June 24, 2008

Rising Temperatures, Sagging Economy Force Utilities to Unplug Customers

By Kyle Stock, The Post and Courier, Charleston, S.C.

Jun. 23--Groceries or lights?

That's a question facing hundreds of people every day in South Carolina. Often, the choice is groceries.

In the first three months of this year, Duke Power, Progress Energy and Scana Corp., the owner of South Carolina Electric & Gas Co., pulled the plug on almost 39,000 homes for falling behind on electricity bills. That equates to 427 a day, according to a Post and Courier Watchdog analysis of state records.

And those numbers don't account for almost half of South Carolina households, which are hooked up to state-owned Santee Cooper, an electric cooperative or other public utilities -- organizations that are not required to report disconnection statistics.

The number of disconnections has risen only slightly in recent months. However, cutoffs typically peak in October, when months of bills boiled up by summer's heat finally overwhelm household budgets.

With the economy sinking and the mercury rising fast, utilities are bracing for a growing pile of debt. And the public service groups that help Palmetto State residents make ends meet are preparing to be stretched to the limit.

"It's definitely getting worse," said Arnold Collins, executive director of the Charleston County Human Services Commission, which distributes federal aid to help with utilities. "We have a number of senior citizens whose utility bills are bigger than their Social Security checks. These people have to decide whether to pay their lights or buy half of their medication."

Lori Garrett works at a school cafeteria and is used to stretching her paycheck. It has to feed her three children and a grandchild, and it has to cool the family's mobile home in McClellanville. The blinds never go up and the thermostat never goes below 79 degrees. Still, Garrett's bill from Berkeley Electric Cooperative hit $269 last month, and she was warned that her power would be cut off in a few days.

Garrett qualified for federal aid and the government paid her bill, but she will not be able to line up a similar disbursement until next year. "I'm trying," she said when asked if she'll be able to keep the power on through the holidays. "I'm trying."

She expects the family budget to improve when her daughter returns to college in the fall and her son, who just graduated from Lincoln High School, ships off to the military. "I know he'll help out," Garrett said.

In all, between 1 percent and 1.5 percent of South Carolina residents have their power shut off every month.

Roughly three-quarters of those who lose service manage to get their electricity flowing again within five days, but a startling number of people have trouble keeping up with their payments: In the average month last year, 6 percent of homes served by SCE&G were behind on their power bills and slated to be unplugged.

And though disconnections increased only slightly in the first quarter of this year, there is some evidence that a growing number of residents will soon be in the dark.

The Santee Electric Cooperative, which serves 43,661 homes and business in and around Georgetown County, disconnected 1,081 of its members in April, 32 percent more than it unplugged in the same month last year.

Mike Couick, chief executive of the Electric Cooperatives of South Carolina Inc., expects to see similar spikes in coming months from outfits such as Berkeley Electric Cooperative that serve more affluent parts of the state.

"It's going to spread its way up the economic spectrum," Couick said. "People are begging and borrowing to keep their lifestyles where they are now, but that's eventually going to run out."

While utilities crank up their power plants to combat rising temperatures, the state's sparse network of social support groups is mustering its resources to battle higher bills.

Dukes Scott, executive director of the state Office of Regulatory Staff, which acts as a consumer advocate on utility-related issues, said almost twice as many people this year are asking his agency for financial assistance or help negotiating a reprieve from their utility.

"If one person gets disconnected, we view it as a problem," Scott said. "It's more than what we would like to see, I can tell you that much."

The Charleston County Human Services Commission, which handles all of the county's federal aid for utility bills, will have more trouble making ends meet this year. It was granted $871,079 in federal energy assistance in 2008, 13 percent less than last year and roughly half the amount doled out in 2006, according to Tami McCrackin, director of the nonprofit's outreach program.

"I'm guessing it will run out by the first of November at best," McCrackin said. "We could probably spend three times what we have every year."

With disbursements capped at a one-time subsidy up to $300, the Charleston County Human Services Commission will be able to help almost 3,000 households this year. In a busy week, the nonprofit will field calls from close to 1,500 people who can't pay their power bill.

Pulling a plug is not as easy as it used to be for utilities. Disconnection rules were tightened four years ago after an 84-year-old woman froze to death in her Greenville home. Power companies no longer can cut electricity during storms or when temperatures drop below freezing. From December through March, South Carolina utilities must afford a 30-day reprieve for residents who have a doctor's note saying a lack of electricity would pose a health threat.

Utilities also are required to send customers two notices in the 10 days before terminating service.

April Sharpe, head of the consumer services department at the Office of Regulatory Staff, said power companies have grown more lenient as the economy has weakened. They often negotiate a payment plan or grant a few more weeks on a bill. After all, unplugging a household takes time and, thus, costs money.

"A lot of it is looking at the good-faith effort that the customer has tried to make," Sharpe said. "Sometimes they really bend over backward."

Several utilities, including SCE&G, collect funds to help cover delinquent bills. SCE&G also encourages customers to provide contact information for a friend or relative who can be called if unpaid bills pile up, according to spokesman Robin Montgomery.

"Of course, the last thing we want to do is disconnect service," Montgomery said. "If they know they are going to have difficulty paying their bill, we'd encourage them to come visit us. That's the approach that we've always taken."

South Carolina residents benefit from relatively inexpensive power, roughly 13 percent cheaper than the U.S. average, according to statistics compiled by the Energy Information Administration. But largely because of air conditioning, they consume more electricity per household than folks in all but four other states. Consequently, the average monthly electric bill in South Carolina is the 11th-highest in the country.

Disconnections, however, are more rare in the Palmetto State than elsewhere.

Nationwide, roughly 4.4 percent of residential customers are unplugged for unpaid bills, about four times higher than the cutoff rate in South Carolina, according to a 2006 survey by the National Association of Regulatory Utility Commissions, a trade group for government workers who preside over power companies. In the most stretched states, such as Oklahoma and Arkansas, more than one in 10 homeowners can't pay enough to keep the lights on.

Every day, electricity becomes more of a luxury good, said John Howat, an analyst with the National Consumer Law Center, a Boston-based group that lobbies and provides legal advocacy for poor people.

"We've assumed as a society in the post-World War II era that utility service should be available to everyone, but that assumption doesn't hold anymore," Howat said. "We're in kind of a new world."

Meanwhile, the debts are casting a shadow on utilities' financial results. In 2006, past-due electricity accounts in the U.S. added up to almost $1 billion, according to the NARUC survey. Howat said power companies have become increasingly aggressive in collecting those debts from delinquent customers. They are also beginning to ask for permission to gather those payments from the rest of their customers through higher rates.

"The damage runs pretty deep," Howat said. "If you threaten utility profits, there's often a change in behavior at the company. They all say they are in the public service business, but ultimately the shareholder is paramount."


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