BGE tightens winter-turnoff policy

Many losing power for not paying bills

November 28, 1999|By Shanon D. Murray | Shanon D. Murray,SUN STAFF

Under a more severe termination policy, Baltimore Gas and Electric Co. has sharply increased cutoffs since 1996-1997 of service to residential customers who fall behind in paying their bills during the winter heating season.

According to BGE filings with the Maryland Public Service Commission, residential gas and electric customer turnoffs leaped 1,918 percent from 332 in 1996-1997 during the winter heating season, which runs from Nov. 1 to March 31, to 6,702 terminations in 1997-1998.

During the 1998-1999 season, there was a slight decline, to 5,089 terminations, but that was a rise of 1,433 percent over the cutoffs in 1996-1997.

The company declined to disclose terminations from April 1 though Oct. 31, which it is not required to report.

Although the tighter policy affects a small number of BGE's 1 million residential customers, it has produced substantial savings: BGE's allowances for uncollectibles -- money it's owed but can't collect -- have fallen from $24.1 million in 1997 to $20.3 million last year and a projected $17.5 million this year.

The increase in turnoffs has come under fire by advocates for the poor, who say it is of increasing concern since low-income Marylanders are unlikely to shop for alternate suppliers as gas and electric service becomes deregulated.

For its part, BGE says the low number of turnoffs during the 1996-1997 winter heating period was the result of a failed program that left customers with larger utility bills March 31 when the winter heating season ended. Its current policy, which flags accounts with $100 overdue, helps customers manage their financial obligations better, BGE says, adding that the utility participates in various assistance programs that provide poor customers with financial help.

"Termination of service is a very serious issue," said Patrick Nolan, BGE's director of credit and collection services. "If customers do not pay, they will be terminated some way.

"The issue is, will they be turned off early or will we wait? From a customer perspective, it's better to deal with a situation early," Nolan said.

Even with its $100 threshold, BGE typically allows overdue bills to amount to $200 in the winter months before it moves to turn service off, he said.

Advocates for the poor say there is usually an upswing in terminations before and after the winter heating season. If service is disconnected before Nov. 1, there is no Public Service Commission requirement for service to be restored during the winter months.

The surge in service terminations is all the more startling, critics say, because PSC rules make it more difficult for utilities to cut gas and electric service during the winter heating season.

At least 24 hours before termination, utilities must file an affidavit stating that cutting service to the household will not pose a threat to the life and health of the occupants, and that the customer had been notified both in writing and by personal contact of financial assistance resources.

Calvin Timmerman, director of rate research and economics for PSC, said BGE is not doing anything wrong. Under PSC rules, BGE is entitled to take action on accounts with $50 overdue.

"What the numbers are essentially saying is, at one point, more than 6,000 customers used to be carried during heating season although their service could have been turned off," Timmerman said.

Critics say the utility is trying to lower the overdue debt it carries on its books as it prepares to compete with natural gas and electricity suppliers. The natural gas market in Maryland was deregulated Nov. 1, and consumers will be able to select electric power suppliers July 1.

"From our perspective, it looks like BGE is trying to make its balance sheet look better on the backs of the poor," said Rob Hess, president of the Center for Poverty Solutions, a statewide nonprofit group based in Baltimore.

"If that is what's happening, it just flies in the face of what a public utility should be doing. BGE has been a good neighbor in the community through the years, and this is a little out of character."

BGE, however, says it tried to revamp its termination policy years before deregulation and competition became prospects for Maryland.

"We tried some programs back in 1993 and 1994," BGE's Nolan said. "We gave them a few years to see how they perform, but we found ourselves in a worsening situation."

"We're put in a hard position by the advocates," Nolan said. "They want us to give people time, so we can work with them. But the same people will ask us why we let the bill get to such a high amount.

"If we let the customer get three or four months in arrears, there's little charity can do," Nolan said. "If we deal with an account early, there is assistance out there for customers to get their service back on."

While terminations have increased, same-day service restorations are up 150 percent and net service denials are down 25 percent, the utility said.

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