Enquirer analysis shows utility disconnects 13% of its customers, twice Ohio’s average
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Duke Energy has cut off electricity to more than one in eight of its Ohio customers as the utility grapples with the state’s most tardy bill payers.
An Enquirer analysis of state disclosures shows Duke cut off power to more than 83,000 electric customers – giving it a disconnection rate of 13 percent, more than twice the state average for the four big electric providers here.
The North Carolina-based energy company acknowledges it has an “aggressive” disconnection policy, but said it’s at the behest of Public Utilities Commission of Ohio regulators. Meanwhile, neither Duke nor PUCO regulators can explain why the utility has so many delinquent customers.
Duke’s average unpaid bill at the time of disconnection was the second-lowest in the state, at $299. Most other utilities turned the lights off when customers’ delinquent bills exceeded $340 – two pulled the plug after more than $400 was owed.
“We don’t dispute that Duke Energy Ohio has a higher disconnection rate than other electric utilities in the state, but our increased enforcement of disconnections was at the behest of the PUCO,” said Duke spokeswoman Sally Thelen.
She added that it ultimately saves paying customers money when Duke cuts off delinquent accounts. Unpaid bills are covered by fee riders in ratepayers’ monthly bills. The typical Duke customer pays $3.84 a year for that.
“PUCO rightly determined that Duke Energy Ohio should aggressively enforce disconnections in order to mitigate the financial impact to our paying customers,” Thelen said.
PUCO says that’s not quite the case. In 2010, it told gas companies to step up bill collection. But it didn’t say that to electricity providers. Duke Energy is the state’s only utility that serves both gas and electric customers.
One state agency, the Office of the Ohio Consumers’ Counsel, has expressed concern about Duke’s rising number of electric disconnections and submitted testimony about it at a recent fee increase proceedings before PUCO .
But it is people like Lynetta Lampkin who could be in the dark if they fall too far behind with Duke.
“It’s hard – I’m a single parent and I’m not making enough money,” said Lampkin, 42. “You’ve got a car, insurance and day-care costs. Then the car breaks down and it puts you behind …”
Why does Duke have more customers flirting with default?
Economists don’t know why Duke has such a higher proportion of delinquent customers. The Great Recession and the subsequent underwhelming recovery have hurt many Ohioans, but it hasn’t singled out Cincinnati for punishment.
Cincinnati’s electric rates are slightly lower than those in other major Ohio cities. Hamilton County’s poverty rate is slightly lower than counties like Cuyahoga, Franklin and Lucas.
And Metro Cincinnati’s $120 billion economy is the fourth-fastest growing of any major city in the Midwest.
Duke Energy has nearly 700,000 electric customers in Southwest Ohio, including most or all of Hamilton, Brown, Butler, Clermont and Warren counties. But among the major utilities serving Ohio, Duke has nearly one-quarter of all customers who are at least two months behind on their bills, though Duke only serves about 15 percent of customers these companies cover.
“It’s surprising that Cincinnati (serviced by Duke) has such a high delinquency rate – we have a stronger economy,” said Jim Brock, an economist at Miami University.
Government energy programs for low-income residents show a steady rate of need in helping them keep the lights and heat on.
The Ohio Development Services Agency, which helps low-income people manage their energy costs, said participation in three major aid programs in 2014 declined 0.9 percent, to 1.1 million statewide. Still, Duke Energy participants rose by 54.5 percent, to 47,801, in the largest program, the Percentage of Income Payment Plan.
One current PIPP participant is Lampkin, a mother of four. In 2007, she lost her job as a cashier at IGA when it closed its Cheviot store, then she was hit with a series of health problems. She had brain surgery in 2010.
The PIPP program keeps electricity and gas on for low-income residents earning up to 150 percent of the poverty level ($35,775 annual income in Ohio for a family of four), provided they pay a percentage of their income toward their monthly bill.
Lampkin recently paid $36 on a monthly bill that averages $150.
Still, government programs don’t explain why Ohio customers in one corner of the state are behind on their monthly bills.
Do Duke’s ‘smart meters’ prompt more disconnects?
Duke’s higher disconnection rate came to light just as the utility is asking PUCO to approve increased rider fees on its customers to cover the cost of energy grid upgrades, including installing “smart meters” on homes.
Smart meters track energy use remotely – they don’t have to send a worker to read customer meters – and they can shut off power remotely, too.
Ohio is one of 17 states that have switched more than half of ratepayers to smart meters, according to the Edison Foundation Institute for Electric Innovation, a trade group.
In 2009, Ohio won $1.2 billion in federal stimulus money to modernize the electrical grid that supplies consumers. Duke Energy was awarded $204 million. Since then, Duke Energy has installed 717,000 smart meters in Ohio, according to the trade group. It has installed another 400,000 meters in Kentucky, Florida, North Carolina and South Carolina.
The company is covering the remaining costs of this modernization with fee riders paid by ratepayers; These riders are approved by PUCO each year. Duke now wants to increase the flat monthly fee from $4.83 to $6.07 for electric and from $1.40 to to $1.46 for gas.
But Office of the Ohio Consumers’ Counsel is wondering out loud if smart meters are driving Duke’s disconnections. Duke disclosures show its annual disconnections have soared 53 percent, from 54,100 in 2009 to 83,200 in 2014. Duke’s disconnection rate has steadily climbed from 8.9 percent in 2009 to 13 percent in the latest reported year ending May 2014.
“The high number of disconnections may be due, at least in part, to the remote disconnect capability of Duke’s smart meters,” said James Williams, an analyst with the Office of the Ohio Consumers’ Counsel.
Duke argued that there’s no connection: Even with remote disconnection abilities, Ohio law states the utility must still send a representative to a delinquent customer’s doorstep on the day service is cut to give one last warning and a chance to pay. The utility said it’s following the law.
Consumers also have up to nearly four weeks in winter between the first disconnection notice and the shutoff.
Duke’s attorneys argue the rider increase process should stay focused on recouping infrastructure costs.
“(The) OCC gratuitously expresses concern related to the number of customers disconnected for nonpayment and inexplicably connects this with grid modernization,” Duke attorneys wrote. “There is no relevant connection of these two matters.”
Duke officials pointed out Williams’ concerns are not backed up by any consumer complaints.
“The OCC does not point to any complaint on behalf of any customer or give any reason to believe that the company is not in compliance with the commission’s regulations concerning disconnection for nonpayment,” Duke attorneys argued in a filing in the pending rate case.
So far, an examiner presiding over the rate case for PUCO has sided with Duke, ruling Jan. 22 that Williams’ testimony was “irrelevant.” The consumer agency is appealing the ruling to the full PUCO commission.
Rising disconnections, questions about final notices
While Duke and the Office of the Ohio Consumers’ Counsel fight over disconnections, an Enquirer review shows a disconnect between the utility and its regulator, PUCO.
As part of its oversight, PUCO collects data on utilities’ “final notices” issued to delinquent customers weeks before power would be shut off.
Duke disclosed to state regulators it cut off electric power to 35,200 delinquent customers from June to September 2013 – but Duke issued absolutely zero “final notices” during that period. The company also reported it issued no final notices in May 2014 – the same month it turned off the lights for another almost 8,600 customers.
Under Ohio law, utilities must send delinquent customers a notice their service may be disconnected by a certain date. Consumers have at least 14 days – and 24 days between Nov. 1 to April 15 – before the utility can end service. Utilities are also required to provide a final personal notice on the day of discontinuation – if the consumer or an adult isn’t home, a written notice is left in a conspicuous location.
Yet, Ohio law doesn’t define what “final notice” means and PUCO has no official definition either.
Duke officials told the Enquirer it defines “final notice” as the extra 10 days allotted to customers in winter months, which is why there was none reported between May and September.
PUCO officials acknowledged this month they were not aware of the standards Duke was applying in reporting key data. PUCO officials also acknowledged they weren’t sure how other utilities were reporting “final notices.”
