Tougher EWEB deposit policy tangles thousands of customers.

Byline: Scott Maben The Register-Guard

Arranging for electric and water service should be no problem, or so the young couple thought.

They were moving back to town after spending some time in rural Lane County, back into the same west Eugene duplex they left a year earlier.

Jonathan and Samantha Russell were customers in good standing when they closed their previous account with the Eugene Water & Electric Board. But when they came back last month, EWEB asked for a $280 security deposit as a condition of restarting service.

The Russells felt blindsided just as they were coping with moving expenses on top of the usual living costs.

"I almost fell to the ground," Samantha Russell said. "I was afraid we weren't going to be able to pay our rent or other bills. We just barely scrape by as it is."

EWEB deposits have snagged thousands of customers since the public utility's commissioners adopted a more rigid policy two years ago to cope with a jump in delinquent accounts.

More than 6,400 residential customers had to post deposits on new or existing accounts in the 12 months that ended June 30. That's nearly four times as many customers who had to pay deposits two years earlier.

And since Jan. 1, EWEB has asked customers to pay about $1 million in deposits - again about four times the amount collected annually just two years ago.

The commissioners - individually and as a board - have heard plenty of gripes about the deposits, including from low-income customers appealing for help. The utility hasn't tracked how many complaints have come in over the past couple of years, but it's not unusual for people to take their cases directly to the commissioners at their twice-monthly board meetings.

The poor economy and steep rise in electric rates during the past few years help explain why so many residents struggle to make payments on time. But EWEB also decided to crack down on customers who habitually pay late or don't pay at all.

Some customers complain that the deposits are excessive and squeeze the financial pinch they're already in. The required amount is equal to twice the highest monthly bill for a residence, even if that high bill was for a previous resident.

"If someone can't pay their bill on time, to me that means they're having financial problems," said Becky Martell, an EWEB customer who's having to pay a $465 deposit this fall after frequent missed payments.

"What makes them think requiring a deposit will make us pay our bills faster? You're just asking for a disconnect right there," Martell said.

Reduce unpaid debt

EWEB's deposit policy is consistent with those of other public utilities in the county, and local policies are slightly more lenient than what most public utilities require, according to the American Public Power Association's 2003 customer service policy survey.

Customers certainly don't like the deposits, but the policy is necessary to reduce the unpaid debt EWEB eats each year, Commissioner Sandra Bishop said.

"There really is a rational basis to this policy, and it has to do with trying to be fair to all customers," Bishop said. "If we are too lenient with people who don't pay their bills on time, other customers end up being unfairly penalized for that kind of activity."

When EWEB is forced to write off too much in bad debt, it loses operating money, meaning rates are more likely to go up, she said.

The deposit policy was vague and loosely applied before the board tightened it in September 2001, hoping to reduce the uncollected bills, utility spokesman Lance Robertson said.

EWEB wrote off about $350,000 a year until 2001, when the number shot up to $1.3 million - likely because of the recession, Robertson said. The more rigorous deposit policy and a 36 percent increase in electric rates didn't kick in until the last few months of that year.

The utility's managers estimate writeoffs of about $500,000 this year and $425,000 next year. In the past two years, EWEB helped cover losses from unpaid and closed accounts by tapping almost $827,000 in security deposits.

"We are applying significant dollars to recover unpaid bills," Robertson said.

"Felt like scum of the earth"

Now, new customers and any who repeatedly miss payments must plunk down a deposit - $180 on average, though some exceed $400.

But fewer than one in 10 residential accounts have had to pay a deposit. EWEB routinely waives them for customers who pass a credit check, who show they paid on time at their previous utility, or who get a fellow customer to co-sign on their account.

The Russells didn't qualify for any of those exemptions. Their credit wasn't good enough, they had made several late payments to their last utility and they didn't have anyone who could co-sign for them.

They asked to pay their $280 deposit in installments and said a customer service manager initially refused. Eventually the couple brokered a deal with EWEB to post the deposit in three payments. But the ordeal left them bitter.

"All we were doing was asking for help," Samantha Russell said. "I was so appalled. I just felt like the scum of the earth or something."

For existing accounts, EWEB calls for a deposit after the customer repeatedly falls so far behind on payments that the utility is on the verge of shutting off power and water.

Bishop said the utility long was lax about enforcing its deposit policy, and a lot of customers knew it.

"I'm afraid people got used to EWEB being the bill they did not have to pay on time," she said.

Some help available

Some customers don't dispute that they're chronically late with payments. It's the size of the deposits they dispute.

When Becky Martell got her bill last month, she owed a whopping $616, including the $465 deposit.

"They put down I had nine final notices, five disconnect notices and three missed payment arrangements in the last year," said Martell, who doesn't question the payment record.

She negotiated to pay the deposit in four monthly installments, but doesn't expect that will be easy headed into the winter heating season. She also said her temporary job will end soon.

"It's been really hard to keep up with all my bills," Martell said. "If I had the money, I'd definitely pay them."

A deposit equal to the highest bill, not twice that amount, would be more reasonable, she said.

A customer hit with a deposit can appeal based on whether EWEB applied the policy correctly, but extenuating circumstances - if someone has lost a job, for instance - aren't considered, Robertson said.

"There are occasions when we will allow customers to pay their deposit over time," he said. "Those tend to be fairly rare. We'd have to look at the individual circumstances of the customer and determine what has changed in their payment history to make that determination."

Customer service representatives also are able to refer cash-strapped customers to EWEB aid programs and other sources of assistance.

EWEB commissioners eased the utility's deposit policy for commercial customers twice since last year after some local business owners complained. The policy was more stringent than the residential one and still is in some respects.

The residential deposit policy, however, isn't up for review anytime soon.

PUTTING MONEY DOWN

The Eugene Water & Electric Board requires residential customers to post a deposit if:

The customer is new (not with EWEB in previous six months) and unable to meet criteria for waiving deposits.

EWEB issues a shutoff notice more than five times in a 12-month period. A shutoff notice is posted on a customer's door about 75 days after a delinquent bill is first due.

The customer fails to make past-due payments as arranged with the utility.

Refunds: EWEB refunds the deposit, with interest, after a year if the customer has fewer than three late notices in that time.

Information: For questions about bills, deposits or low-income energy assistance, call EWEB at 484-2411 and ask for customer service.

CAPTION(S):

"I'm afraid people got used to EWEB being the bill they did not have to pay on time" SANDRA BISHOP EWEB COMMISSIONER Brian Davies / The Register-Guard Jonathan and Samantha Russell are making payments on a $280 EWEB deposit to receive service.