Wednesday, November 20, 2013 by Michael Kanin

Council split over plan to give delinquent utility ratepayers more time

Council Members Kathie Tovo and Laura Morrison want to give delinquent Austin Energy ratepayers who participate in the utility’s Customer Assistance Program additional leeway in paying their bills. Their proposal met with some resistance from Mayor Lee Leffingwell and utility staff Tuesday.


After some discussion, Leffingwell prompted staff to disclose that it would be impossible to predict the cost impact of such a move. “(If) we change the criteria, it might change the amount required to fulfill the program,” Leffingwell offered. “So that means, as soon as you figure out what that number is, you’re going to have to come back with a budget amendment request – or are you going to have to cut it off at some point because you can’t exceed the budget amount, right?”


“At this point, estimating that cost increase,” began Vice President of AE Customer Care JJ Gutierrez. “We don’t have that ability in front of us.”


Gutierrez put the bulk of the cost increase at the foot of staffing increases that would beef up a program dedicated to ongoing renegotiations of delinquent bills.


Leffingwell added that he could not vote for an item with an open fiscal note.


In another exchange with utility staff, Council Member Bill Spelman suggested that the ordinance changes could result in a never-ending loop of debt. “We need to give people an opportunity to make some headway,” he said – noting that Council members could dial up a percentage of an outstanding bill that delinquent CAP customers would have to pay.


Utility officials confirmed that position Tuesday afternoon.


“All of our research shows that if we continue extending payment arrangements to customers who have defaulted on previous payment plans, they end up owing more than when they first asked for help. Their debt continues to accrue because they keep defaulting on their plans. It is a losing proposition for them,” said Gutierrez.


“It is similar to credit card debt. If you just make minimum payments and you don’t pay off your balance, you keep falling further and further into debt,” Gutierrez said.


Current utility policy allows up to three successive payment arrangements for delinquent account holders. If, after a third consecutive payment arrangement, ratepayers are not able to pay their bills, Austin Energy will not generally allow a subsequent payment plan.


The utility also requires that customers who have service cut off for non-payment pay a 50 percent down payment.


For Tovo, it was an issue of simple reality. “I completely understand and respect and am committed to our fiscal responsibility to make sure that Austin Energy can collect its debts, and that customers who receive service are paying for that service – I assume we are all completely committed to that,” Tovo said. “But again…when people get to the point where they are disconnected and a payment arrangement that is open to other customers is not available to them and they have to come up with that 50 percent of their balance, we might be better off in terms of collecting on that debt, to consider some other kinds of payment arrangements.”


Council members have approved a discussion between city management and advocates about other potential solutions to the issue. Those discussions are ongoing. Deputy General Manager Kerry Overton told Council members that he would prefer to continue that process.


Overton suggested that, should the process be allowed to continue unabated, he hopes “we would have a joint recommendation or we would be able to” bring forward a proposal with only minor differences between low-income advocates and the utility.


Spelman asked Overton how long it might take to come up with a recommendation via that discussion. Overton replied that he expected it would take 60 days.


Council members are set to vote on the change Thursday.

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Key Players & Topics In This Article

Austin Energy: As a municipally-owned electric utility, Austin Energy is a rarity in the largely deregulated State of Texas. It's annual budget clocks in at over $1 billion. The utility's annual direct transfer of a Council-determined percentage of its revenues offers the city a notable revenue stream.

Austin Energy Customer Assistance Program: a utility-run program that offers discounts based on eligibility for low-income ratepayers, as well as those with "serious medical problems."

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