Karlee Weinmann CenterPoint Energy is under fire for deceptive billing practices in Minnesota that systematically increase the risk that elderly and low-income customers will see their gas service disconnected even when they pay their monthly bills.
The utility’s billing protocol is in the spotlight after an unnamed customer filed a complaint with the Minnesota Public Utilities Commission (PUC), alleging that CenterPoint disconnected her gas service despite her proactive efforts to keep up with bills. An investigation by PUC staff revealed that CenterPoint had not applied the customer’s payments to her gas balance as she intended, but to separate charges related to a CenterPoint appliance service company.
CenterPoint’s appliance subsidiary – Home Service Plus, which provides monthly subscriptions for maintenance and repair services – is an independent profit driver for the utility. Unlike CenterPoint’s gas utility business, it is not subject to oversight by the PUC. Records show that CenterPoint applied payments meant for the customer’s gas bills to her Home Service Plus balance, prioritizing cash flow for its private subsidiary while setting the customer back on her bills and ultimately cutting her service when she fell too far behind.
This sequencing of payments “meant that there was a systematic bias against keeping her gas bill current,” the office of Minnesota Attorney General Keith Ellison wrote in a filing with the PUC. A review of the customer’s payments showed that CenterPoint frequently applied her payments to its unregulated business before applying them to her gas charges.
The customer could have conceivably avoided the shutoff and additional fees if CenterPoint had applied the payments to her gas service as intended rather than Home Service Plus, because she would have paid her gas charges nearly in full. The total amount of money she ultimately paid to Home Service Plus exceeded the amount of gas arrears she carried when CenterPoint shut off her gas, Ellison’s office found.
More than 9,000 CenterPoint gas customers in Minnesota enrolled in Home Service Plus were behind on their gas bills, according to a January 28 CenterPoint filing. These customers owed a combined $1,081,929 on their gas bills, underscoring the risk of similar disconnections.
“The policies employed by CenterPoint prioritize payments for goods and services not subject to Commission oversight and result in the commingling of regulated and unregulated business funds,” the Citizens Utility Board of Minnesota (CUB), a leading consumer advocate, wrote in a PUC filing. “Engaging in such practices generates significant confusion and could increase the likelihood of involuntary residential disconnections.”
Amid warnings from consumer advocates, the PUC will consider potential reforms at a March 27 hearing. Utility shutoffs in Minnesota recently hit a 10-year high. CenterPoint reported more than $1 billion in profits for last year.
CenterPoint provides misleading info about balance, payments
The CenterPoint customer made several attempts to catch up on payments and avoid service disconnection, but the company failed to provide her with accurate information, causing cascading consequences, PUC records show.
In one example, she called CenterPoint and explicitly asked to pay the remainder of what she owed for gas service. But the utility provided incorrect information about her balance due, instead relaying the amount due on her Home Service Plus account. She paid the amount she was advised, thinking it was for gas service. But the misinformation led to late fees and a mounting balance due on her gas account, prompting CenterPoint to eventually disconnect her service.
In a table included in its PUC filings, CUB illustrated how CenterPoint’s confusing – and misleading – billing process can run up gas bill arrears for unsuspecting customers. In this hypothetical example that broadly tracks with the real-world customer complaint, CenterPoint divides a customer’s payment, first applying it to gas arrears, then to past-due balances owed for Home Service Plus. Only after that does CenterPoint put funds toward the customer’s gas service. But by then, there’s not enough left to cover what’s owed for gas service. As a result, the customer is left with an outstanding gas bill at the end of the month. By the next billing cycle, they are in arrears on their gas service – possibly without even realizing it.
CenterPoint billing “preys on more elderly and low income customers”
The ongoing probe into CenterPoint’s billing practices began when the customer filed a complaint with the PUC after the utility shut off her gas service. The complaint prompted PUC staff to make inquiries with the utility, which became a lengthy email correspondence made public as part of the PUC proceeding.
Early on, PUC staff clarified to CenterPoint that “The company is allowed to collect for the other services it sells, but it can’t use gas disconnection to further those goals.” In another email, the same PUC employee specified that “for any payment plans in general, the entirety of the payment needs to go toward gas service first until that is satisfied and only after the gas arrears is satisfied can payments go toward other unregulated services.”
The communication with CenterPoint grew complicated. Throughout the exchange, PUC staff expressed frustration that CenterPoint repeatedly sent the same material in response to various requests, and did not clearly answer questions about Home Service Plus and billing protocols. When CenterPoint finally provided more concrete information, the problem was evident – and in apparent violation of PUC rules.
“I can clearly see they were applying funds to other than the gas bill and that is the heart of the matter. Those actions lead [sic] to the service disconnection,” Anne Thom, the supervisor of the PUC’s Consumer Affairs Office, wrote in an email to a colleague. She called CenterPoint’s billing “a convoluted mess.”
Thom reviewed recordings of calls that the customer made to CenterPoint, which Thom said made “very clear no one at [CenterPoint] could explain the billing.” Additionally, she said confusion around Home Service Plus payments makes it “a program that preys on more elderly and low income customers.”
“I can’t believe when I asked where they stated language about late fees and payment application the response was ‘it’s on our web site’ and in the tariff,” Thom wrote. “Two places elderly and/or low income customers are not going to be visiting. This is outrageous.”
Home Service Plus problems a “pattern”
Customer confusion over Home Service Plus is a “pattern,” according to PUC staff, whose emails show they chided CenterPoint for failing to change their process “even though we have raised the issue before.”
The issues with Home Service Plus extend beyond confusion about payments and billing. More broadly, customers commonly misunderstand what Home Service Plus is – and what benefits the service actually provides them.
The case of the customer who filed the complaint illustrates the dynamic. She signed up for Home Service Plus with the misguided impression it was an insurance policy and that she was required to have it, PUC records show. It’s a routine misconception with such a program, Ellison’s office noted in a filing.
“This misunderstanding of service plans such as Home Service Plus is not uncommon; service plans and extended warranties are perennial subjects of consumer education materials because consumers often do not understand their limitations and/or believe them to be insurance policies,” Ellison’s office wrote.
CenterPoint uses monopoly utility to bolster unregulated business
The risk of customer confusion is heightened by CenterPoint’s use of its monopoly gas utility business to give itself a competitive edge in the appliance service industry.
For example, CenterPoint advertises the Home Service Plus program to the gas customers whose names and addresses it keeps on file for utility service purposes. Additionally, Home Service Plus marketing materials use CenterPoint’s name and familiar branding. These resources are not available to the many independent companies that compete with Home Service plus to provide appliance service – and neither is the ability to siphon from regulated gas payments to cover appliance service charges.
“CenterPoint enjoys a marketing advantage for its unregulated businesses in the form of brand goodwill due to its regulated business, as well as direct access to its natural gas customers for advertising purposes,” Ellison’s office wrote.
CenterPoint appears to maintain a single customer account for any customer who receives its regulated gas service and is also signed up for Home Service Plus. Under this shared system, customers currently receive a single bill for payments owed to both. This results in confusion about what’s owed, consumer advocates say, and it enables CenterPoint to apply payments meant to cover gas bills to Home Service Plus charges.
Consumer advocates pressing for changes
Ahead of the PUC’s hearing this month, several consumer advocates – including Ellison’s office, CUB, and the Legal Services Advocacy Project – have outlined a suite of proposed reforms. While CenterPoint said it has met with the parties, it has so far refused to reach a mutually agreeable resolution to the problems they’ve identified.
Consumer advocates recommend that CenterPoint separate billing for its core gas service and Home Service Plus, including sending separate and clearly identified bills for each. Failing that, they urge the PUC to require CenterPoint to apply customer payments first to gas arrears, then to gas service, and only after that to unregulated business offerings like Home Service Plus.
Additional recommendations include requiring CenterPoint bills to clarify what services the customer is paying for, and that Home Service Plus is separate from their gas service; that CenterPoint cannot disconnect gas service if a customer falls behind on Home Service Plus charges; that Home Service Plus services are not subject to the same regulatory oversight as gas service; and to include contact information for the PUC’s Consumer Affairs Office in case a customer wants to file a complaint. Similar information should also be made available on CenterPoint’s website, consumer advocates say.
“CenterPoint’s captive gas customers deserve a baseline level of transparency,” Ellison’s office wrote, “which will improve service quality and potentially reduce arrears, disconnections, and consumer complaints.”
Photo credit: Tilemahos Efthimiadis via Flickr
