Senate News Update
From Senator Jane Earll
January 14, 2005

New Utility Law Changes Explained 

Late last year, the General Assembly was asked to enact legislation that would provide utility companies with more tools to address the problem of "deadbeat" customers, or those who do not pay their bills.  Utility companies have incurred large amounts of debt over the years because of their inability to collect payments from some customers, and this ultimately leads to higher utility costs for each and every customer.  While the Legislature wanted to help find ways to enable these utility companies to collect unpaid bills, we were also mindful that some people have legitimate hardships that prevent them from paying.  We needed to strike a balance between going-after "true malingerers" and being overly harsh to those with unfortunate circumstances, and I believe we accomplished that. 

Utility companies are allowed to terminate service (literally shut-off the gas, for example) for a variety of reasons, but the most common occurrence is a customer who simply is not paying their bill.  Terminating utility service is a drastic step and only happens in extreme cases, and the changes we made in December solidify the exceptions to the shut-off rule. 

The termination rules are less severe when a household has a total income under 250% of the federal poverty level.  That translates to a monthly income of less than $3265 for a 3-person household.  Additional rules apply if a household has undergone a large decrease in income, or has experienced a significant change in circumstances (such as the death of the primary wage earner, serious illness, loss of residence, or increase in dependents under age 12 or over age 64).  Estimated meter readings may not be used to support a termination order.  If a shut-off is warranted, terminations may only be executed if the utility is prepared to accept payment the next day and re-connect the service.  Clearly, the intent is to go after those who are purposefully avoiding their responsibilities, not those in a tight spot. 

The fee to re-connect service will be spread-out over three months for those whose incomes are over 300% of the federal poverty level, and even longer for those with lower incomes, or those who can document job loss, death of the primary wage earner, or illness.  Again, shut-off is a drastic step, and these changes were made to stop "deadbeat" customers, not to punish someone or a family suffering a hardship of one form or another. 

"Deadbeat" customers have an impact on those who pay their bills on-time.  Uncollected debt is a factor in a utility company's decision to raise rates, so it is in everyone's best interest to make sure that leniency is granted to only those who are worthy.  An attempt was made to require new customers to pay a deposit, in case they became delinquent in the future, but that effort was defeated.  Instead, only prior customers who had failed to pay their bill in the past, or who are not found to be credit-worthy, will pay a deposit. 

Furthermore, payment arrangement terms have been extended for those with low incomes, or who suffer a significant change in circumstances (as mentioned earlier). Utilities may waive late payment charges for those whose incomes are at or below 150% of the federal poverty level. 

Finally, the utilities may not add a surcharge to cover uncollectible accounts to the bills of paying customers.  Again, the risk of uncollected debt is a cost of doing business for the utilities, and it should not be passed-onto those who struggle to pay their gas, oil, or electric bills and go without other necessities to do so. 

All utilities are required to notify customers of these new provisions, and the Pennsylvania Public Utility Commission (PUC) will be re-drafting its regulations to put the new changes into effect.  As I stated, there was a great deal of confusion and misinformation about this legislation, and I hope this explanation dispels any myths that may have been out there. 

As always, if you have any questions on this or any other state government matter, please do not hesitate to contact my office directly at (814) 453-2515.