Hoping to reduce its bad debts and give some of its poorest customers a break, the Baltimore Gas and Electric Co. yesterday announced a program that gives low-income customers up to $144 a year in discounts if they pay their bills on time.
"This is a rather unique approach," said Steven A. Mormann, director of customer credit for BG&E. "We feel it is a better approach than what you see [elsewhere] in the industry."
The incentive program, which was approved by the Public Service Commission yesterday, is open to 44,000 BG&E customers who are eligible for Maryland Energy Assistance payments. For instance, families of four making $20,000 or less would qualify.
Under the program, qualified customers who pay their BG&E bill on time would receive a credit on their next bills. This discount would be either $12, $9 or $7, with the poorest customers getting the largest discounts.
BG&E said it hopes the initiative will reduce its uncollectible debts from low-income residential customers. The utility's uncollectible debts have declined from $16.5 million in 1992 to $15.2 million last year as collections for commercial accounts have improved, Mr. Mormann said. But during that time the portion connected with low-income customers worsened, rising from $2.8 million to $3 million, he said.
The company expects to be paying $1 million to $1.4 million a year in incentives. But the company forecasts a net savings of $1.5 million over the next four years from lower collection costs and reductions in its uncollectible debts and the carrying costs attached to them.
The program, which starts this month and will be reviewed in September 1996 to assess its effectiveness, was praised by agencies that deal with low-income ratepayers.
"There must be some kind of incentive," said Sandra E. Brown, director of the Maryland Energy Assistance Program. "It is very worthy of BG&E to take such progressive steps."
She said the discounts would be an important supplement to state energy assistance, which averages about $257 a year per family.
However, Mary Ellen Vanni, an advocate and policy specialist for Catholic Charities, doubted the program will help the extremely poor. "I think it will help the working poor," she said. "This is just the first step."
To qualify for the incentives, the low-income customers must be part of BG&E's Utility Service Protection Program, which spreads payments evenly over the entire year. The 26,000 low-income customers in that program will start receiving discounts next March if they pay their bills on time, Mr. Mormann said.
BG&E has also established two units to deal with low-income customers, one to counsel the lowest-income people on bill-paying and the other to focus on collections.