Dominion’s sale of customer data brings new scrutiny to other SC utilities
Dominion Energy isn’t the first South Carolina utility to do business with HomeServe USA, the home repairs company that recently caught state regulators’ attention after mailing Dominion’s customers unsolicited offers to insure the gas lines leading to their homes.
In fact, 13 other utilities across the state have made business deals with the company.
But such business arrangements — which have previously drawn complaints of misleading marketing and unfair business practices — could soon face tougher restrictions in the Palmetto State.
As it launches an investigation into Dominion’s sale of customer data to HomeServe, South Carolina’s utility watchdog — the Office of Regulatory Staff — is already pushing for a new state regulation that would ban for-profit utilities like Dominion from selling customer information to third parties without customers’ consent.
The agency also is probing Dominion’s troubles in Utah, where state regulators put a stop to HomeServe’s mailings to Dominion Energy Utah customers for more than a year until the companies agreed to clarify their business relationship to customers and restrict HomeServe’s access to customer data.
“They ignored everything that happened in Utah and made the same mistake here, triggering the exact same response from regulatory bodies that already have a massive workload of cases,” Regulatory Staff spokesman Ron Aiken told The State.
Not just Dominion
The issue has come to a head since shortly after Dominion’s South Carolina customers received mailers last month from HomeServe — on Dominion’s letterhead — letting them know they hadn’t opted into a service plan that would cover costly repairs if a natural gas line leading to their home breaks.
Some customers said they were unsure who sent them the mailers, which conveyed a sense of urgency, and whether gas line coverage is really necessary.
The State reported on Nov. 22 that Dominion had sold customers’ information to HomeServe, which used it to target the mailers. Days later, the utility suspended the practice and Regulatory Staff opened an investigation into the deal.
But Dominion is far from the only S.C. utility to partner with HomeServe, a Connecticut-based company with more than 3 million customers in the United States — a number that grows as it inks marketing deals with utilities across the country.
That includes 14 utilities in South Carolina.
Duke Energy, a for-profit power company with operations in South Carolina’s Upstate and Pee Dee regions, also partners with HomeServe.
Duke subsidiary Piedmont Natural Gas provides customer addresses to HomeServe, but – unlike other utilities – it doesn’t receive a fee in return, spokesman Jason Wheatley said. Piedmont receives a commission from HomeServe only when one of its customers calls Piedmont to sign up for a HomeServe plan, but not when they contact HomeServe directly.
Columbia and Charleston’s public water systems have signed marketing deals that allow HomeServe to send mailers to homeowners promoting coverage plans for the gas, water and sewer lines that lead from the meter to their homes.
So did water and sewer utilities in Horry, Darlington, Beaufort and Jasper counties.
But unlike Dominion or Piedmont, none of those utilities turned over customer information to HomeServe, they told The State. HomeServe typically reaches their customers by blanketing their service areas with mailers, sometimes reaching people who aren’t customers.
“We were not willing to share that information with an outside organization,” said Pam Flasch, public affairs manager at the Beaufort-Jasper Water and Sewer Authority. “We are there to sell water and sewer services to our customers, and that’s it. Their information is kind of sacred.”
Some utilities also go to great lengths to clarify for customers that HomeServe is a separate company offering an optional service.
The city of Columbia, for example, doesn’t let HomeServe send out solicitations on the city’s letterhead. Instead, the city lets HomeServe include a separate letter from the city explaining that it has endorsed HomeServe to offer water and sewer line coverage.
Utilities typically get a set-up fee from the deal, plus a commission on any customer who signs up for a HomeServe plan. But they don’t always simply pocket the cash.
Charleston Water System has donated about $182,000 of the $589,000 it has made from its deal with HomeServe to a program that helps low-income customers pay their water and sewer bills, spokesman Mike Saia said.
Columbia puts all of its HomeServe revenue toward a similar program, spokesman Robert Yanity said.
Worth it?
Utilities and cities defend their partnerships with HomeServe, though some admit they have fielded complaints from customers who were confused by the mailings.
They say customers typically don’t understand that they are responsible for the water, sewer and gas lines leading from the meter to their homes.
(Standard homeowners insurance policies typically cover the pipes inside your home, but not outside it. Utilities are responsible only for the pipes that lead up to the meter).
They say they partnered with HomeServe to give customers who wants those lines covered an option.
HomeServe spokesman Myles Meehan said the company has 119,000 customers in South Carolina and coordinated 10,800 jobs here, saving Palmetto State customers some $3.5 million.
Insurance experts say HomeServe’s services are legitimate, though they aren’t classified as insurance here.
Instead, they are warranties that could pay to fix a pipe that breaks because of their age, nearby tree roots or other factors. Such issues could cost a homeowner hundreds or even thousands of dollars.
But they aren’t all that common, especially for newer homes or neighborhoods without trees. The plans also generally don’t cover problems caused by the homeowner or “unusual circumstances” such as a natural disaster.
“I don’t know if it’s a product that everybody needs,” S.C. Department of Insurance Director Ray Farmer said. “Each homeowner would have to make their own judgment, their own assessment. I would imagine that people have lived in their homes 30 or 40 years and never suffered a break in a water line or a sewer line or a gas line.”
Scott Holeman, a spokesman for the Insurance Information Institute, says he lives in a Kansas City neighborhood with plenty of trees and a history of water line breaks. He pays Service Line Warranties of America, a company that offers similar services to HomeServe, about $120 a year for water and sewer line coverage and advises residents to do their research before deciding one way or another.
“Everybody has to make their own assessment of what their needs may be,” Holeman said. “If you’re in an older home, or a home with a lot of trees, you might ask some of the neighbors if they’ve had similar problems. Do some homework.”
Backlash
Still, HomeServe’s mailers have created headaches for some utilities and their customers.
Customers are typically confused when the first round of solicitations go out, as they are unsure who is sending them or whether they have to sign up, utility representatives told The State.
HomeServe’s solicitations often come on the utility’s letterhead. And regulators and attorneys general in other states have taken action against HomeServe for solicitations that resembled a utility’s correspondence with customers.
HomeServe has paid settlements — but denied wrongdoing — to at least four states that sued it over allegedly misleading marketing campaigns.
HomeServe’s partnerships in South Carolina also have irked some small business owners.
Shortly after the city of North Myrtle Beach’s water utility partnered with HomeServe in late 2016, local plumbers mutinied, complaining the city was hurting their businesses by selling its endorsement to a national corporation.
“Every plumber in town came to City Council and complained,” city spokesman Pat Dowling told The State. “It became sort of a brouhaha. The city basically backed off.”
North Myrtle Beach wasn’t the first utility to back down.
Even before that, in May 2016, Aiken plumber John Wade contacted his state senator, Republican Tom Young, to complain about mailers offering similar home repair services to customers of South Carolina Electric and Gas (now owned by Dominion).
SCE&G had sold its customer data to a Dominion subsidiary called Dominion Products and Services, which sent the mailers. Wade pushed Young for a new law prohibiting that kind of arrangement.
Emails show Young responded that there was not enough time left in the 2015-16 legislative session to make that kind of change. But he put Wade in touch with then-Office of Regulatory Staff Executive Director Dukes Scott, who asked SCE&G to stop the mailings in the Aiken and North Augusta area. The utility obliged.
“They’re gathering personal data and picking winners and losers,” Wade told The State recently. “It’s a whole big slew of things that shouldn’t be allowed.”
Meehan, HomeServe’s spokesman, said the company works with 65 small businesses in South Carolina, employing them to complete jobs for HomeServe’s customers.
Next steps
Regulatory Staff filed a petition on Nov. 27 formally asking the S.C. Public Service Commission — the panel that governs the state’s for-profit utilities — for a regulation that would restrict such deals.
It would specifically stop those utilities, including Duke and Dominion, from sharing customer information with HomeServe or similar companies.
In the meantime, Dominion has halted the mailings to its customers — at least through the end of the year. Both Dominion and HomeServe have said they will cooperate with that probe.
In a statement, HomeServe’s Meehan wrote that utilities that partner with HomeServe “should be allowed to share limited name and address information with these partners to facility accurate addressing of their customers and billing for these services as required.”
Aiken, Regulatory Staff’s spokesman, said the agency is studying how Utah regulators responded to the same issue with Dominion when customers there submitted hundreds of complaints about the mailers from HomeServe in 2018.
“We are going through the entire docket,” Aiken said.
This story was originally published December 8, 2019 at 5:00 AM.
