Maryland residents who fail to pay their utility bills on time are often charged late payment fees double the familiar 1 1/2 percent per month allowed on other charge accounts and even higher than the state's usury law limit for consumer loans.
The two largest utilities serving the state, Potomac Electric Power Co. and Baltimore Gas & Electric Co., charge their Maryland customers 3 percent interest for the first month in which a bill is not paid on time.
The rate exceeds the state usury limit of 2 3/4 percent per month interest on small consumer loans in Maryland, but public utilities are specifically exempt from the usury law. Their rates are set by the Public Service Commission.
According to records on file at the commission, BG&E collected nearly $5 million in late payment fees last year, largely from families who fell behind when their winter heating costs drove their bills up during the severe cold weather in January and February.
A search of the records disclosed that Pepco has failed to file the required reports for more than two years, and its late-payment collection figures were unavailable.
Pepco and other companies that serve customers in the District and Virginia are limited by those jurisdictions to 1 1/2 percent a month interst -- an annual rate of 18 percent.
The Maryland Public Service Commission, however, allows utilities to charge interest only on the first two months of arrears -- 3 percent the first month (a 36 percent annual rate), and 2 percent the second month. Customers who fall further behind in payments may have their service cut off.
In Maryland, late fees can add a total of $2 to a typical $40 bill that goes unpaid for two months or more. The $2 includes the $1.20 fee for the first month penalty and 80 cents for the second month.
As much as 80 percent of a utility's total late fees come from residential customers, rather than business or commercial users.
The office of the people's counsel in Maryland has petitioned the Public Service Commission to cut the penalty fees at least in half, saying the current charges are excessive.
Maryland Del. Thomas Mooney, a Takoma Park Democrat, called for legislation to roll back the rates to the level charged by neighboring jurisdictions.
"The Maryland rates border on the usurious," he charged.
Pepco's failure to file its late-payment reports went unnoticed at the Public Service Commission until a reporter reviewing the files discovered the gap last week.
The commission's chief auditor, Marshall E. Stokely, at first said, "I can't tell you why they aren't here."
After checking with a company official, Stokely reported Pepco had not filed the reports because of an "internal breakdown."
Responsibility for compiling the report had been shifted from one department to another within the company and the second department had not been informed of its new assignment, the auditor said.
PSC Chairman Tom Hatem said the company could be fined for submitting reports late.
"I don't want to make a judgment in advance, but we could fine them," Hatem said.
The penalty for failure to comply with reporting rules can run up to $100 a day for each day the company is late.
Utility companies say that they need the penalty fees to offset the cost of collecting overdue bills. Statements filed by the firms with the Maryland PSC routinely list collection expenses that equal or nearly equal the late fees they charge.
The collection costs they list usually generally include a portion of company salaries, postage and paper for follow-up billings and use of equipment for billing.