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Many Hoosiers Return to Cycle of Utility Disconnection


Photo: Kevin Doran

No regulatory agency track the number of involuntary utility disconnections in the state.

23 year old Bloomington resident Jamie Whitman had his power off for about 2 months between the beginning of August and the end of September, the result of a month long period of unemployment.

Even after he got a job, he still spent almost a full two months contending with a range of minor problems.

“I had a job.” says Whitman.  “But I couldn’t cook food.   I couldn’t keep food.  I had not refrigeration.”

There is no accurate way of telling how many Hoosiers are now going without heat or power.  Calls to the Indiana Utility Regulatory Commission, and the Office of the Utility Consumer Councilor revealed that no state agency charged with regulating the utility industry in Indiana actually tracks the number of involuntary disconnections.

When the question was directed to gas and electric companies themselves, the majority of companies declined to answer.  The three that did respond claim to have seen a 20% decline in the number of customers disconnected for unpaid bills over the same time last year.  However, not one utility provider questioned would release specific numbers.

The Problem?

Indiana has one of the highest maximum utility deposit rates of any state in the country. For Hoosiers with poor credit histories, utility providers can require customers to pay a deposit prior to starting service.  These deposits are meant to protect the utility in case a customer fails to pay his bills. These rates are regulated by the Indiana Utility Regulatory Commission and set at a maximum of one sixth of a customer’s average annual usage for electrical service and one third of a customer’s average annual usage for natural gas.

Over the last twenty-plus years, the cost of residential utility service has increased significantly. Along with this growth comes a corresponding increase in deposit rates.

Utility consumer advocates at both the national and state level say complaints about excessive deposits are extremely common. In Indiana, the problem is magnified by the fact that state and federal heating assistance dollars cannot be applied to deposits or late fees.

Dave Menzer works with one of Indiana’s largest utility assistance programs… The Indiana Community Action Association.  His organization is responsible for administering a large portion of the federal heating assistance dollars assigned to the state.  He says utility deposits are strongly linked to usage rates.

“In the past has resulted in deposits of $800 for some customers.” Menzer says. “Needless to say if your struggling to pay your heating bill it’s going to be a challenge to find those dollars to reestablish service.”

According to Vectren Energy and Gas spokeswoman Chase Kelly, most utility providers use third party credit checking agencies to determine the risk involved in offering service to a particular client. She says deposits are used because utility companies often provide services in advance of payment.

“We do credit check like any other company would to determine their credit rating.” says Chase.  “If it is poor or unavailable then we sometimes require a deposit.”

Assistance is available.

In utility companies’ defense, most do offer different assistance programs to low income customers.  Duke Energy, for example, gives customers the option to donate money towards paying other customers bills.  Vectren limits required deposits to $50 in cases where a customer qualifies for heating assistance.  Indiana law also forbids utility providers from terminating service in cases where someone has applied and qualified for government heating assistance.

However, ICAA spokesman Dave Menzer notes that it’s not always easy for customers outside of an institutional setting — such as nursing homes and drug treatment programs — to access available aid programs.  And many of those programs target regular monthly bills rather than on- time reconnection fees and deposits.

One social worker with whom WFIU spoke says agencies like her’s often know how to work the system, adding the paperwork involved in applying for aid can be extremely complicated and would be difficult for someone without specialized training to understand. She says it is often simpler to call up local charities and even churches.

Until the state makes an effort to track the total number of disconnections that happen each year, it will remain difficult to determine the number of people actually left out in the cold during the winter months.

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