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Utility Shut-Off Notices Surging
Many Fall Behind On Heating Costs

By Lisa Rein
Washington Post Staff Writer
Friday, February 27, 2009

Utilities across the Washington region have sent out millions of notices to customers who have fallen behind on their gas and electric bills in the past year and are increasingly shutting off service as residents find that they cannot pay rising heating costs.

In Maryland, alarmed regulators ordered utility officials to appear at a hearing yesterday to explain what's going on.

A state program funded by ratepayers and designed to give one-time, crisis assistance to low-income customers ran out of money early last year, and state officials put in $27 million in tax revenue to meet the need. Maryland taxpayers are on track to contribute an additional $90 million this year.

"Our doors are busting," said Brian L. Wilbon, deputy secretary for operations in the Department of Human Resources, which runs the program.

Recent data the utilities provided to regulators show that Baltimore Gas and Electric issued 1.9 million shut-off notices in 2008; Washington Gas issued 472,586; and Pepco, 426,202.

In the most detailed analysis, Maryland's Public Service Commission found late last year that late bills, known as arrearages, and shut-offs, called terminations, began exploding in 2006.

From October 2006 to September 2008, shut-offs jumped 23 percent across the state, and arrearages were up 44 percent. The average sum in arrears rose from $250 to $340.

The increases coincided with a 72 percent rate increase by BGE after the lifting of rate caps imposed at the time of deregulation.

In Virginia, Dominion Virginia Power cited higher fuel costs when it raised rates 18 percent last year; the utility shut-off service to 93,890 customers for nonpayment, a 15 percent jump from 2007.

In the District, one fourth of Pepco's customers who rely on electricity for heat were in arrears in 2008, the data show.

It's not just low-income customers who cannot pay. Interviews and data submitted to regulators in Maryland and the District show that some customers whose income is too high to qualify for assistance are also in danger of shut-offs.

Many Maryland customers are reporting that their January energy bills doubled in a month, said Douglas Nazarian, chairman of the Public Service Commission. Of particular concern are tens of thousands of Pepco, Washington Gas and BGE customers who could lose service April 1, when a winter restriction on shut-offs ends.

Utility officials point to this winter's cold weather and a longer billing cycle -- resulting in bigger bills -- over the December holidays. They also acknowledge that staff shortages prompt them to estimate as many as 10 percent of bills, with results that do not always reflect actual use.

Higher wholesale energy prices continue to push up electricity and natural gas costs, a result of deregulated markets in the District and Maryland. A typical monthly Pepco bill for District customers is $103.67 today, compared with $58.16 in 2004.

Ever-growing bills are on the minds of the elderly and disabled residents of Friendship Arms, a subsidized development off East-West Highway in Hyattsville in Prince George's County. All of the 20 men and women who gathered in the fourth-floor common room one evening this week said they are struggling to pay their bills, and some have had to beg Pepco not to disconnect their service.

Residents use various strategies to keep their bills down.

"I suffer through it. I don't turn the heat on," Dorothy Wilson said. She achieved a small victory last month: A $114 bill.

Mims Freeman said he keeps his oven on and puts a bowl of water inside to warm up his apartment. Hope Edwards, 83, said she piles on the covers so she can turn off the heat at night.

Yesterday, Maryland utility officials told the Public Service Commission that they are stepping up efforts to reach vulnerable customers and to offer them payment plans that can spread out their debt. "Our goal is to assist customers in any way possible," said Jeannette Mills, BGE's senior vice president of customer relations and account services. But 70 percent of customers on payment plans default, officials said.

Virginia does not have a state assistance program, but customers can apply for federal help. A bill that would have charged customers a small amount to create a state low-income assistance fund did not pass the General Assembly.

Maryland regulators seemed frustrated that the utilities are not doing more to help their customers.

When Wayne Harbaugh, BGE vice president for pricing and regulatory services, blamed inefficient heat pumps for the surge in many bills, Commissioner Harold Williams said, "I don't buy that." And when Harbaugh blamed the weather, Nazarian retorted, "It's not freakishly cold."

Williams, who said his electric bill doubled last month, took issue with the utility's policy of allowing longer billing cycles during the winter. He said the higher bills that result get many customers in trouble.

The rise in shut-offs has dramatically increased utilities' bad debt. BGE's bad debt has doubled to $44 million; Pepco's jumped from $8.7 million to $12.4 million. Ratepayers will end up paying for it.

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