The "Power" of Social Media: Legal Issues & Best Practices for Utilities Engaging Social Media

Article excerpt

SYNOPSIS: Once Web 2.0 luddites, more and more utilities are now adopting social media. Whether it's a company profile and job postings on LinkedIn, a Facebook page with tips about energy efficiency, or a Twitter stream disseminating information about recent outages, utilities are undeniably serious about adding digital real estate to their service territory.

Yet even as the utility march towards Web 2.0 gathers momentum, the heavily regulated nature of the utility industry presents challenges in the naturally free-flowing world of social media. In addition to the traditional issues that all businesses face when engaging social media - from workplace concerns related to employee abuses of social media and appropriate discipline to copyright and IP protection - utilities must also ensure that their participation in social media does not run afoul of affiliate codes of conduct, SEC regulation, and a host of other compliance issues. This article provides an exhaustive summary of the legal and regulatory issues potentially implicated by utility engagement in social media, and proposes best practices and guidelines for development of a social media policy that reduce the risks of social media for utilities.

THE POWER OF SOCIAL MEDIA

Increasingly, utilities are harnessing the power of social media for a variety of business purposes, including educating consumers, implementing regulatory initiatives like demand response and smart grid, coordinating stakeholder proceedings, and communicating power outages and safety issues to the public. Yet even as utilities hop aboard the social media bandwagon, they remain subject to the same regulatory and legal requirements that apply to their traditional activities. Though social media changes the media for communicating with consumers or carrying out a required function, it does not change the message. Thus, commonly prohibited activity like utility endorsement of an affiliate is not transformed into permissible conduct merely because that endorsement comes in the form of a 140-character tweet.

This article describes the regulatory and legal issues potentially triggered by a utility's use of social media. Part I briefly defines what social media is, and describes the ways that utilities currently use social media. Part II describes the distinct legal issues triggered by utility use of social media from the perspective of the utility as (1) an employer, (2) a corporate entity, (3) a regulated entity, and (4) for public power, a government body. Part III highlights best practices for utility use of social media, with emphasis on development of a formal social media policy.

I. OVERVIEW OF UTILITY ENGAGEMENT OF SOCIAL MEDIA

A. What Is Social Media and Why Does It Matter?

Part of the new generation of Web 2.0 applications, social media is a catch phrase that describes technology that facilitates interactive information, user-created content and collaboration.1 Social media sites are growing fast and furiously, becoming indispensable to consumers. In August 2010, for the first-time, Facebook surpassed Google as the number one site where internet users spend the majority of their online time - 41 million hours for Facebook users versus 39.9 million hours for Google. A recent Nielsen report showed that overall, users spend a quarter of their online time using social media applications.2 And it's not just kids, either: a Pew Research report released in August 2010 showed that social media use of sites like Facebook and LinkedIn by adults aged fifty to sixty-four grew by a whopping 88% between April 2009 and May 2010.3 Bottom line: if a company seeks to get a customer's attention online, a social media presence is indispensable.

Given the dozens of social media platforms available (with new ones emerging each year), it's best to categorize social media tools in terms of the functions that they serve. The chart below lays out categories of social media, along with some of the best-known examples correlated with their respective functions, and potential utility use:

B. …