Puget Sound Energy will ramp up collection efforts for $140M in overdue bills

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Thousands of low-income families could have gas and electric service cut off because of renewed efforts by Puget Sound Energy to get customers to pay their long overdue bills, anti-poverty advocates warn.

State regulators agreed last month to allow PSE to resume credit and collection practices paused since the pandemic as it works to recover more than $140 million owed from tens of thousands of customers.

Washington Utilities and Transportation Commission order prescribes steps the state’s largest investor-owned utility must take to let customers know what payment management programs are available, and refer them to nonprofit Community Action Agencies for assistance.

If a customer fails to take action within 30 days, PSE may place them on a phased debt collection plan, known as dunning, under the order. Disconnections for non-payment are limited to those who owe more than $250 and are more than 90 days overdue.

“Our goal is to keep customers connected to their energy service and we will do everything possible to help them,” said Carol L. Wallace, PSE’s director of customer operations. “We will not disconnect customers who are working to pay their bill.”

But disconnections will occur and studies show minorities and low-income households will make up a disproportionate share of those whose services are cut-off, said leaders of the Washington State Community Action Partnership. They pressed state regulators to prevent disconnections for customers in the most disadvantaged communities, as well as for homebound and medically fragile seniors and families with small children.

“We are surprised and disappointed in the Commission’s order to allow shutting off essential services for vulnerable residents,” said Jeff DeLuca, executive director of the partnership. “That population is not being excluded from this process.”

IOUs

Puget Sound Energy operates the state’s largest natural gas distribution system, serving nearly 800,000 customers in six counties. It also provides electricity to about 1.2 million customers.

In 2019, the last year PSE conducted normal credit and collection operations, 40,655 customers were disconnected of 459,045 customers who faced the prospect of losing service for nonpayment, according to the utility.

In March 2020, spurred by the pandemic, Gov. Jay Inslee imposed a statewide moratorium on utilities disconnecting service. That moratorium lasted until Dec. 31, 2021.

PSE officials said the utility did not resume disconnections until May 2022. Since then, there’s been “a small amount” involving customers owing more than $1,000 who were not known or “estimated” to be low-income, Wallace said.

Meanwhile, for much of the last two years, the commission worked to update its credit and collection regulations. As that process labored on, PSE sought permission to resume efforts to collect larger overdue bills because the amount of arrearages –  the money the company is owed, but has not been able to collect from customers – kept growing.

Wallace told regulators in November the amount owed in October 2023 was $140 million and, if written off as bad debt, could result in customers getting a one-time rate increase of 4.2% for electric and 3% for gas.

At a hearing in February this year, utility commissioners heard from those concerned PSE’s request could cause a surge in disconnections and those opposed to shouldering the financial burden of those who don’t pay.

“Now is not the time to bring back electric service disruptions. It is the time to remind everyone that those who are behind on their bills are not just numbers; they’re mothers and fathers, aunts and uncles, grandparents and friends who deserve to be treated with dignity and respect,” said Kathleen Saul, who has a doctorate in energy and environmental policy and is a faculty member of The Evergreen College.

Scarlet Caldwell said she understood the need for the moratorium in the pandemic but did not support a rate increase to cover the unpaid bills of others, according to a transcript of the Feb. 8 hearing.

“I work hard for the things that I do, and I want my money to go to my family and my friends. And I don’t have enough to go around, unfortunately,” she said. “I don’t think it’s fair for us to have these huge increases because other people didn’t pay their bills or they needed a couple months’ break.”

Documents considered by the commission show PSE had 92,108 residential customers with bills more than 90 days overdue. Some estimates are that a little more than a quarter could be people who owe more than $1,000 and are lower-income.

Commissioners do not believe their May order opens the floodgates for disconnections, a UTC spokesperson said.

Arrearages for PSE are “unsustainable,” said Amanda McCarthy, acting communications director for the commission. “If those arrearages are not paid off, the amount will have to be socialized among all ratepayers. This means that bills for the working poor or those living paycheck to paycheck will increase significantly.”

Dunning

The commission order issued last month spells out how PSE must proceed. They need to reach out to customers by phone or in writing about payment assistance programs for which they may be eligible. Some will get referred to Community Action Agencies – such as the Community Action Partnership – for help.

When a person enters PSE’s dunning process, they will get at least two phone calls and receive two mailings – an urgent and a final notice – over a 35-day period before entering the disconnection queue, utility officials said. The goal is to get them back on track but they are informed they may be subject to disconnection if they take no action.

PSE officials said they aren’t predicting how many people might face disconnection “because we have never been in a situation with customers who are several months, if not years, in arrears.”

They hope a program launched last fall offering a bill discount of up to 45% and another program helping customers with past due balances starting this fall will keep a lid on disconnections.

The Community Action Partnership and one of its programs, The Energy Project, will be counted on to link utility customers with assistance programs enabling them to keep service on as they chip away at what they owe. There’s concern that demand will overwhelm resources of such relief programs.

“The fear is we won’t have the capacity to mitigate the number of individuals in crisis who are trying to avoid a disconnection,” said Shaylee Stokes, director of The Energy Project.

DeLuca, with the Community Action Partnership, said high demand for assistance shows that most people want to pay their bills.

“Disconnections do happen. People are going to have to make decisions about what bills they can pay,” he said. “What this is going to do is it is going to put people at risk of losing their housing.”

PSE officials chafed at the suggestion the utility was moving too aggressively.

“It’s unfortunate that key partners, including the community action agency partners who distribute PSE’s assistance dollars, spend their time making assumptions that may or may not be true,” Wallace said.

by Jerry Cornfield, Washington State Standard

Washington State Standard is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Washington State Standard maintains editorial independence. Contact Editor Bill Lucia for questions: info@washingtonstatestandard.com. Follow Washington State Standard on Facebook and Twitter.

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