Branding and the Energy Industry: A Cautionary Tale

A few weeks ago, I wrote a post about examples of successfully branded commodities and how that might translate into the energy industry, especially with the growing market desire for renewable generation. Since then, I’ve come across an example of a retail energy company focusing on renewables with a unique brand position. Unfortunately, it’s also an example of the high stakes that come along with a stake-in-the-ground brand position.

Ethical Electric was created by a former MoveOn.org campaigner and a climate strategist. Like other energy retailers, they enter into power purchase agreements with renewable energy developers and sell to customers. Unlike other energy retailers, they base their prospecting list on models developed for political campaigns, and 1% of sales are directed to progressive organizations.

No criticism here – at Shelton we’ve seen firsthand that purpose-driven companies do better on a number of metrics, and segmenting/microtargeting customers a la political campaigns is a smart marketing strategy. In fact, it’s not unlike the way we go about executing on campaigns for our clients. I just wanted to lay some context for the story – Ethical Electric, by virtue of its name and business model, is promising a very specific brand experience, and, making some assumptions about who they’re targeting via a political campaign model, they’re likely making that promise to the very types of Americans who are inclined to boycott brands who don’t tell the truth.

Therein lies the rub. Ethical Electric was recently accused by the Illinois Attorney General’s Office of making misleading claims in its marketing materials. The complaint noted that consumers may have been misled to believe a few different things: that their power was generated by 100% renewables (when that may have not been entirely accurate), that they had to choose a power supplier when they could have stayed with ComEd, and that prices were similar to ComEd, when, in fact, they were consistently higher. Ethical Electric reached a settlement with the Chicago AG’s office and is now required to provide rebates to customers that will range anywhere between $191,000 and $3 million, depending on the number of claims filed. As Attorney General Lisa Madigan noted, “That type of blatant consumer fraud will not be tolerated.”

Now, there are two sides to every story, and settling a complaint is not the same thing as admitting guilt. But the cautionary tale is this: if you’re going to brand your organization as “ethical,” you really, really have to go out of your way to ensure that promise is never called into question. At the very least, Ethical Electric should put a stop payment on the check written to the legal team that reviewed their marketing materials. And they should rework processes and possibly job positions to ensure that, going forward, their ethics appear to be beyond reproach in the court of public opinion.

The potentially deeper irony here is that in an effort to move the renewable energy market forward, they may have made the path to more renewable energy just that much more difficult. Earlier I alluded to the growing desire for renewable generation. Both our 2015 Energy Pulse and 2016 Eco Pulse studies show consumers want electric utilities, as well as the companies they buy products from, to use more renewable energy. But now, based on simply reading the news coverage, it seems there may be quite a few people in Illinois who have a negative frame of reference about renewable energy. They might see renewables as overpriced and may be less trusting of competitive renewable energy retailers. As someone once wrote, “Trust takes years to build, seconds to break, and forever to repair.”

In many ways, renewable energy is political. But ethically speaking, honesty is always the best policy.