Could Your Social Media Program Cost You $5.7 Million in Foregone Rate Recovery?

by Carolyn Elefant on October 23, 2012

in Social Media in Regulated Utilities

Social media may cost less than traditional advertising but even so, social media done right doesn’t come cheap.

As I’ve written before, an increasing number of utilities are investing in social media for a  variety  of functions, presumably anticipating that they’ll recover the costs in rates. But not every cent spent by utilities on social media is prima facie  prudent and recoverable as a recent FERC order suggests.

On September 20, 2012, FERC set for hearing  the accuracy and prudence of $5.7 million in expenses for advertising, public relations, consumer education and lobbying included in rates associated with the now abandoned Potomac Appalachian Transmission Highline  (PATH) transmission project.  (Note: for those following the case, PATH has more recently sought recovery of abandoned costs for the project which may be recoverable under FERC policy if prudently incurred).  Questionable expenditures include:

  • Costs associated with promotion of the transmission project (which are not recoverable) that had been classified as public education and outreach;
  • Costs associated with creation of reliable power coalitions formed by a public relations firm contractor to develop third party support and coordinate efforts for the PATH project and which challengers claimed were really front groups created to provide a false appearance of grass-roots activism and to hide PATH’s sponsorship by professing to promote overall energy infrastructure development.
  • Costs associated with a public education and awareness team (PEAT) which the challengers argue does not educate the public as PATH claims, but rather is a public relations advocacy program for the Project.

Though the PATH case doesn’t specifically involve utility use of social media, the outcome will hold valuable lessons.  Social media makes it easy to set up public education campaigns or Facebook pages for coalitions which often serve the dual purpose of education and advocacy.  Utilities that do not narrowly define their social media campaigns may find them subject to question, just like the expenses in this case.

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