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SMECO Ends 24 Year Moratorium on
Cutting Power to Poor During Winter Months

Posted on January 04, 2007:

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The County Times Newspaper

The Southern Calvert Gazette Newspaper

By Adam Ross, The County Times
David Noss, SoMd.com, Contributed to this Story


HUGHESVILLE, Md. - Southern Maryland Electric Cooperative (SMECO) enacted a new policy this winter season to not allow delinquent bills to amass from November through March without a power shutoff.

SMECO is Southern Maryland’s primary electric provider. The decision ends a 24 year policy that barred winter power shutoffs for non-payment by the non-profit cooperative. As a cooperative, SMECO is owned by its members. All customers are members.

SMECO supplies more than 140,000 customer/members in Calvert, Charles, Prince George’s and St. Mary’s Counties, according to David Foggo, government and public affairs manager for SMECO.

When asked about the rationale for the decision, Foggo responded with two points. First, Foggo said that the new policy brings SMECO in line with other utilities in the Washington region. Secondly, Foggo stated that in the past when some members stopped paying their bill from October through March, it created congestion for SMECO and the community organizations that help the poor pay their utility bills.

Vice President of Customer Service, Susan Hamilton, added that SMECO made the change in response to a growing number of delinquent accounts but the “goal is to get the bill paid, it’s not to disconnect. [Disconnection] is a last resort,” she said.

SoMd.com conducted a follow-up interview today with SMECO representatives Hamilton and Tom Dennison, Public Media Relations Director. Hamilton and Dennison reiterated the justifications for the policy change made by Foggo to The County Times. When pressed for a more substantial business rationale for the change, Hamilton added that the new policy benefits SMECO customers who do pay their bills on time. However, she was not able to provide a tangible dollar amount of the benefit.

Hamilton also added that many customers are able to pay their bills but choose not to do so. She said that this premise is based on SMECO’s analysis of customer bill paying habits over previous years. Both Hamilton and Dennison stressed that SMECO did not feel there was any justification for people allowing their accounts to become delinquent to the point of disconnection. They pointed to their Even Monthly Payment Plan that would average the high energy costs in the winter months over the entire year. They also pointed to the financial assistance programs that are available to help financially distressed customers.

Hamilton and Dennison confirmed that the policy change was submitted to the Board of Directors by A. Joseph Slater, President and Chief Executive Officer in 2005. The Board later approved the policy. According to the SMECO website, Slater was appointed to his current position in 2003 after Wayne Swann retired.

Of the 44,250 customers in St. Mary’s County, SMECO has already stopped service to 101 households as a result of nonpayment this winter season, Hamilton said. The policy was actually enacted in 2005, but no power was cut off until March of 2006. SMECO has cut the power to 18 accounts in the past two days alone.

In accordance with state law, SMECO cannot cut power to a home if the forecast for the succeeding day is predicted to be below 32 degrees.

SMECO notified customers of the policy change through news stories, bill inserts and a company newsletter, according to Hamilton, although that information cannot be found on the company’s website, which has uploaded bill inserts dating back to August of 2005.

Mention of the policy was made in the company’s most current December 2006 newsletter, under the heading “Customer Assistance Available,” but is limited to two sentences, “Customers who do not pay their bill may have their service disconnected. The Code of Maryland Regulations (COMAR 20.31.03.03) authorizes electric utilities to disconnect customers at any time during the year.”

Sandra Washington, executive director of LifeStyles Inc., a nonprofit organization that provides community assistances to people throughout Southern Maryland, said there is a significant increase in families asking for assistance this winter season despite the relatively mild temperatures.

However, Hamilton claimed the energy assistance organizations were in support of the policy because it spread out the number of people filing for the assistance over the entire year instead of in April, when SMECO begins acting on delinquent accounts.

While Washington said she agreed that the policy helped to spread out the logjam, it still hurts the people who have recently come on hard times, the very people LifeStyles attempts to help.

“We are in the midst of the season and [SMECO] is a business and they have to look at that,” said Washington. “But [the policy] has a severe impact on the families we are serving. There are not a lot of resources out there to assist families.”

According to SMECO’s Customer Rights and Responsibilities booklet, “Bills are due when issued and are past due after 20 days.” The booklet outlines SMECO’s procedure for terminating power, which includes a notice on a bill reading “service is subject to being turned off,” and a Notice of Termination mailed separately from a bill.

The latter notice informs customers they have 14 days to fully pay the past due amount or service may be turned off.

According to Hamilton, SMECO follows up on a past due bill with a phone call to the member, and then a site visit to try and collect payment. Foggo said it’s a member’s “own fault” if they have their electricity cut off because they failed to call and make the proper arrangements.

People rely on their SMECO service for heating, lights, cooking and, in some cases, their water service because of electric pumps placed in county wells.

Despite the effect cutting service may have on a customer’s water service, Foggo said “[SMECO] would not really have any way of knowing which customers were on city wells or public water to begin with.” Foggo compared the problem to a gas furnace, because it too runs on an electric motor and said it’s not really SMECO’s concern over what is affected, customers are responsible to make payments on their bill or at least contact SMECO to arrange a payment plan.

Once service is disconnected, members cannot set up individual payment plans. The bill must be paid in full, along with a $20 reconnection fee, and in some cases a deposit if one is not already on file.

Washington said she stresses to residents to seek assistance as soon as they start having difficulty keeping up with their bill, and not until after their power has already been cut.

There is an extensive application and interview process for families applying for energy assistance through the Southern Maryland Tri-County Community Action Committee Inc., Washington said.

“Tri County is one of our biggest helps,” added Washington. “Getting an appointment and getting through the process takes time and this policy is certainly having an impact.”

Meanwhile, SMECO refers its financially challenged customers to the Energy Assistance Program and the Electric Universal Service program within the state Public Service Commission.

SMECO also takes part in the Project Match program and has vowed to match donations from its community members up to $50,000 through April 15, according to A. Joseph Slater, president and executive officer of SMECO in a December letter to SMECO members.

The Project Match program benefits local families who may be unable to pay their oil, gas or electric heating bill.

The program has increased its match amount over the last three years from $15,000 to $25,000 to $50,000. In 2004 SMECO members contributed $11,000 to the program, and last year members contributed $31,000.


RELATED INFORMATION:

If you are unable to pay your electric bills due to financial hardship, please take immediate steps to contact SMECO at the number provided on your statement to prevent disconnection. SMECO will work with you to establish a payment plan and/or put you in touch with agencies and charitable organizations that can help you financially. You can also find information about those organizations in our Christmas Getting Help Guide. With the 2005 disconnection policy being enforced this winter, you must take action or risk the possibility of finding yourself in the dark.

Citizens concerned about the policy change's impact on your neighbors may want to contact the following officials to express your opinion:

SMECO President and Chief Executive Officer - A. Joseph Slater, 301-274-4343.

Sen. Thomas V. Mike Miller, Jr. (D), Senate President, District 27 (Calvert), (410) 841-3700, (301) 858-3700.

Sen. Roy P. Dyson (D), District 29 (Charles, Calvert, St. Mary's), (410) 841-3673, (301) 858-3673.

Sen. Thomas M. Middleton (D), District 28 (Charles), (410) 841-3616, (301) 858-3616.

SoMd.com Editor’s Note: We will make no attempt to judge who can not pay their electric bill due to financial hardships vs. those who may simply elect not to pay even though they can (as SMECO alleges is the case with some customers). Nor will we judge those who fail to be proactive in taking steps to get help before they are terminated.

However, since SMECO is a non-profit cooperative that is owned by everyone who is a customer, we do feel that it is appropriate to make the public aware of the salaries that we are paying to the executives who are responsible for making the decisions that affect the poor in our community. This data is public information and is provided every year to the Maryland Public Service Commission (PSC) in the form of the Annual Financial Report. The 2005 report for SMECO is located here (PDF 71.7MB). We have extracted the pertinent page that demonstrates the salaries paid to the corporate officers in 2005 (JPG 143KB). We have not ascertained the compensation paid to the Board of Directors at this time.

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