122 North Avenue, NW
New Philadelphia, Ohio 44663
330-602-7001 rnconner@yahoo.com
December 4, 2010
Mr. Michael Johnson, Law Director
City of New Philadelphia
117 South Broadway
New Philadelphia, Ohio 44663
Dear Mike,
Thank you for the information concerning Resolution 58-2010. I have looked it over and have some concerns in which you may be interested.
The use of the City letterhead in conjunction with that of Constellation Energy (CNEG), while an excellent marketing tool, should be reconsidered. The implication is that the City of New Philadelphia is a participating partner with Constellation in the providing of natural gas to its citizens.
The letter itself is misleading, stating, “Under this arrangement,….(CNEG) will be the exclusive natural gas supplier and provide the City of New Philadelphia’s citizens with offers for service beginning with the February 2011 billing cycle.” This is not factual as other natural gas suppliers which are doing business in New Philadelphia will not be terminated. “Exclusive” indicates that Constellation will be the sole supplier of natural gas within the City and is the only choice. From a marketing standpoint, while effective, the terminology raises a question of marketing ethics.
The reference to billing and maintenance as “your local utility” is ambiguous. The specific designation of Dominion East Ohio should be used to prevent confusion. A minor point but one which could be a precursor of misunderstanding.
The letter has potential for involving the City in future lawsuits. The tenor of the letter is that New Philadelphia, by authority of the Mayor, recommends New Philadelphia residents use Constellation Energy and concurs with Constellation Energy’s policies and procedures. The dual signature blocks at the bottom of the letter indicate a partnership.
The third page, first paragraph, of the letter, it states, “Voters in the City of New Philadelphia approved this aggregation program and in response the City of New Philadelphia passed an ordinance enacting the same.” I have no knowledge of such a referendum appearing on a ballot for the City of New Philadelphia, nor the passage of such, by the voters of New Philadelphia. Such a blatant lie should not be propagated among the citizenry, especially under the letterhead and signature of the Mayor of New Philadelphia.
Concerning the Contract:
Article 1.1
The City of New Philadelphia is committed to actively promote and market the services of CNEG. It further states that for the period of the contract the “City agrees that it will not endorse any other gas supplier during the term of this Agreement.” Such an agreement may open the City to charges of discrimination and/or possible action under Anti-Trust legislation.
Article 1.2:
The City of New Philadelphia is committed to participate in paying for advertising and mailing of advertising materials for CNEG.
Both Articles 1.1 and 1.2 are committing the City of New Philadelphia to become an active partner in the advertising and marketing programs of CNEG. This is not in the best interests of the City. Such commitment and action by the City, or its officers, may constitute a serious conflict of interest and/or constitutional issues. The City should not become involved in the activities of private businesses which are attempting to sell to the citizenry a product for financial gain.
Article 1.2(b) states that CNEG “may utilize City resources for advertising, promotion and consumer communications….for the term of this Agreement.” This opens the possibility of the use of City copy machines, sign making capabilities, personnel to deliver advertising and promotional materials house to house, advertising on City water bills, advertising on City vehicles, and commits the city to provide information on names, addresses, and possibly other information for all city residents listed in the City’s computer systems.
It is not in the best interest of the City to enter into an agreement or partnership with any vendor in which the vendor will be selling a product to citizens of the City. The use of the City logo, the terminology used in the cover letter, the Mayor signing the cover letter along with a CNEG representative, could be construed as a City mandate to use a specific natural gas supplier, namely Constellation New Energy.
There are other issues which cause concern. Thomas Bellish, of Buckeye Energy Brokers, who by resolution was authorized to represent the City in finding a proper natural gas supplier, recommended Direct Energy as the best choice gas supplier when the City is in conflict with Direct Energy because of a performance issue. This displays a gross lack of due diligence on the part of Mr. Bellish.
Mr. Bellish offered a donation to the City of $3.00 for each resident who signed up with Direct Energy, an offer which was not repeated with the CNEG proposal. Why was the $3.00 offered in the first place and why not with CNEG? Could it be because of a difference in natural gas price between the two being overshadowed by the commission?
During his original presentation, Bellish stated that he would be the New Philadelphia resident’s representative with the gas supplier. In a discussion with Robert Berry, Vice President of CNEG, Berry stated after the Marketing Agreement was signed, neither Bellish nor Buckeye Energy would be involved. All transactions after the signing would be between CNEG and its customers, no intermediary involved.
Could the City have done the same thing that Bellish did and come up with the same agreement. In short, yes. By contacting suppliers of natural gas the City Administration could have cut the same deal. There is the possibility that a better deal could have been made. Considering that Bellish works on a commission basis, the offer from CNEG might not be the least expensive to the consumer, but the most advantageous to Mr. Bellish. The way the situation is now, the New Philadelphia gas user who buys into the CNEG agreement may never know.
The City of New Philadelphia is not considering a contract with Constellation New Energy for the supply of natural gas to New Philadelphia. It may not enter into any contract on behalf of an individual citizen of the city. What the City and its Mayor are about to enter into is a marketing agreement between the City and CNEG which will allow CNEG the opportunity to use the City’s reputation in an aggressive marketing plan based on the good name of the City of New Philadelphia to sell natural gas to its residents. It is the same type of marketing agreement signed between Michael Jordan and Nike, with the same objective, to add legitimacy and credence to a sales campaign. What will the City be endorsing next? Pepsi over Coke? Burger King over McDonalds? Lauder over Clinique?
Lastly, I find it inconceivable that the City would consider passing legislation authorizing a letter signed by Mayor Taylor and an Exclusive Marketing Agreement, which contain empty spaces. These unfilled spaces reference contact information for Constellation Energy and other critical items including the cost per cubic foot of natural gas delivered, and the dates the agreement will be in force. All pertinent information should be stated in writing before any agreement comes out of Committee and is presented on the Council floor. The Marketing Agreement being considered for passage in its present form is tantamount to signing a contract for the purchase of real estate without the location and price being disclosed. I know of no attorney who would recommend the purchase of anything by presenting the seller with a signed blank check. If 58-2010 is passed in its present form, all parties involved will have failed their moral and legal responsibilities.
Passage of Resolution 58-2010 is ill-advised. The City of New Philadelphia has no moral nor legal right to become involved in a marketing plan with a supplier of any sort which is in a competitive industry doing business within the City.
Thank you for your time. I would appreciate your comments and am happy to discuss this with you at any time should you request it.
Respectfully,
Robert N. Conner
Mr. Conner,
ReplyDeleteThis is old news and the city had the same issues that you have with the contract and has not taken any action. I dont understand your point?