Background
Electric, natural gas, water, and telecommunications utility services are essential to health, safety, and economic welfare. These services must be affordable and reliable. Customers deserve high standards of customer service and consumer protections.
Service quality and consumer protection regulations help protect consumers. They are needed in all markets. That is, they are needed both in monopoly markets and in markets that allow competition for some aspects of utility services. They address consumer challenges such as difficulty obtaining service, delays in necessary repairs to restore service, errors in bills, unfair collection practices, fraud, and deceptive advertisements.
The adoption of minimum standards and public access to performance results give providers clear service objectives. Standards also improve provider accountability. And, where competition is allowed for some utility services, minimum standards allow consumers to compare providers more easily so they can make the best choice.
Most jurisdictions have put in place consumer protections for energy, water, and sewer services. These regulations address consumer protection issues such as billing disclosures, payment arrangements, termination and reconnection of service, and dispute resolution. Consumer protections in high-speed internet include easy-to-understand prices and credits for prolonged outages. For phone service, companies must maintain networks and offer reliable service.
Reliable and resilient infrastructure is also critical. Severe weather emergencies, including disasters, can leave customers without power for days or even weeks. Without electricity, consumers can also lose access to essential heating and cooling, internet-based communications, and water service.
An old and failing infrastructure system can also cause customers to lose access to essential utility services. For example, phone service may be of poor quality because the copper network has not been maintained adequately. In addition, a growing number of communities do not have access to a safe water supply in part due to old infrastructure.
Some consumers face utility cutoffs because they cannot afford to pay their bills. Access to affordable payment plans and assistance in paying bills for those with low incomes are essential to ensure access to universal utility service.
Additional consumer protection programs are needed to respond to the onset of competition in some states for electric and natural gas generation supply service. These consumer protection policies do not regulate rates or prices. Instead, they put in place licensure and disclosure requirements, as well as prohibitions on unfair trade practices.
Utility deposits: Some utilities require some consumers to pay a deposit before receiving service. Often, they use a credit score to determine whether to charge a deposit. Because of this, populations with disproportionately low credit scores have to pay more. This includes communities of color and people with low incomes. Yet consumers tend to pay their utility bills before paying other obligations such as credit cards. As a result, negative information from a credit report based on non-utility transactions does not necessarily provide useful information on a customer’s likelihood of paying a home utility bill. And it can mean that people with low and moderate incomes with low credit scores who can least afford to pay deposits are required to do so.
CONSUMER PROTECTIONS, SERVICE QUALITY, AND RELIABILITY: Policy
CONSUMER PROTECTIONS, SERVICE QUALITY, AND RELIABILITY: Policy
Consumer protections
Policymakers should adopt robust service standards and consumer protections to ensure fair terms and conditions for all essential utility and telecommunications services. At a minimum, they should:
- guarantee universal availability of affordable and reliable essential utility services.
- ensure transparency of the terms, conditions, and costs of their services. Bills and notices should be complete, accurate, and understandable. They should provide full and clear descriptions of all charges. Providers should be prohibited from including separate line-item billing charges that are not expressly mandated by law. Consumers should have the right to receive paper copies of bills and notices.
- prohibit unfair, deceptive, or abusive acts or practices. These include prohibitions of unfair early termination penalties and misleading or deceptive marketing practices.
- conduct robust oversight and enforcement. This includes regularly compiling and reporting on complaints and other key data about essential services.
- require timely and consumer-friendly access to redress for billing disputes and other problems. Consumers should have the option to have an independent state agency resolve disputes fairly and effectively (see also Mandatory Binding Arbitration policy).
Consumers should not have to pay for unwanted services. Companies should be required to obtain recorded consent before switching service providers or adding services. Regulators should impose substantial penalties on companies that engage in deceptive marketing practices. This includes slamming (switching a customer to a new provider without authorization) and cramming (adding services to an account without authorization).
Policymakers should create uniform reporting standards for collections data on past-due accounts to allow for meaningful nationwide comparisons and analysis.
Termination of service
Policymakers should establish rights and protections for customers who face possible termination of service.
Consumers should not be disconnected from water, electricity, and natural gas services when:
- weather conditions threaten health and safety. This includes extreme-temperature days.
- a medical professional certifies that they need access to these services to avoid serious harm or death.
Providers should also offer affordable repayment plans to all customers as well as low-income bill-payment assistance and arrearage forgiveness programs to customers with low incomes. These policies should apply to regulated utilities and competitive providers of utility services.
Disconnection and reconnection fees
Policymakers should prohibit fees for the disconnection or reconnection of customers. If fees are allowed, they should be based on actual utility costs.
Network reliability and resiliency
Policymakers should adopt and enforce network reliability and resiliency standards for utility and telecommunications services.
In doing so, policymakers should:
- require utilities to report outage and restoration of service data to the public. Oversight bodies should publish monthly service-quality data and reports on penalties.
- monitor and report on service-provider performance and enforce sanctions and remedial actions if performance falls short.
- adopt specific standards for major storms and widespread outages and require timely reporting and review of the response;
- establish protocols for minimizing outages and restoring service after outages that prioritize hospitals, long-term care facilities, and other residences and facilities that serve older adults, people with disabilities, or both (see also Disasters and Extreme Weather, and Quality and Consumer Rights and Protections Across All Long-Term Services and Supports Settings);
- prohibit telecommunications carriers from permanently replacing networks that have been damaged in a storm or other disaster with technologies that produce lesser levels of service than were provided prior to the disaster; and
- increase appropriated funds for research, development, and demonstration of technologies that will improve the reliability and security of distribution and transmission systems.
Policymakers should ensure that communications networks function reliably and consistently during both favorable weather conditions and emergencies. This should be the case regardless of whether a provider offers services over wireless, copper, fiber-optic, or some other technology.
Utility deposits
State policymakers should prohibit utility deposits for essential residential utility services.
If regulators allow utility deposits, then at a minimum, credit scores or reports should not be used as a factor in determining deposit amounts.
If public utilities are permitted to use credit scores to determine whether a security deposit is required, that practice should be applied uniformly to all customers and service areas. Policymakers should enact consumer protections, including the following:
- Credit scores should not be the only method of determining whether to require a security deposit.
- Before having to pay a security deposit as a result of a credit score, applicants should have an opportunity to demonstrate creditworthiness through other means.
- Utilities must disclose credit scores to all applicants required to pay a security deposit based on their score. The utility must also provide such applicants with the name and contact information of the entity providing the score and the rights and disclosures required by the Fair Credit Reporting Act, the Equal Credit Opportunity Act, and any state utility, credit, and collection regulations.
- Utilities should disclose their use of credit scoring to all consumers.
- Customers should have the right to receive a full refund of their security deposit if they fulfill their payment obligations over a reasonable amount of time. The utility should also pay reasonable interest on the amount held.
- State regulators should review and approve the development and use of credit scores and the specific score below which a security deposit will be required.
- Utilities should submit all relevant data to state regulators on an annual basis to help determine the impact of credit scoring on consumer access to essential services.