Wednesday, October 31, 2012

Central Hudson Service Interruptions to Collect Bills On the Rise

These are hard times for many of Central Hudson's customers.  Many of them lose service when they fall behind in paying their bills for electric and gas utility service and service is terminated as a bill collection measure:

Central Hudson has about 240,000 residential electric customers, according to monthly collection activity reports filed by the utility with the PSC, so termination of  12,704 of them amounts to approximately 5.29% shut off in 2011.  The wide monthly variations in the number terminated indicates the discretionary nature of decisions to terminate service to collect bills.

The number of customers shut off is a small fraction of the number of customers with arrears more than 60 days:

About 23,000 to more than 25,000 customers were more than 60 days in arrears in every month of 2011.  This amounts to 9.5% to 10.4% of Central Hudson's electric customers.

Central Hudson customers more than 60 days late in paying their bills owe large amounts to the utility:

Customers more than 60 days in arrears owed Central Hudson more than $12 million in every month in 2011.  In May and June, they owed more than $14 million.

The average amount owed by a customer with more than 60 days of arrears was between $500 and $575.

The relatively small monthly variation in the amounts owed by customers more than 60 days in arrears stands in contrast to the much more variable number of monthly terminations and numbers of final termination notices.

Final Termination Notices (FTNs) are sent to customers, threatening interruption of service if payments, or satisfactory deferred payment arrangements, are not made. Apparently, many customers receive more than one FTN in a year, because in 2011, Central Hudson sent 290,720 FTNs -- more than the total number of its residential customers:

The number of FTNs sent to customers by Central Hudson was more than 22,000 in all months of 2011, or about 9% of all customers in each month.  FTNs were sent to 25,000, or about 10.4% of all customers, in two months.  The spike in October FTNs is revealing.   The decision to send FTNs is not linearly related to the amount owed by customers.  Even though the number of customers in arrears is greater in other months, and the amounts owed by customers in October are less than in other months, October is the month  with the largest number of FTNs. The most FTNs were issued in October 2011, but the total amount owed by customers receiving FTNs is greater in four other months, February, March, April, and May.

The total amount owed by customers more than 60 days in arrears was roughly the same in September and October 2011, but there were about 4,000 more FTNs issued in October.  Perhaps the surge in October FTNs is timed by the utility to take advantage of the November opening of the Home Energy Assistance Program (HEAP).  HEAP provides emergency assistance grants (payable directly to the utility) on behalf of eligible low income households with heat related utility service, when they have been shut off or have a FTN.

The number of service terminations to collect past due bills has risen dramatically since 2005.

There has been a 171% increase in the number of residential service terminations since 2005.  A comparison of the monthly differences in the number of terminations is below:

In addition to the much larger number of terminations in 2011, the monthly graphs indicate that the October surge in terminations did not exist in 2005.  This is further indication of the discretionary elements in making decisions to terminate service for bill collection purposes.

The general trend shows that Central Hudson is relying more upon service termination to collect its bills:

PULP's testimony in the pending PSC proceeding underway to consider the takeover of Central Hudson by Fortis, which includes a proposal to extend the current rate plan, urges measures to address affordability issues through low income rates and reforms to curb the growing reliance on service termination to collect bills.  The data obtained in that case indicates that service terminations in 2012 are higher than in 2011.
See Proposed Central Hudson/Fortis Merger Offers Little for Consumers; Shutoffs Up 171% Since 2005, PULP Urges Reforms


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