The Big Turnoff

[December 24th, 2008]

After the past week’s storms, your electric bill this month will be big. Better pay it.

Unlike about 20 states, Oregon allows utilities to terminate customer accounts during the winter months. And a survey released by the National Association of Regulatory Utility Commissioners last week shows Oregon’s disconnection rate for nonpayment is well above the national average for electric utilities. Oregon’s cut-off rate has also risen dramatically since 2001, when the regulators association started collecting statistics. (See the survey at naruc.org.)

“We’re seeing a lot of people in jeopardy this year,” says Mark Noonan, a program specialist with Elders in Action. “Between high costs and cold weather, a lot of people’s ability to pay is being compromised.”

Bob Jenks, director of the Citizens’ Utility Board, a state ratepayer group, calls the shut-off data “disappointing,” although he cautions weather variations can skew statistics.

The numbers show 5.8 percent of customers—more than one in 20—of Oregon’s regulated electric utilities had their service cut off last year. That’s nearly 25 percent higher than the national average calculated in the survey.

“We’ve known about this issue,” says Bob Valdez, a spokesman for the Oregon Public Utility Commission. “And we’re concerned about it.” (For gas utilities, Oregon’s shut-off rate is below the national average.)

There are a couple of interesting figures within Oregon’s high shut-off rate:

Utilities cancel service for an obvious reason—nonpayment. Oregon utilities terminate service more frequently than in other states, although the average amount late payers are in arrears here—$116.83—is only about three-quarters of the national average.

Additionally, although more people are in arrears here than nationally, and more of them end up losing service, non-payers actually do less financial damage to utilities in Oregon than elsewhere.

NARUC numbers show that utilities nationally write off $13 for every $1,000 billed. But in Oregon, utilities only write off $10 per $1,000.

Valdez offers explanations for both differences.

First, he says, Oregon’s shut-off rate is above average at least in part because it is against the law in colder-weather states for utilities to shut off customers for nonpayment.

Second, Oregon’s higher percentage of unpaid bills costs the state’s utilities less, Valdez explains, because they can recapture those costs by passing them on to other customers.

“Oregon rules allow money to be collected from all customers,” Valdez says. “I guess you would call it socializing the cost of nonpayment.”

Valdez says there are protections for utility customers whose medical devices—such as home dialysis machines or oxygen dispensers—require electricity. Such customers can get exemptions from shut-off, although they are still required to pay their bills eventually.

There are a couple of bright spots for customers struggling to make payments.

Congress recently nearly doubled the amount of federal dollars available to Oregon ratepayers­—to $52 million—through the Low Income Home Energy Assistance Program. The state PUC has also directed Oregon’s two biggest utilities—PacifiCorp and Portland General Electric—to divert funds from conservation programs such as weatherization to bill-payment assistance.

“We’re anticipating this winter is going to be a tough one,” Valdez says.

Mark Wolfe of the National Energy Assistance Directors Association in Washington, D.C., says Oregon should go further and prohibit winter shut-offs. “It’s a public health issue and a no-brainer,” Wolfe says.

Officials at Oregon’s largest utility, PGE, which serves 801,000 customers, were unavailable for comment as they dealt with power outages Monday to 63,000 customers.

Pat Egan, a spokesman for PacifiCorp, the state’s second-largest utility with 550,000 customers, says his employer’s shut-off rate is 5.3 percent. That’s higher than national figures but below the Oregon average.

PacifiCorp’s number has been pretty steady for the past three years, Egan says, but is likely to rise based on the increasing number of customers more than 120 days behind on their bill.

Currently, 9.9 percent of PacifiCorp’s Oregon customers are more than 120 days in arrears, Egan says. That’s up sharply from a year ago, when only 7.7 percent were 120 days behind. (State law allows utilities to disconnect service 30 business days after a customer receives a bill, although Egan says disconnection doesn’t usually happen that fast if the customer is responsive.)

“We’re working closely with the local energy-assistance office to assist customers to pay down their debt,” Egan says.