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BY TUX TURKEL
MaineToday Media, Inc. 07/29/2008

BY TUX TURKEL

MaineToday Media, Inc.

Customers owed Central Maine Power Co. a record $34 million in unpaid electric bills through March, and utility regulators worry that high energy prices and the sour economy will send that amount soaring this winter.

CMP's cumulative balance of unpaid bills has skyrocketed since 2004, when electricity supply prices from wholesale generators began rising. Four years ago, it was $8.4 million. Looking ahead to this winter, CMP and state officials are concerned that people who don't have enough money to buy heating oil will try to survive with electric space heaters, stove tops and ovens, threatening their safety and racking up bills they won't be able to pay.

Ultimately, these customers may have power cut off. This trend has implications for all customers: Some of the debt CMP and electricity providers can't recover could eventually be absorbed by ratepayers. Seeking solutions, staff members of the Maine Public Utilities Commission met last week with representatives from the state's electric and gas companies.

Ultimately, these customers may have power cut off. This trend has implications for all customers: Some of the debt CMP and electricity providers can't recover could eventually be absorbed by ratepayers. Seeking solutions, staff members of the Maine Public Utilities Commission met last week with representatives from the state's electric and gas companies.

They agreed to share information aimed at prevention, helping vulnerable customers manage their electric use by identifying power-hungry appliances, for example, so they don't get so far behind. Unpaid bills aren't a new problem for utilities.

But in recent years, regulators have noticed a disturbing pattern. The number of customers disconnected for non-payment has been rising slowly, while the amount of money owed -- especially by CMP customers -- has shot up. This trend suggests that a minority of customers owe an increasing amount of money on their accounts, according to Derek Davidson, director of the PUC's consumer assistance division.

Despite heightened public knowledge of energy issues these days, Davidson said, some people just don't understand why they're using so much electricity. "We're talking about the most vulnerable customers," he said. "They don't have an awareness. They're not going to go to some Web site." At last week's meeting, utility representatives told stories that underscored this point, referencing customers who owed thousands of dollars. One home had a very old refrigerator that was drawing huge amounts of power. A farm was using an inefficient heating element to keep barnyard water from freezing. A homeowner had heat tape plugged in to keep a pipe flowing, where some insulation would have solved the problem. One customer had Christmas lights on in May.

"There are a fair number of customers who need some guidance," Davidson said. The PUC is asking electric utilities to do more to reach out to these customers. One approach is to show them how to read their electric meters, so they can see which appliances or equipment is making the dials spin. Unpaid balances weren't a major problem until a few years ago. Overall electric rates were generally flat in the early part of the decade.

That changed after 2004, when higher electricity generating costs began pushing up rates. CMP's home customers saw overall rates rise from roughly 12 cents per kilowatt hour in 2004, to nearly 16 cents today. Rates at Bangor Hydro-Electric Co. and Maine Public Service Co., which were already higher than CMP's, rose more slowly through the period, but now exceed 16 cents. Under restructuring, Maine utilities deliver electricity and aren't responsible for generation costs.

But the cumulative effect in each case was that unpaid balances grew with rates. CMP's rise has been the most dramatic. Unpaid bills are leading to more service cuts, although at a slower rate. CMP recorded 18,553 disconnects as of last March, up from 17,934 in the previous year. PUC rules allow electric and gas utilities to disconnect people who don't pay their bills. During the winter, however, customers have special protections if they agree to long-term payment plans.

Although there's a perception of heavy-handed utilities pulling the plug and leaving families freezing in the dark, Davidson said his observation is that Maine companies are flexible and try to keep on the lights. That flexibility might lead some customers to take advantage of the rules this winter, if only to survive, Davidson said.

At last week's meeting, participants discusssed this scenario: Many oil dealers require cash up front to fill the tank. Homeowners who can't come up with the money might instead buy a few electric space heaters. That will warm the house, although at a great cost. But because people figure they won't have their power shut off in winter, they'll just try to catch up with bills in the spring.

"They're not worried about paying on time," Davidson said. "They're interested in keeping warm."

This approach also can be dangerous and lead to fire hazards. CMP promotes space heaters to take the chill off a bathroom or focus warmth in individual rooms. But the company was aware last winter of more people using space heaters to warm entire homes, or in desperation, turning on kitchen stoves and ovens.

"That could be a huge problem," said John Carroll, a CMP spokesman. CMP has 600,000 customers. Roughly 5 percent of them are 90 days past due on their accounts, an indication that they're unable to pay. CMP is asking these customers to consider a monthly payment plan to smooth out bills over 12 months. More than 22,000 customers have signed up for the company's Simple Pay plan.

"People need to take steps now," Carroll said. "If they had trouble last year, it's not hard to see that they're going to have problems this year."

At the PUC's urging, CMP and other utilities are being asked to reach out to vulnerable customers, and to keep the agency posted on progress to lower unpaid balances. The companies have agreed to share ideas this summer. They may meet again this fall with the PUC. Failure to control unpaid balances not only overwhelms individual customers, but can trickle down to all ratepayers, said Richard Davies, the state's Public Adovocate.

The current rate plan under which CMP operates has a threshold for how much delinquent money can be recovered by the company in rates, and how much the company must absorb. If unpaid balances grow, Davies said, more of the problem could be shifted to ratepayers in the future.

"All customers could end up paying a little more," he said. CMP collects roughly $350 million a year in revenue from ratepayers. The $34 million in outstanding balance in March represents roughly 10 percent. That share appears large, Carroll said, but it includes many people who are just a month or so late on their payment and will become current. The challenge this winter is to keep customers from using electricity in ways that give them little hope of ever getting caught up.

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