3/7/2013 The conflict that arises from opposing sides on the topic of corporate responsibility programs is common amongst companies; when merging companies this struggle comes to the forefront of discussion in regards to altruistic programs. As this struggle arises one must take into consideration the effects on all stakeholders in a company. In the NYSEG case, NYSEG initiated a Customer Advocate system in order to assist those customers who suffer from hardships or are financially troubled beginning in the 1970s when energy prices skyrocketed (Arnold, 120). However, NYSEG recently merged with Energy East Corporation and their position on maintaining the program is unknown. The Customer Advocate system was created in response to catapulting energy costs by NYSEG. It was set up to aid customers and the local community, specifically those who were having trouble paying their bills or had unforeseen hardships such as lengthy illness, a serious work injury, or death of a wage-earner. NYSEG offers assistance to the client whether or not they believe they will retain him or her. The objective is to help them financially rehabilitate and prevent the shut off of their utilities (121). Additionally, NYSEG has created Project Share, a direct-financial grants program funded purely by NYSEG employees, retirees, and customers. NYSEG’s customer advocates who assist these customers in need conglomerate with other programs such as the American Red Cross Society, local churches, and social services in order to help as many customers as possible (121). The program is credited to operating expenses and operates at a loss for the company. The company’s revenue funds this system, thereby reducing shareholder’s dividends (122). However, the money expended on the program is viewed as recovered funds because NYSEG assumes that the customers it aids through this system would have been unable to pay their charges and eventually been written-off as a bad debt. As a result, NYSEG’s bad debt level is 20% lower than the average United States utility company (121). Although the program seems to have many benefits in that it assists customers and local communities to financially support themselves in the long run, the entire system runs at a net financial loss. As a result there are several positions Energy East Corporation could take on the system, all of them having different effects on the stakeholders. The simplest option being that Energy East Corporation could opt to drop the program completely. The Customer Advocate system runs at a net loss and whether or not the customer may have found another way in which to financially rehabilitate and pay their bills is unknown. The main purpose of a business is to create a profit and therefore cutting the program could be viewed as being in the best interest of the corporation and its stockholders. Additionally, it would be less responsibility for the higher up management that would have to take responsibility of the program. On the other hand, customers are losing a line of help in regards to their fiscal problems. Also, the cutting of this system could hurt their excellent customer relations that NYSEG has built and could deter potential new clients. Another potential outcome is that Energy East Corporation continues the Customer Advocate program in order to maintain healthy customer relations while promoting themselves to prospective clients through their philanthropic efforts. Additionally, this new section of Energy East Corporation could continue to maintain low bad debt percentages, which could possibly increase the overall revenue. However, the system would still be running at a net financial loss which could potentially decrease the returns on dividends for shareholders depending on how large that loss is in comparison to the turnover of written-off debts. Additionally, this could increase responsibility for managers for Energy East Corporation that will have to oversee the program. Finally, the entire Customer Advocacy system could be expanded and modified to fit the other departments of Energy East Corporation. This could boost customer relations in other departments and the company’s public image. In embracing this system, the company could help customers in a new manner and open up potential jobs for prospective or current employees. However, there could be major losses involved with the expansion of this program. NYSEG had been running this program for over thirty years and was still running at a deficit; as a result, in creating new sections to the program there is a large potential for an increase in financial loss. This financial loss would not only hurt shareholders as dividend returns plummet but it could also lead to the loss of jobs for employees if that net loss is too great. All of these options being considered, the one that benefits the stakeholders the most should be chosen. The most ethical business choice in this situation is for Energy East Corporation to retain the Customer Advocacy Program but not expand it. In doing so, the largest number of stakeholders are affected in a positive manner. The stockholders of Energy East Corporation will most likely receive an increase in their returns in dividends through the merger; even though this system cuts into these returns to an extent, it aids other stakeholders. Managers and other current employees of Energy East Corporation could have a new opportunity to work in or oversee the program which could lead to happier and more productive employees through the increase in opportunities. Additionally the customers would continue to receive the support they need to continue paying their bills and financially rehabilitate. The last shareholder group affected is the corporation itself. The corporation seeks to benefit by retaining NYSEG’s reputable public image in addition to receiving a strong customer base. Also, the bad debt percentage in this section of their corporation would help to lower their overall bad debt rate. In choosing the option that benefits all of the stakeholders in the company in a positive manner and helps their customers and local communities to rehabilitate, Energy East Corporation would be making the most ethical business decision.

Arnold, Denis G., Beauchamp, Tom L., Bowie Norman E., (2013). Ethical Theory and Business. Upper Saddle River, New Jersey. Pearson Education, Inc.