Maryland among several states battling energy bill late fees – CBS Baltimore

NEW ORLEANS (AP) – Chris Kinney, a resident of Rapides Parish in central Louisiana, has seen his electricity cut off eight times in the past two years because of late payment of his Cleco Power energy bill.

His family did everything to catch up: pawning properties, accumulating huge bank overdraft fees, taking out loans and applying for energy assistance.

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Somehow, Kinney’s outstanding balance kept growing.

While his electricity bill has grown to about $6,400 over the past two years, Cleco Power has also charged him more than $1,250 for late paying his bills, including late fees, reconnection fees, and money. deposit.

“These fees keep piling up and there is no way to keep up. Kinney said.

Americans paid a total of $561 million in deferred fees for electric utilities in 2019.

But how much you pay depends on where you live.

An AP analysis of federal regulatory data shows that some large utility companies in states such as Louisiana, Mississippi, Kentucky, Florida and Maryland are charging customers far more late than they should. national average.

Five power companies – Cleco Power, Kentucky Power Co. and three subsidiaries of Entergy Corp. – averaged over $17.50 per customer in annual late fee revenue from 2011 to 2020. This is more than three times the national average of $5.83 per customer in the same time period. .

These fees make up a small fraction of the total revenue of large energy companies – less than a quarter of a percent on average – but for those who pay them, they can be squashed.

Late fees often penalize customers who are less likely to pay their utility bills in the first place. Poorly insulated homes and damage from natural disasters both contribute to poor people spending more of their wages on their energy bills. And Black and Hispanic households are more likely to experience energy insecurity and face utility disconnections.

For those who fall behind, that often means choosing between paying for power and buying other necessities.

Mary Boyd, 83 and living in New Orleans, said her expensive energy utility bill from Entergy – a major utility provider in Louisiana and three other Southern states – left her with a choice. between medication and other expenses like repairing damage to her fence caused by Hurricane Ida.

“I was sick. I had high blood pressure, asthma, and arthritis,” said Boyd. “Now just imagine this, this three hundred and one dollar energy bill taking away food and stuff. other.”

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Power companies, including Entergy and Cleco Power, say late fees are an important tool to encourage customers to pay their bills.

Entergy spokesman Jerry Nappi said: “Finally, late payment policies are in place to help protect all customers from possible rate increases as a result of uncollected payments. ten”. The company does not profit from late fees, he said.

But for some major utility providers, including Entergy, late fees account for more companies’ revenue than average.

Nine companies, including Baltimore Gas and Electric, Central Hudson Gas and Electric, and Cleveland Electric Illuminating Co., derive more than 0.5% of their total revenue from late collection of fees between 2011 and 2020 – double and even triple the national average of about 0.24%.

Late fees are meant to cover the cost of collecting bills, or the cost of disconnecting or reconnecting the property’s power.

Odogwu Obi Linton, who sits on the board of directors of the National Association of Regulatory Gadgets, said they are not meant to be punitive.

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If customers pay their bills quickly, the utility won’t have to make or pursue a debt collection, Linton said. This saves the utility company money on things like turn notifications and phone calls to collect late payments.

But advocates say the amount charged does not reflect the cost to power companies.

“Previously there were very few, if any, late fees our utilities charged on a cost basis,” said Kent Chandler, Chairman of the Kentucky Public Service Commission.

Dan Kermode, a former policy adviser at the Washington Transportation and Utilities Commission, says late fee regulations in many states were decided long before the advent of new technologies and systems. new computer system. Billing software and automated meters have made late collection costs nearly zero for utilities.

In Louisiana, state regulations allow a penalty of up to 5% for late payments for all electric utilities. When asked about why the late fee penalty was set at 5%, Public Service Commission press secretary Colby Cook said he could not comment because of late fee regulations, which were set adopted in 1976, without specifying the rationale behind its adoption. .

“This is what is unique about late fees – these are fees that do not collect costs, but act as an incentive for late payments,” says Kermode.

Some regulators and consumer advocates question whether late fees are effective.

In Kentucky, the pandemic has resulted in a moratorium on late fees for residential customers through the end of 2020. Looking back at the impact of that moratorium, the commission said, “deferred fees have an impact. little effect on the timeliness of payments to residential customers for utility services. ”

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According to researchers from Indiana University at a paper they published in the scientific journal Nature Energy.

In New Orleans, an organization called Comprehensive Community Action helps disburse federal energy assistance, based on need. Nearly all of the energy assistance group’s 7,000 customers are Black, even though only about 60% of New Orleans residents are black.

In 2017, Black households spent 43 percent more of their income on energy costs than white households did, according to the American Council on an Energy Efficient Economy. quantity. The council’s analysis, published in 2020, also found that the energy costs of Native American and Hispanic households account for a much larger share of income than that of leather households. White.

Older homes, even in low-income communities, are generally less energy efficient at first – and floods or other disasters can damage those buildings to the point where they no longer suffice. eligibility for government weather assistance.

“Homes in Louisiana have been impacted by hurricanes and floods. “That kept us out and weathered them because it needed a whole new roof,” said Lauren Holmes, who oversees energy assistance programs for Louisiana Housing Corp. We can’t get in and insulate an attic if you have a four meter hole in the attic. “

In neighboring Kentucky, most homes that applied for such assistance also failed to receive them.

Kent Chandler, a member of the state’s Public Service Commission, said for each home that Kentucky Housing Corp. could be weathered using federal funds, about two homes could not be retrofitted due to potential health and safety issues that made them ineligible for that aid.

And weathering isn’t the only thing that affects energy efficiency; How people heat their homes also plays an important role. In rural areas of Kentucky, many homes are heated with inefficient electric heating systems, which makes the bills expensive during the winter months, Chandler said.

Getting financial assistance to pay those bills, however, may be easier said than done for those who are unemployed or self-employed.

“When residents receive a disconnection notice, they only have a few days to receive help and all supporting materials,” said Selton Jones, community service specialist for Total Community Action on energy services. needed before they are disconnected. “If I play at a jazz bar and just play the saxophone, I don’t have to pay taxes.”

People receiving pensions, Social Security or other retirement income all have that document and are more likely to get help paying their bills, but that still doesn’t mean they will not fall behind.

Carolyn Peters lives in New Orleans on a fixed retirement income and has received aid from the federal Low Income Home Energy Assistance Program. Her February bill from Entergy New Orleans was nearly $500, including late fees charged in previous months.

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When asked how she plans to pay the outstanding bill, Peters said she will have to give up another essential like medication. “It was a stress,” she said.

https://baltimore.cbslocal.com/2022/03/07/food-or-power-maryland-among-several-states-struggling-with-energy-bill-late-fees/ Maryland among several states battling energy bill late fees – CBS Baltimore

Jake Nichol

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