NiMo To Refund Short-term Clients’ Deposits: PSC Also Orders Utility To Pay Interest to Affected Customers
Times Union - 04-13-2004
Niagara Mohawk has begun crediting security deposits charged to thousands of customers who were considered short-term clients.
The state Public Service Commission, which regulates utilities, told the Syracuse-based company to give back the money plus interest. The commission also declined a proposal that would let NiMo collect a security deposit from existing customers who are more than 60 days behind on their bills, or new applicants who left old accounts unpaid.
The plans were attempts to deal with the problem of unpaid accounts, which a NiMo spokesman said total more than $65 million a year.
"We are disappointed with the PSC's decision," said Alberto Bianchetti, spokesman for NiMo. "But we'll work within the process available to us to help reduce the issue of unpaid bills, which is a serious problem for Niagara Mohawk."
About 5,000 people were due refunds, he said. The company provides electric and gas services to more than 2 million customers in upstate New York.
The decision was a victory for some advocates of low-income New Yorkers.
"We think it's a great result," said Ben Wiles, senior attorney for the Public Utility Law Project of New York Inc. The nonprofit organization filed the original petition against NiMo's plans. "We thought it was really unfair and disadvantageous to consumers that were asked to pay the deposit," he said.
The nonprofit group also last week asked that NiMo be ordered to pay a penalty to people whose service was held up by the deposit policies. The commission said it would consider complaints on a case-by-case basis.
In March 2003, the company started requiring deposits for short-term customers, as determined by the terms of their rental leases. In May, it asked the commission to let it collect deposits from residential customers who fell below a certain credit-scoring level. The Public Utility Law Project, however, charged that the lease-based policy was illegal.
After a series of hearings, NiMo, the Department of Public Service and the New York Consumer Protection Board came up with the alternative proposal for customers who are late on bills. Meanwhile, NiMo still held the short-term deposits, though it said it would return them if ordered.
The commission did not reject the joint plan, saying it might reconsider it in the future. But it encouraged NiMo to pursue other ways to solve its problem.
"We're looking at this issue as one that is essential for the company to improve," said Bianchetti, NiMo's spokesman.
Customers who still have a credit on their bills after May 1 will receive refund checks for their deposits, Bianchetti said.
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