Why Does My Energy Company Charge Me A Deposit?
Posted by zteam212 on September 1, 2008
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Energy rates seem to always increase. A multitude of factors are responsible for rate increases. “Energy hopping” is one of these factors. Energy hoppers are individuals that do not plan on paying for energy. These energy hoppers move around from company to company with no intention of ever paying their energy bill. The stroy is below:
The Watchdog: ‘Energy hoppers’ cost us all more
By DAVE LIEBERwatchdog@star-telegram.com
Thousands of electricity customers in Texas are dealing with high bills by skipping out on them and signing up with new providers.
They are called “energy hoppers,” and electricity companies don’t like to talk about them. Who can blame the companies?
“It happens all the time,” one administrator at a Tarrant County social-services agency told me. “A whole lot of people do it.”
A Reliant Energy spokeswoman said, “We see unpaid balances on thousands of closed accounts.”
Because other electricity providers don’t know who they are, delinquent customers have no trouble finding a new company to serve them.
A spokesman for the Public Utility Commission calls it “gaming the system.”
The practice has become so widespread that PUC Chairman Barry Smitherman spoke out on it this month. Customers who owe money should “work it down” with the providers to whom they owe money rather than switch to a different company and leave the old company with unpaid bills, he said.
Energy hoppers don’t get away with it entirely. Their credit ratings can suffer, and some electricity providers threaten to take wayward customers to small-claims court, although none acknowledges doing that yet.
But electricity providers are hampered by state rules that prohibit the creation of a statewide database showing customers’ payment histories. If there were one, providers could see which customers are big risks.
Providers get only coded summaries from credit agencies of a customer’s general history of utility payments to phone, electricity and cable companies. Apparently, that’s not enough to tell them who the delinquents are.
It’s also not enough for them to figure out how much a new customer should pay as a deposit.
The worst part about energy hoppers? In the end, good customers who pay on time end up footing the bill, providers say.
I discovered this when researching the case of Lori Conway of Fort Worth. She complained to The Watchdog that she received a $2,600 bill from Ambit Energy of Dallas and that she had been accused by Oncor, which reads her meter, of meter tampering, which she vehemently denies.
When I contacted Ambit and Oncor, I learned that Conway had not received an electric bill for eight months. Her big mistake? She never called to ask why.
“They didn’t send me a bill, so I thought, ‘Don’t worry about it,’ ” she told me.
Ambit cut off her electricity, which forced her family to find other lodging for four days, and told Conway that she had to pay $2,600 to get the power turned back on.
Instead, she signed up with another company, which did not require a deposit despite her big bill with Ambit and a 2-year-old personal bankruptcy filing listed in public records. Among her creditors in that bankruptcy: TXU Energy for $1,100.
She has electricity again, but Ambit says it’s not done with her. Her debt is being referred to a collection agency and she may be sued in small-claims court, Ambit co-founder Chris Chambless told me.
Conway said she realizes that she should have jumped on the matter when bills stopped showing up each month. Now, she said: “I live from paycheck to paycheck. How I would ever come up with $2,600. It’s had me stressed, to say the very least.”
State law used to allow an electricity provider to get records from other providers when assessing the risk factor of a new customer. But that provision expired 20 months ago.
Despite pleas from some providers, the state has not created a rule allowing a statewide database because of concern that it could place an unfair burden on some customers, especially lower-income households. It’s up to the Legislature to fix this loophole and put an end to energy hoppers.
But because electricity bills are so high, there has been a reluctance to make matters worse, The Watchdog concluded after talking to consumer and energy groups.
Without a database, companies say they have to be smart in deciding how much of a deposit to require. Under Texas law, electricity providers cannot deny anyone service based on credit history. A deposit is their only leverage.
Current law allows utilities to charge deposits to residential customers of up to one-fifth of an estimated annual billing or the estimated sum of the next two months’ worth of bills. Customers with good payment histories are usually allowed to forgo a deposit, companies say.
Deposits are not required from Texans over age 65 with good payment records, people with medical problems, victims of family violence and people receiving government aid.
I checked with several companies for their policies, and they vary, so consumers should always ask.
Not all providers agree on the need for a statewide database. Stream Energy, for example, says it “would not be in favor of anything that would create unfair barriers to consumers looking to exercise their options in the marketplace.”
TXU acknowledges speaking to state regulators about such a database. Direct Energy says it would support one, too, because nonpayers result in higher rates for people who pay on time, spokeswoman Lisa Dornan said.
In Conway’s case, her meter stopped and showed zero electricity usage for more than seven months. Meter readers thought the house was unoccupied. But in the summer, a meter reader noticed that the air conditioner was running but that there was still no usage shown.
An investigation showed that someone had stopped the meter, but Conway says she knows nothing about it.
Still, when it came time to switch companies, she easily signed up with a new one.
The required deposit: zero.
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About electric deposits Ask a utility provider about its policy.
Under Texas law, no one can be denied electricity service because of credit or payment history. Providers also cannot charge different rates to customers based on their financial worthiness.
Providers may seek a deposit from customers who can’t prove credit worthiness or have a bad previous payment history with that company.
Providers cannot require a deposit from an existing customer unless the customer was late paying a bill more than once in the last year or had service terminated for nonpayment in the last year.
Online: tinyurl.com/5wupsu
Source: Texas Public Utility Commission
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