Ontario electricity companies billed $12.4 million last year to tell customers their power could be cut off
Alice Petrova’s electricity was cut off last year. She lives in Toronto and after withholding payment from Toronto Hydro for several months over a billing dispute, the company cut her off.
They also charged her $55 to notify her that payment was past due and that her power could be shut off.
But she’s not alone. Global News has learned 38 hydro companies in Ontario – including Toronto Hydro, PowerStream and Veridian Connections – billed customers a total of $12.4 million for the delivery of 635,000 disconnection notices and for administering their overdue accounts.
Many of these customers were already struggling to pay their bills.
Overall, electricity companies in the province sent customers more than 1.5 million disconnection notices in 2016.
“Definitely a little bit outrageous,” Petrova, a 25-year-old digital consultant, said. “When it comes to an essential service like hydro, you can’t really put people in a situation where they’re paying for a piece of paper.”
Petrova noticed her credit card was charged twice for the same amount while paying her bill over the phone. She contacted Toronto Hydro and tried to fix the situation but says no one at the company could resolve the issue or even see the error on her bill.
Toronto Hydro, meanwhile, confirmed that no double-payment was received and that no billing errors could be found on her account.
WATCH: After midnight ultimatum, government forced to bring in legislation banning disconnections
Petrova’s bank eventually fixed the problem but not before Toronto Hydro sent her a disconnection notice and cut off her power while she was away on vacation.
“If I’m paying $55 [for a disconnection notice] I want a fancy invitation,” Petrova said. “At the time I was also in school, which is not cheap. And especially living on OSAP and stuff like that, I definitely do think that $55 is a harsh number.”
Customers who pay on time should not be penalized, companies say
Global News submitted Freedom of Information requests to all 71 electricity providers in the province – including Hydro One, which Premier Kathleen Wynne’s Liberal government made exempt from access to information laws in 2015.
Toronto Hydro, which sent out more than 84,000 disconnection notices to residential customers last year, charges the most in the province for their collections fee – $55 – which is nearly double the fee charged by the next closest company.
The utility collected a little more than $4 million from these charges in 2016 and says it spent roughly $306,000 delivering disconnection notices.
The company says any remaining amounts would have been spent on other collection activities and no profit is made as a result of these fees.
“We have a duty to recover the [amounts owed],” said Brian Buchan, a Toronto Hydro spokesperson. “When that doesn’t occur it’s an exceptional process… A small fraction of our customers fall into this category.”
Toronto Hydro says the money it collects from this fee isn’t only for delivery of disconnection notices. It’s also used to offset the cost of other collection activities, including making phone calls and reminding customers to pay their bills.
But advocacy groups say it’s unwise to penalize people already struggling to pay their bills by charging additional service fees.
“We believe people who can’t afford to pay their bills shouldn’t be further punished by adding charges that will then make it more difficult for them to clear their arrears,” said Mary Todorow, a researcher for the Low-Income Energy Network. “It’s not that they won’t pay, it’s that they can’t.”
WATCH: Hydro One leaves family of six without power for six months
Under existing Ontario Energy Board (OEB) rules, companies must refund the Collection of Accounts service fee to eligible low-income customers who agree to an arrears payment plan.
While Toronto Hydro and other companies follow these rules, customers that are not low-income, such as Petrova, do not receive the same refund.
Legally, companies must give 16 days between when a bill is issued and the due date. At that point a company may send a disconnection notice. Customers must then be given 10 days’ warning between the time they receive the notice and when the disconnection is performed. This includes a final 48-hour warning prior to disconnection.
Electricity companies could – according to these rules – disconnect a customer roughly one month after a payment was due.View link »
Major differences in how accounts are managed
The Global News investigation also revealed significant differences in the way utilities administer overdue accounts.
Several companies said they do not track the number of disconnection notices sent each year, while others keep meticulous records.
Some companies, like Toronto Hydro and Hydro One, carry-forward overdue amounts to the next month’s bill and make multiple efforts to resolve payment issues before sending out a disconnection notice.
But unlike Toronto Hydro, Hydro One – which sent out more than 246,000 disconnection notices last year – does not hand deliver the majority of its disconnection notices, nor does it bill customers directly for this service.
“The actual cost of sending a disconnection notice is approximately $1.05,” said Tiziana Baccega Rosa, a spokesperson for Hydro One. “The low cost allows us to send our customers a disconnection notice without charging them for it. It would cost Hydro One more to charge customers for a disconnection notice and any additional collection activity required to recover that fee than it would to send the notice with no fee.”
WATCH: 76-year-old man disconnected by Toronto Hydro
But Toronto Hydro says there’s no way around these fees. If companies like Hydro One aren’t billing customers directly, that means they’re charging everyone a slightly higher rate for the electricity they use.
“We understand some of our customers are struggling and that’s why we work with them,” Buchan said. “But at the end of the day, we do need to make sure people are paying for the services we provide.”
Regional differences in policy
Horizon Utilities, which is now part of Alectra Utilities, bills its customers $30 for this fee.
Unlike many other companies, Horizon waits until an employee arrives at a customer’s home to collect overdue amounts before charging any fees.
“Horizon utility was serving the St. Catharine’s-Hamilton area, which was very hard hit during the 2008 economic downturn,” said Blair Peberdy, Alectra’s vice present of corporate relations. “So the utility, back several years ago, adopted the policy that it felt reflected the realities of the communities it was serving.”
In total, the company sent out more than 115,000 disconnection notices last year, but took in only $30,000 in Collection of Accounts fees – roughly $3.95 million less than Toronto Hydro billed its customers for 30,000 fewer disconnection notices.
Todorow, meanwhile, says rising energy costs have affected families across the province, not only in Hamilton.
She says that while the government has done a lot to assist those struggling with their bills, more could still be done to ensure customers are protected and to prevent companies from acting too quickly.
“We think some companies are over-noticing. In other words, they actually don’t intend to disconnect [when they send a disconnection notice],” she said. “It’s basically a signal that there could be more severe consequences if you do not pay your bill. But the problem is, that signal is going to be something that low-income people can’t respond to if they simply do not have enough money.”
OEB rules say policy should be applied ‘uniformly’
The OEB, which recently banned companies from sending disconnection notices or cutting off customers’ power during the winter, says it’s conducting a full review of its customer service rules. This includes the fees it allows companies to charge for the delivery of disconnection notices and managing overdue accounts.
But a review of OEB guidelines used by several utilities in the province suggests the regulator may not be enforcing its own rules with respect to the Collection of Accounts service fees.
WATCH: Rising hydro costs force family to choose between electricity and food
According to the 2006 Electricity Distribution Rate Handbook, basic services such as billing and disconnection should be performed “uniformly” across all electricity providers.
The Handbook, which several companies told Global News they use to set their customer service fee prices, says there should be “no difference in the application of these services among distributors.”
The OEB, however, would not confirm whether charging for disconnection notices or collection of accounts service fees is a part of these basic services.
“The handbook was a guide issued by the OEB to assist electricity [distributers] in 2006,” said Brian Hewson, vice president of consumer protection at the OEB. “Since then, the OEB has adopted a more rigorous and cost-based process. Today, as is the case with all rates, a distributor that wants to add a new service charge or increase an existing one must justify that change as part of its rate application.”
Yet according to Toronto Hydro, the $55 fee it charges for administering overdue accounts – a fee that was approved by the OEB – is based specifically upon guidelines contained in the 2006 handbook but adjusted to today’s costs.
“The fee is actually taken from an Ontario Energy Board algorithm,” Buchan said.
Should the OEB push for greater uniformity, Buchan says the company will adjust its policies accordingly.
Petrova, meanwhile, says she doesn’t think the notices need to be hand delivered – something Todorow agrees with – and thinks sending them by mail or online could be a way of cutting costs.
“I think there’s a reason why people sign up for online billing,” Petrova said. “it’s easier to check. And yeah, it would probably save you a ton of money.”
© 2017 Global News, a division of Corus Entertainment Inc.