Consumer advocates say no to Peco's pay-as-you-go

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A Peco technician installs a smart meter in 2012. Peco has proposed a pay-as-you-go payment system, which relies upon smart meters to report customer usage, and to allow the utility to remotely shut off customers for nonpayment.

A Peco proposal to launch a unique pay-as-you-go plan for electricity customers has attracted an outpouring of response from advocates, much of it wary and hostile.

The Philadelphia utility in October filed a proposal with the Pennsylvania Public Utility Commission to create a pilot program that would allow a customer to deposit a sum with the utility whose balance would be reduced with each kilowatt-hour the customer consumed. Peco says the program would be similar to prepaid programs offered by mobile phone companies.

Consumer advocates, who are expected to testify at two hearings the PUC will hold Monday in Philadelphia, say the prepaid program would be a bad deal for low-income customers, who they say would pay more for power, and be more susceptible to shut offs.  

“The experience in other states and countries that have implemented prepayment programs demonstrates that the ill effects of these programs, when widely deployed, fall disproportionately on low- and moderate-income consumers who already struggle to pay for basic utility service,” the Pennsylvania Office of Consumer Advocate said in comments filed with the PUC.

Although low-income customers would not be allowed to participate in the pilot program, advocates say the poor and vulnerable households would be the most likely candidates to sign up for a pay-as-you-go program if one were more widely embraced.

“A household’s health, safety, and welfare should not be the subject of experimentation by an electric utility,” Jenna Collins, an attorney with the AIDS Law Project of Pennsylvania, wrote in comments to the PUC.

The PUC’s Bureau of Investigation and Enforcement expressed wariness about the purported benefits of the program, and the lack of information about how much it will cost.

Retail energy suppliers also are opposed to the proposal, because they say competitive suppliers, not regulated utilities like Peco, are better positioned to provide such retail offerings.

Peco said its pilot program would aim to enroll 1,000 of its 1.6 million customers, but might eventually appeal to a broader base. Customers enrolled in similar programs elsewhere tend to use less electricity as they become more aware of the connection between consumption and costs, it said.

No other Pennsylvania utility has a prepaid program, though six other utilities expressed support for Peco’s pilot project. The plan, which is voluntary, would go into effect in early 2018.

Peco says the program might appeal to customers with late-payment histories because they could avoid getting hit with late fees or having to pay security deposits. Peco has proposed allowing customers who already have paid security deposits to transfer the sums to their prepaid accounts. For customers with delinquencies, 25 percent of the amounts they pay would apply to past-due balances.

Customers could prepay the utility online, by mail, or in person, and could monitor their use by computer or on a smartphone app. The utility would issue notices when five, three, and one day’s worth of service remained. After a zero balance was hit, customers would get a five-day grace period to replenish the funds before the utility shut off service.

Peco, in a response to the negative comments submitted by advocates, took issue with claims that the prepaid plan would create a “second-class service.” It said the program should be allowed under existing utility law.

A full list of the comments is filed on the PUC’s website under the docket number P-2016-2573023.

Angela T. Jones, a PUC administrative law judge, has scheduled hearings at 10 a.m. Monday at the PUC’s offices on the sixth floor of 801 Market St., and at 6 p.m. Monday at the Grand Ballroom at First District Plaza Conference Center, 3801 Market St.