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Questions Raised Regarding Payment Plans by IA Utilities

December 5, 2014—In late November, Iowa media reported that some municipal and cooperative utilities weren't giving customers enough time to pay outstanding balances and were setting payments for budget billing programs higher than allowed by state rules.

The information came from the Iowa Utilities Board (IUB), which in March 2014 had asked all Iowa utilities to report details about their payment agreements with customers having outstanding balances. The IUB asked the data to be from Nov. 1, 2013 through May 1, 2014.

"What it [data] showed the Board was that a lot of municipals and maybe some cooperatives were not following the Board's rules exactly the way they were intended," Cecil Wright, IUB's general counsel, told the press.

The Iowa Consumer Advocate said utilities are utilizing excessive payment plans. Instead of figuring the monthly payment based on a full 12-month average, some utilities are basing it on months when customers' bills are highest. Also, the IUB said utilities must give customers 12 months to pay off debts; however, some are only giving customers two to four months.

The Consumer Advocate and low-income advocates worry that these practices could lead to families being disconnected from service as the state enters its coldest time of year. At least 16,000 households had lost their service right before cold weather descended on Iowa at the end of November.

In response to the media coverage, the Iowa Association of Municipal Utilities said the IUB lacks authority to rule on municipal payment plans. The IUB doesn't have authority over the rate setting of municipals and cooperatives, but it does have oversight over disconnections. IUB's staff has recommended it open an inquiry into this matter to resolve these questions.

"Clearly, energy just isn't affordable for a significant number of folks out there," said Jerry McKim, the state LIHEAP director. He said the 16,000 number of households already disconnected is a low estimate. "It doesn't include rate-regulated homes, which would no doubt boost the number even higher."

The problem of customers not being current in their payments continues. At the end of last winter, over 240,000 households owed more than $46 million on their energy bills. By November 1, Iowans had reduced the past-due amount to $27 million.

Iowa LIHEAP has already served over 30,400 families with assistance this heating season, which is a five percent increase over the same time last year. After the propane crisis of last winter, Iowa LIHEAP did help low-income families pre-purchase nearly $3 million in propane at lower prices during the summer.

Sources: Media reports