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Then There's This – Poor People to AE: We're Not Deadbeats

New ordinance gives needy ratepayers a payment plan they can work with

By Amy Smith, Fri., Dec. 13, 2013

Kathie Tovo
Kathie Tovo
Photo by John Anderson

Poor people and needy seniors have a hard time catching a break once they get behind on their electricity bill. But last week, on a vote of 6-1, City Council approved an ordinance that provides more breathing room for residential customers trying to climb their way out of mounting utility debt.

For Carol Bierdzycki, executive director of consumer advocacy group Texas ROSE – Ratepayers' Organization to Save Energy – the ordinance couldn't have passed soon enough. She had spent most of early fall just trying to get a meeting with Austin Energy officials to discuss restructuring the utility's delinquent payment plan – a system that she believed worked against, not for, low-income customers and those with sudden hardships. Too many people were getting disconnected or threatened with disconnects, and she and other low-income advocates were running themselves ragged trying to intervene on their behalf. After hitting one dead end after another, Bierdzycki turned to City Council offices for help, with a goal of creating a more flexible payment plan for needy ratepayers.

With some nudging from City Hall, AE assembled a citizen steering committee to draw up new policy for the long term. In the short term, Council Member Kathie Tovo took the lead in developing what she called a "stop-gap" ordinance (with drafting assistance from Bierdzycki), which went into effect immediately upon passage. Mayor Lee Leffingwell cast the lone no vote, citing concerns about unknown costs associated with the new installment plan, which now gives delinquent customers up to 24 months to make "reasonable payments" in equal installments, without running the risk of getting their electricity turned off.

The vote took place Dec. 5, at Council's monthly Austin Energy Com­mit­tee meeting, which also served as a special-called meeting to take action on the ordinance.

AE officials did not support the action, and made clear their concerns that such a measure, even if it's temporary, would add more layers and cost to the collections process. They suggested that delinquent customers may simply take advantage of another opportunity to slack off on their utility bills. And while supporters of the ordinance argued that too many people were getting disconnected, or threatened with disconnects, Deputy General Manager Kerry Overton countered with statistics showing that only a small percentage of people get their electricity turned off.

Catastrophies Happen

Ruby Roa, a member of Austin Interfaith and Ladies of Charity, took strong issue with the implication that late-paying customers would try to game the system under the ordinance. As a former AE employee charged with collecting delinquent payments, Roa boasted that she was one of the most energetic people when it came to shaking down customers for payment.

But times are harder now. Rents have gone up, health care costs are breaking personal bank accounts, and Austin's poor population has grown along with the rest of the city. "We're not talking about deadbeats here," Roa said. "We're talking about poor, working families, people like you and I that maybe ... they've gotten sick, and they've had some catastrophic emergency and they're not able to pay these utility bills. And when we call Austin Energy, we're not getting anywhere."

Consumer advocacy groups got a boost from one of their expert witnesses, John Howat, a senior analyst at the Boston-based National Consumer Law Center, which works on regulatory policies on behalf of low-income people. He said that a review of AE's existing payment-plan policy shows that "only a tiny proportion" of the utility's payment plans are successfully completed. In order to have an installment plan work, he said, it has to be on what he called reasonable terms, taking into account a person's actual income and expenditures. "If we want and expect these payment plans to fail, then make a repayment term that's not reasonable and that's not affordable," he said, adding that the "reasonableness component" appears to be missing from AE's current policy. Howat told Council that ordinances like the one proposed are fairly common in other cities with large populations of people living in poverty. "You would not be breaking any new ground," he said.

Indeed, Tovo wasn't trying to break new ground, but wanted a temporary solution to the delinquent-payment hurdle. "How can we prevent what we all know is going on because we receive emails about ... people and families who are in a position of having their utilities disconnected and in jeopardy of losing their housing." So as Tovo saw it in urging passage of the ordinance, the issue centered on getting some protections in place for customers to, as she put it, "help them be successful to chip away at that debt, and help the utility ... collect the debt that's owed to them."

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