Utilities, Take Note: It’s Not Just and Reasonable to Use Social Media Spy on Your

Turns out the “just and reasonable” standard isn’t just for utility rates and contracts anymore, but for dealings with consumers.

In a recent Order directing PG&E to show cause why it should not be subject to penalties for its former director’s underhanded infiltration of an anti-smart grid online forum, the California Commission gave new meaning to the phrase “just and reasonable,” holding that:

Public utilities have a duty to provide just and reasonable service which includes the duty to provide complete and truthful information to their customers. By lying to and infiltrating anti-smart meter consumer groups, Mr. Devereaux, acting on behalf of PG&E, violated PG&E’s obligation to provide just and reasonable service to its customers.

Moving forward, the California Commission will hold a proceeding to determine whether PG&E management was aware of Devereaux’s activities and whether fines or other remedial actions should be imposed on PG&E.

Lots of commentators will hold up the California Commission’s decision as proof of the need for robust social media policies but to me, that’s an overly simplistic analysis. The real problem for companies is not simply having a social media policy, but ensuring that company executives abide it. Moreover, action by a higher-up like Devereaux is more likely to be viewed as reflective of official company policy than an isolated incident by a low-ranking peon, thus triggering utility liability for fines and sanctions.

The California Commission’s decision has two lessons for utilities. First, as utilities transition into smart grid and social media, there are still opportunities for mishaps. The California Commission’s decision may be the first of its kind to potentially hold a utility accountable for employee misuse of social media but it won’t be the last.

Second – and as I noted at the outset, energy regulatory nerds like me are accustomed to use of the phrase “just and reasonable” in the context of rates and charges and possibly conduct like antitrust or discriminatory practices. The California Commission broadens the scope, expanding a utility’s obligation to act justly and reasonably to its conduct on social media and dealings with customers. That’s a big step but in my view, a necessary one to guard against mischief and realize the enormous promise that social media has to offer the utility industry.