Utilities lend support to no-interest bill plan

But say debts must be paid before heating season

Utility company representatives said Tuesday that they support a proposal to offer no-interest payment plans to customers behind on their bills so long as the debts are repaid before heating bills start increasing again next winter.

"When you start pancaking a payment plan on top of a very cold winter period, that's when customers get far behind," Wayne Harbaugh, Baltimore Gas and Electric's vice president for regulatory affairs, told state regulators during a hearing.

The utilities want to recoup the costs of providing these plans, which Harbaugh described as "basically a no-interest loan" to customers. BGE and representatives from other companies urged the Maryland Public Service Commission to lift the temporary prohibition on suspending customers' utility services that was put in place last month to allow time to work out the details of the payment plans.

Commissioners, who will have the task of issuing an order on payment plans, first began investigating growing numbers of terminations and past-due balances in January. They later expanded their inquiry to review thousands of complaints of skyrocketing utility bills. Last month, the regulators ordered a work group of consumer advocates, utility companies and commission staff to sort out the details of payment plans that would aim to help people catch up.

Much of the discussion on the group's report during Tuesday's daylong hearing at the commission's Baltimore offices focused on the length of the payment plans. The utilities proposed plans that would be no longer than nine months for large investor-backed electric utilities and six months for other utilities.

But Theresa Czarski of the Office of the People's Counsel, which represents consumers, said companies should offer customers at least up to 12 months to pay their bills, if needed. The vast majority will be able to eliminate their balances within a few months, she said.

An official representing both Pepco and Delmarva Power said that the failure rate of payment plans that are 10 to 12 months long was about 80 percent.

The utilities' proposed plans could also require down payments of up to 25 percent, and up to 50 percent for customers with previous defaults or who had built up a balance before the winter, when bills skyrocketed because of low temperatures and other factors.

In addition, those disconnected from service could reconnect by paying 75 percent of what they owe and the remainder on a payment plan rather than the full amount up front, as currently charged.