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Barbed Wiring

Low-income customers fenced in by new utility law



When Terrell Montgomery moved into his new apartment in Highland Park last July, he thought all he needed to fork out was the first and last month's rent. But when Montgomery applied to have gas turned on, he got an unpleasant surprise: Equitable Gas sought a security deposit of $448, even more than his $425-a-month rent.



Montgomery says he has a decent credit history, but while he hadn't been an Equitable customer before, the company charged him an upfront payment based on the previous tenant's usage.


"It ties up the $400 that I didn't have," says Montgomery. "It wasn't fair. I wasn't living in there."

Hefty security deposits and no-mercy shut-off practices have become more common since the November 2004 passage of the Responsible Utility Customer Protection Act, which aims to crack down on what utilities call deadbeat customers. But the law has also caught many other customers, most with low incomes, in its dragnet.


Service shut-offs by the city's two main utilities, Duquesne Light and Equitable Gas, have skyrocketed since the law went into effect. Last year, 22,132 Duquesne Light customers were turned off; less than half as many, 10,694, were the year before. Similarly, 13,075 Equitable Gas customers were cut off in 2005, an 86-percent jump from the 7,023 terminations the year before.

"Utilities are businesses; I think a lot of people don't realize that," says Joseph Vallarian, a Duquesne Light spokesman. "It's helping utilities to keep costs down because you're not spending as much money collecting the money owed."


While it remains to be seen how the law may have benefited paying customers, it has hurt those with thinner pocketbooks.


Under the law, utilities can determine the amount of a customer's security deposit based on his or her credit rating. If a customer is "unable to establish creditworthiness to the satisfaction of the public utility," the act says, the utility can ask for as much as two months' worth of estimated bills. Those who don't have the money may be forced to live without gas or electricity.

"The utilities have the discretion as to how much they're going to ask," says Harry Geller, executive director of the Pennsylvania Utility Law Project, a statewide advocacy group that counsels community groups and other nonprofits on energy matters. "That can create a significant impediment to [getting] utility services."


The new law has stymied not only low-income utility customers, but also those hoping to move out of homeless shelters and into affordable housing. Low-income families are less likely to own a home, and tend to move more frequently. Now, social-service providers say, these customers face a higher hurdle every time they think about moving.


A client of Adrienne Walnoha's, interim director of the Community Human Services Corporation in Oakland, almost managed to have a safe place of her own after running from an abusive husband with her four children in tow. But a hefty gas deposit threatened to keep that goal out of reach. The disabled woman was charged $310 up front ... nearly half as much as her monthly rent. All told, her first month's rent and security deposits came to more than $1,500; she draws roughly $600 a month in Social Security.


"Where does someone on Social Security Disability who gets sporadic child support get $1,560?" asks Walnoha, who oversees the agency's homeless-assistance programs. (The woman received help from the agency in putting up the security deposit.)


Utility officials emphasize that customers can be given up to three months to raise the money for the deposit (though they'll be shut off after that time if the money doesn't come in). Customers who compile a good payment history after one year can recoup their deposit, with interest.

"Security deposits are meant to protect our utility ratepayers," says Dave Spigelmyer, spokesman for Equitable Gas. "This act is intended to protect consumers, especially those who are paying the bills." When customers don't pay their bills, Spigelmyer says, costs get passed on to the customers who do. "The act has been a good thing for those who pay regularly."


Phyllis Stewart says she would pay her bills regularly ... if only the utilities would send them.

After her ex-fiancé moved out of the Brookline home they shared, Stewart stopped getting the gas and electricity bills. Then two days before Thanksgiving last year, she found her gas shut off. Although the gas bills have followed the ex-fiancé, under whose name the account was opened, the law empowers the utility to go after Stewart for the $2,000 owed.


With help from a legal-aid attorney, Stewart was put on a budget plan, which caps her monthly bill at a more-affordable amount. "I pay them faithfully every month," says Stewart. Even so, she's still in limbo. Stewart is anxious to move to a bigger apartment she's found in the neighborhood ... but if she moves, she might not be able to get electricity hooked up because of the unresolved dispute. Her complaint against Duquesne Light ... in which she maintains she's being charged $400 for bills she's never seen ... is pending at the state Public Utility Commission, which has three months to rule on a case.


"I'm not asking to wipe the slate clean," says Stewart, who is raising her disabled son on unemployment benefits. "All I'm asking is to put my name on the bills, so I can be receiving the bill and pay." And even if the utility allows her to open a new account, she worries about coughing up the security deposit.


"They might ask for $300 or $400; I don't have that," says Stewart. "[M]e and my child will be sitting in the dark. You need electricity to live, but these utilities ... they have you under their thumb."


Several state legislators have proposed changes to the 2004 law to soften the blow. State Sen. Jim Ferlo (D-Highland Park) has proposed legislation capping security deposits at one month's worth of estimated service. Ferlo's bills include other measures as well, like requiring utilities to contact customers face-to-face before shutting them off.


"I think we need to restore the balance and give some protection back to Pennsylvania's utility customers," says Ferlo.


Some would go even further. In January 2006, former Public Utility Commissioner Joseph Rhodes Jr. conducted an inquiry into the implementation of the act. Rhodes found that the law is "a big stick" threatening to cudgel everyone who cannot afford to pay up. "The question that the Legislature should address is whether the current [law] is in the long term public interest," Rhodes concluded in the report, submitted to state Rep. Dwight Evans (D-Philadelphia): "I believe fundamentally that [the law] should be repealed ..."


But until the law is either scrapped or changed, advocates for low-income residents say customers should be proactive in guarding against shut-offs.


"People have to seek help sooner rather than later," says Lisa Hernandez, a public benefits attorney with the Neighborhood Legal Services Association who is advising low-income utility customers, including Stewart. "By the time people came to me, they have made several attempts at payment plans for one reason or another. It's very difficult to try to negotiate if [the customers] lose their credibility, which may not be through any fault of their own."

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