers in the public utility’s service area (click here to read the original story). In his e-mail, Hill said of the City Paper article, “I don’t think it can be classified as a major news story.”
Asked to clarify how he intended to improve "perceptions" of HomeServe's mailed advertisements, Hill wrote to the City Paper: "We are going to try to improve the appearance of the mail-outs so that there is less confusion as to whom the letters are being sent from. The contract provides us with the opportunity to approve the mail-outs, and we simply want to find a way to minimize any confusion in this regard. We will work out the details with HomeServe and our in-house staff."
Some customers and consumer advocates have cried foul about the practice, especially after public utilities around the country began issuing warnings about the company's advertisements and four attorneys general in other states took action against the company for its advertising practices. A HomeServe spokesman has said that the company has entered about 50 "partnerships" with public utilities and municipalities, but CWS was the first utility in South Carolina to sign a contract. (Elsewhere in the Lowcountry, the Beaufort-Jasper Water & Sewer Authority is currently in negotiations with HomeServe, according to meeting minutes.)
Dean Riegel, a Charleston City Council member who is also an appointed member of the CWS Board of Commissioners, says he thinks there are "legitimate concerns" about the private-public partnership. "I was surprised, frankly, that we didn't have more blogs or reactions to it," Riegel says. "Are we as public entities up to selling our name, our logo, our brand to private investors?" Riegel says he expressed reservations about the HomeServe deal initially, but meeting minutes show that he was absent from the September 2013 meeting when the board voted to recommend signing the contract.
Here's the original e-mail Hill sent out on Wednesday:
I know by now you all have seen the article that ran last week in the Charleston City Paper regarding HomeServe and our contract with them. (We knew this was coming.) As you all know, we put this program together over a year ago to offer customers an option to purchase insurance for service line repairs, etc. on their property that are not the responsibility of CWS. Many utilities across the country are contracting for very similar services, or in some instances, offering such programs in-house for an additional cost on their monthly bill. (Most customers are unaware that these service lines on their property are theirs to maintain and/or repair). So far, over 7,000 customers in our service area have signed up with HomeServe for this optional service, and the vast majority of customers are extremely pleased with the service provided and/or the peace of mind this coverage affords. Also, as you know, we went through an exhaustive RFP process to select a vendor for this service and actually had three separate firms respond. HomeServe was without a doubt the most qualified in our opinion, and their offer to us was the best overall, so we issued them a five-year contract as presented to the Board. They offered us a 12 percent proportion of all customers sign-ups, and as you know, we are using a significant portion of these funds to help those less fortunate customers pay their monthly bills via our agreement with the Charleston County Human Services Commission. This has worked marvelously well and we would be glad to share any of these details with the Board at any time. But the bottom line is that this funding source is at no cost to our rate-paying customers, except for those who voluntarily sign up for the HomeServe coverage. And as you know, any HomeServe charges are not billed on our monthly bills, but by direct billing to the customers from HomeServe.
The City Paper web article had a total of three responses on their blog, so I don't think it can be classified as a major news story by any stretch of the imagination ... Nevertheless, we plan to meet again with HomeServe and use this less-than-optimal press coverage as an opportunity to work with HomeServe to improve the perceptions of their future mailing to our customers. We have also not provided HomeServe with any of our customer data.
So the bottom line of all of this to me is that this story for now is dormant, and we will use it as an opportunity to make some improvements to their future mailings to help customers better understand the relationship between our two entities. We will keep you informed of progress in this regard; or if for some reason we can't come to terms, if the contract with H/S is suspended or voided. But in our view, this has been an absolute success story for our customers and a proverbial win-win arrangement for all parties involved to date. We just need to "tweak" the "packaging" a bit and we will be on our way.
Let us know if you would like any more information, but for now, we are going to proceed with the above-referenced path forward. Regards, and Happy New Year to you all!! Thanks, Kin
The Board of Commissioners' next meeting is scheduled for Tues. Jan. 27 at 9 a.m. at 103 St. Philip St. In case you're curious, click here to read the marketing agreement that CWS signed with HomeServe, and click here to read the terms and conditions of the warranty that HomeServe is selling in Charleston.