AARP Hearing Center
Background
Electricity, natural gas, water, high-speed internet, and phone services are essential to health, safety, and economic welfare. Consumers need access to affordable and reliable essential utility services, with strong consumer protections and high standards of customer service.
Service-quality and consumer protection regulations are important in all markets (whether regulated or deregulated). These regulations address consumer challenges such as difficulty obtaining service, delays in repairs to restore service, errors in bills, unfair collection practices, fraud, and deceptive advertisements. Clear service standards, public reporting of service results, and regulatory oversight and enforcement help ensure that consumers receive consistent and acceptable levels of service and reliability.
Reliable and resilient infrastructure is also critical. Severe weather emergencies, including disasters, can leave customers without power for days or even weeks (see also Disasters and Extreme Weather). Without electricity, consumers can also lose access to essential heating and cooling, water, and telecommunications services.
Some consumers face utility cutoffs because they cannot afford to pay their bills. Several options may be available. Consumers of all income levels may have access to repayment plans. Those with low incomes may also qualify for bill-payment assistance, as well as arrearage forgiveness programs that forgive a portion of overdue balances.
In deregulated markets, in which multiple providers offer services, consumers face additional risks. A Wall Street Journal investigation found that Americans who signed up with retail energy companies in deregulated markets paid $19.2 billion more than they would have under a regulated utility. Deceptive marketing practices can make it especially difficult to secure affordable energy. Consumers may sign up for a low introductory rate, only to have it jump to an unaffordable level when it expires. Contract terms can make it difficult for consumers to switch to a new provider without paying expensive termination fees. Some consumers are even switched to a new provider without their consent. It is important that consumers be protected from such unfair, deceptive, or abusive practices.
Utility deposits: Some utilities require certain 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 (see also Credit Reports and Scores). This includes people from communities of color and people with low incomes. Yet consumers tend to pay their utility bills before paying other obligations. As a result, negative information from a credit report based on non-utility transactions does not 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 utility services. At a minimum, they should:
- guarantee universal availability of affordable and reliable essential utility services.
- ensure transparency of the terms, conditions, and prices of their services. Bills and notices should be complete, accurate, and understandable. Bills should include 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 at no charge (see also Paper statements).
- prohibit unfair, deceptive, or abusive acts or practices. These include prohibitions on unfair early termination penalties and misleading or deceptive sales and marketing practices.
- conduct robust oversight and enforcement. This includes regularly compiling and reporting on complaints, service outages, and other key data about essential services.
- require timely and consumer-friendly access to redress for billing disputes and other problems (see also Pre-Dispute Mandatory Binding Arbitration). Consumers should have the option to seek resolution of disputes fairly and effectively through an independent state agency.
Consumers should not have to pay for unwanted services. Companies should be required to obtain evidence of affirmative 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 credit and collections data on past-due accounts and disconnections for nonpayment. They should analyze the data to develop the most effective consumer protections and programs, particularly for those that serve customers with low incomes.
Termination of service
Policymakers should establish rights and protections for customers who face possible termination of service. Consumers should not be disconnected from essential utility services when:
- weather conditions or extreme temperatures threaten health and safety.
- a medical professional certifies that they need access to these services to avoid serious harm to a member of the household.
Providers should be required to offer:
- affordable repayment plans to all customers, and
- bill-payment assistance and arrearage forgiveness programs for customers with low incomes.
Disconnection and reconnection fees
Policymakers should prohibit fees for the disconnection or reconnection of customers. If fees are allowed, they should be reasonable and reflect the utility’s actual cost to disconnect or reconnect service.
Network reliability and resiliency
Policymakers should adopt and enforce strong network reliability and resiliency standards for utility services.
Consumers must be able to receive essential utility services reliably and consistently. Utility systems should be capable of recovering quickly from disruptions such as cyberattacks, disasters, and extreme weather events.
Policymakers should:
- ensure that the public is well-informed during prolonged outages using communication methods traditionally employed by older adults.
- require utilities to report outage and restoration-of-service data to the public.
- monitor and report on service-provider performance and enforce sanctions and remedial actions if performance falls short.
- adopt specific standards for significant 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 Emergency Preparedness).
- 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.
- increase funding for research to improve the reliability and security of distribution and transmission systems.
Policymakers should ensure that communications networks function reliably and consistently during unfavorable weather conditions and emergencies. Appropriate regulatory oversight should ensure reasonable investments and costs.
Utility deposits
State policymakers should prohibit utility deposits for essential residential utility services (see also Noncredit Uses of Credit Reports and Scores).
If regulators allow utility deposits, then consumer protections should be adopted.
- Credit scores or reports should not be used as a factor in determining deposit amounts.
- Households with low and moderate incomes should not be charged a security deposit. Utilities should be required to inform applicants of any security deposit exemptions.
- Customers should receive a full refund of their security deposit, plus reasonable interest, if they fulfill their payment obligations over a reasonable amount of time.