In a previous blog, we discussed some of the laws regarding utility companies and collection agencies, specific to the state of Washington. Here, we’ll go over some of the additional guidelines and restraints that govern a utility company’s ability to collect owed payment. As previously mentioned, gas and water providers are unique in that they are generally authorized to terminate service for delinquent accounts. Because these are considered basic services, however, there is a process to do so. Let’s take a look!
Did you know?
A 1978 Supreme Court decision (Memphis Light, Gas, & Water Division v Craft) had a lot of influence on the utility provider industry. One of the major outcomes from this case was outlining some of the requirements that must be met before utilities are cut off. We’ll take a look at the requirements according to Washington State, but rest assured that the other 49 states have very similar text.
Notice of Delinquency
When a customer is delinquent, the provider is required to give notice of delinquency before terminating service. Part of this is because water, sewer, gas, and other utilities are considered essential services, and the Court ruled that some sort of due process must happen before residents are cut off. According to the Municipal Research and Services Center and the Revised Code of Washington (RCW), a notice of delinquency must include:
billing and due dates of payments
the date when the account becomes delinquent (generally 30 days after payment due)
any interest and penalty amounts
the date that service might be terminated
These notices must also be written in layman’s terms so as to be easily understood, and they must be mailed in a timely fashion. It’s very important for the company to have a process in place to deal with delinquent accounts fairly, equitably, and consistently. This way, the same standards are being applied to all customers. Before sending an account to collections, 30 days must have elapsed since the original delinquency notification was sent.
Termination of Service
Utilities providers are in a strong position to ensure payment (providing the customer is able to pay). The authorization to terminate service is a powerful incentive, and one not shared by all industries. For example, a person who cannot pay back student debt has already received the service (an education). Someone who does not pay credit card bills already possesses the TV or furniture that a credit card was used for. In these cases, it is much more difficult to recover assets in a delinquent account. If someone does not pay their water bill, the service gets cut off after sufficient notification.
Before that can happen, however, the utility company needs to go through the notification process outlined above. A customer must be given the opportunity to dispute the bill and provide evidence in their favor, and needs to be assigned a “case worker” who is authorized to work on their account. Services can be reconnected after satisfactory payment of previous outstanding charges.
While these conditions are specific to Washington State utilities collections, you can expect that the requirements for utility companies around the country are very similar. Before an account can be shut off or sent to collections, the notification process outlined above must have occurred. Having a clear, firm process to enforce these policies fairly ensures the greatest chance of getting paid and maintaining a healthy bottom line. Should you get to a point where an account does need to go to a collection agency, please give us a call or click here to learn about our experience with utilities collections.