Maine news, sports, weather from Portland Press Herald / Maine Sunday Telegram, Portland, Maine

July 14, 2012

In downturn, CMP unplugs most ever for nonpayment

The spike in disconnects – a reflection of a struggling economy in Maine – came as the electric company also strengthened its credit collections.

By Tux Turkel tturkel@mainetoday.com
Staff Writer

Central Maine Power Co. shut off electricity last year to 29,554 homes of residents who didn't pay their bills, an apparent record number that also reflects the condition of the overall economy.

Disconnections hovered around 17,500 a year until 2007, on the eve of the national recession. Then they shot up -- rising by 60 percent last year -- despite a dip in 2010.

The figures were requested by the Maine Sunday Telegram to examine the relationship between power disconnections and the state's economic health.

Overall, economists say, the disconnection activity at Maine's largest utility can serve as an indicator -- similar to jobless statistics and mortgage foreclosures -- to track the state's economy.

"It makes sense that as the economy is doing poorly, these are bills that just don't get paid," said Amanda Rector, Maine's state economist. "There's been no substantial improvement, so it's not surprising that disconnects would stay high."

The trend can't be entirely attributed to the economy, although CMP says it's the primary cause. Another factor is that the company beefed up its credit collection methods over the period, in part by outsourcing the job, and through a more-focused attempt to reduce charge-offs for bad debt. That helped increase the number of disconnections in 2009.

These collection practices are the subject of an ongoing, two-year investigation by the staff of the Maine Public Utilities Commission, which is concerned about the amount of bad debt the company is accumulating and the potential for ratepayers to be stuck with the tab.

CMP figures aren't available yet for the first half of 2012. But community action programs have been fielding a flood of calls so far this year, the result of disconnection notices that have been going out since winter.

Western Maine Community Action, which serves low-income residents in Franklin County, has seen requests for help about disconnects and inability to pay electric bills double since 2010. Calls jumped from an average of 25 a month in 2010, to 58 a month this year.

"Once the (winter) moratorium is over, the calls come in," said Danielle Flannery, program manager at Western Maine Community Action in East Wilton. "In winter, people may choose to pay for groceries or car repair. Come April, they have a $750 electric bill and can't pay it."

Power company disconnection activity is influenced by factors other than collection practices. Last year's record prices for heating oil, for instance, led many low-income Mainers to warm their homes with electric space heaters, and defer the high cost until spring.

The relationship between disconnects and unemployment features a time lag that may be attributed to the ability and desire of people to hang onto their electricity.

From 2008 through 2010, Maine lost 28,000 jobs, many of them in manufacturing and construction. Maine's seasonally-adjusted jobless rate stayed around 5 percent into 2008, jumping above 8 percent in 2009 and 2010, before moderating last year. But people who lost manual-labor jobs have had a tough time replacing them, according to Glenn Mills, director of economic research at the state's labor department. That may help explain why disconnects hit a high point last year.

"You want to maintain housing and food ahead of most things, and electricity is part of housing," he said. "You try to keep the house with the lights on."

PUC rules require gas and electric utilities to make various attempts to contact customers and negotiate payment options before power is shut off. Also, service can't be cut during the peak heating season, between Nov. 15 and April 15.

CMP had roughly 544,000 home customers in 2011, and stopped service to 29,554 of them. Last year was the peak, so far, of an upward trend that began in 2007, when disconnects totalled 18,553.

(Continued on page 2)

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