PR agencies embroiled in MI utility contract wrangle

LANSING, MI: Three Michigan PR agencies are involved in a

controversy over a state commission's decision to award them no-bid

contracts to handle consumer education programs dealing with utility

deregulation.



The Michigan Public Service Commission plans to spend $26 million

on PR, advertising, and grassroots efforts to educate consumers about

electric utility deregulation. Of that, $480,000 is budgeted for

PR, with an additional $250,000 for grassroots efforts, and

$175,000 for creation of a website.



The commission decided two years ago to award contracts for the work to

JankowskiCo. (Detroit), Ken Peterson & Associates (Southfield, MI), and

McCann-Erickson's Detroit office. All three had worked for either

Detroit Edison or Consumers Energy, both major Michigan utilities.



However, while Peterson had done internal communications work, the other

two are essentially ad agencies, which left open the question as to

whether they would subcontract PR work to other firms.



The no-bid nature of the contract and the possibility of a conflict of

interest - because of prior agency work for the utilities - only

recently became a public issue because of a story in the The Detroit

News.



"There wasn't even consideration of opening this up to companies that

weren't associated with utilities. In my mind, that raises questions,"

said Rick Gamber, executive director for the Michigan Consumers

Federation.



Peterson head Ken Peterson said, "The whole conflict-of-interest issue

was addressed two years ago in hearings. There really is no conflict of

interest here. All the parties involved, the utilities and the PCS, are

working for the same goal now."



But Peter Lark, a Michigan assistant attorney general, said that while

there was "no suggestion that it's unlawful, we think what they're doing

is unwise. We think it should have been competitively bid."



A commission official has said the no-bid process was used because of a

lack of time to get the consumer education program underway. But the

program has yet to begin two years after it was authorized because

Michigan still has no non-Michigan utility companies willing to sell

power in the state.



"There is no time element; nothing has really happened," says David

Waymire, an EVP with Marketing Resource Group, a Lansing, MI firm that

has worked in the deregulation area. "There's still plenty of time to

put this out to bid; there are a lot of firms in Lansing, the state

capital, that were far more engaged in electric restructuring than these

firms were."



Currently, the commission has no plans to hold another hearing.



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