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Maryland OKs Pilot with Consumer Protections

The Maryland Public Service Commission has approved, as modified, a trial prepaid billing program proposed by Baltimore Gas & Electric Company (BGE). The commission explained that certain changes should be made to the utility’s original plan so as to protect consumers from unexpected terminations.

As first tendered by BGE, the one-year pilot program would permit 1,000 electric-only and dual-service customers to prepay for their service by submitting a minimum payment of $40 in advance of consumption. Customers could add money to their account at any time, with the first two payments per month not including a transaction fee. The utility attested that customers would be able to access and track their prepaid balance, as well as an estimate of “days remaining” before the account balance reaches $0.

According to BGE, retail choice customers may participate in its plan, and even customers with arrearages would be eligible for the program. The company said ratepayers with overdue accounts would be permitted to pay off the arrearage over time, with 75% of each payment applied to current service and 25% to the arrearage. Current security deposits would be returned to customers after first retiring any preexisting arrearages. Although finding merit in the prepaid billing proposal overall, the commission related that it did harbor some reservations about the streamlined termination process for program participants BGE wanted to use.

Asserting that it wanted to make sure customers are afforded every opportunity to avoid disconnections of service, the commission added the following requirements to the program:

  1. BGE must ensure an immediate switch (and thus immediate restoration of service) between the prepaid pilot and traditional post-pay service anytime the customer so requests;
  2. If a customer requests to switch to post-pay billing during the five-day extension period agreed upon by BGE, the company cannot require an additional security deposit before service is restored;
  3. BGE must contact the customer within 72 hours after a termination, alerting the customer to the option of returning to post-pay service with no additional security deposit required; and
  4. BGE is not to relay to credit reporting agencies any terminations of service of customers enrolled in the prepaid pilot.

Additionally, and apparently in an effort to protect low-income consumers from themselves, the commission told BGE that it may not credit security deposits to the participating customer’s prepaid account. The utility had indicated that it believes that customers deserve a waiver of current rules regarding security deposits because they are voluntarily choosing to limit their risk of uncollectable bills. But the commission disagreed, pointing to questions raised by its staff about whether that appearance of an immediate cash receipt might be a major incentive for low- and moderate-income customers to join the pilot when they would not otherwise be inclined to do so.

The commission cautioned that there might be a jump in disconnections once those security deposit credits are used up. Plus, the commission said, crediting the security deposit up front could make it more difficult for customers to switch back to traditional post-pay service, as they would need to provide a new security deposit.

The commission thus ruled that prepay customers may not receive a refund of their security deposits simply because they are participating in the program. Rather, the commission found, they should be required to follow BGE’s current rules and tariffs governing security deposits. Seeking to minimize the likelihood of customers experiencing frequent undesired disconnections of service, the commission set the maximum arrearage amount for participants at $600. The commission explained that that limit would allow a customer who pays $50 a month toward an arrearage to completely eliminate that balance during the 12-month term of the pilot, while also giving BGE an opportunity to collect meaningful data on how the program impacts customers with considerable amounts of outstanding bills.

The utility had suggested that a $1,000 limit would test the pilot’s ability to assist high-arrearage customers pay down those balances. The company claimed that such customers might benefit the most from the prepaid service option. Re Baltimore Gas & Electric Co., Case No. 9453, Order No. 88438, Oct. 25, 2017 (Md.P.S.C.).