Spring brings utility disconnections for thousands

People who have their utilities disconnected have plenty of company. This year Minnesota's largest utility, Xcel Energy, will likely cut off service to more than 25,000 delinquent customers for at least a couple of days.

The volume of shutoffs does not diminish the shame and embarrasment ratepayers feel when they come to a social service agency and ask someone like Catherine Fair for help. Fair said many of those seeking aid from Community Action Programs of Ramsey and Washington Counties are first-time visitors who feel a stigma, even if the circumstances that bring them there are understandable.

"I've had a Realtor who made $60,000 in 2006. The last three months he made only $4,000 total -- in three months. We all know why. There's no money there anymore, nobody's buying homes," Fair said.

Customers who expect they'll have trouble paying their winter heating bills can keep their gas and electricity on under a provision of state law known as the cold weather rule. Agreeing to a payment plan with their utility companies protects ratepayers from being cut off between mid-October and mid-April.

Utility companies say a surge in disconnections is common after the seasonal expiration of the cold weather rule on April 15th. Shutting off the heat in springtime may not sound like a calamity, but Fair said in some places the local utility controls more than the heat.

"In this area, in the east metro, Xcel Energy is also the electric provider. So the gas and electricity are on the same bill," Fair explained. "When somebody is behind on their heating bill for the winter, their electricity is shut off. That means that there is no stove, no refrigerator, no lights."

Xcel Energy's manager of credit policy and compliance, Pat Boland, said the company supplies electricity to 1.1 million residential customers in Minnesota and natural gas to 400,000. Boland said when overdue accounts reach the point of disconnection - after multiple months of non-payment - electrical service is shut off first, because that's easier to restore once payment is received.

Boland says in about 60 percent of disconnection cases, service is restored within two days. He said the number of customers behind in their payments to Xcel is comparable to a year ago.

"It was not much of a change from last year to this year," Boland said. "Actually, it was fairly flat. What we did recognize, however, especially with those that are natural gas customers of ours, the numbers didn't go up, but the dollars owed did increase."

Boland said this spring delinquent customers owe Xcel $38.5 million.

At Minnesota's largest natural gas supplier, CenterPoint Energy, spokeswoman Becca Virden said overdue accounts are running about double the dollar amount at Xcel. But she said the total is down about 40 percent from last year, because more customers have arranged payment plans. Virden said the cost of uncollected accounts is ultimately borne by the company's ratepayers.

Each of Minnesota's leading utilities has stiffened its policies regarding unpaid bills. At CenerPoint, when disconnected customers want their service restored, they must now put down a deposit equal to two months average payment. That comes on top of their overdue bill and a re-connection fee. The deposit is returned if the customer's bills are paid on time for a year.

Xcel has tightened its rules about who's eligible to set up a payment plan. Boland said the company is no longer negotiating agreements with customers more than three months behind on their bill.

"What we found ourselves doing was making arrangements - in some cases multiple arrangements - with customers, only to see those arrangements not be kept. And therefore the customer wouldn't get caught up during the summer months and we were having debt carry over into the winter."

At Community Action Program of Ramsey and Washington Counties, Catherine Fair thinks less flexibile credit policies will eventually lead to a higher rate of disconnections. And she said disconnections only make it harder for customers to pay overdue bills.

"Without power, without a refrigerator to store food -- it's very expensive to buy prepared food for your family. And it only sets you back further in your finances to put toward your past due energy bill," Fair said.

Fair predicts the slumping economy will boost the number of people who fall behind in their utility bills. She thinks the stigma will keep them silent in their struggle, even if the ranks of the disconnected grow.

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