The problem with Prepaid Utility Service from SDG&E
SDG&E's latest proposal for pre-paid utility service will force ratepayers who can't get credit
with SDG&E to buy their utility services in advance. T
he proposed program will allow SDG&E to remotely terminate power when the money in a
pre-paid account runs out. According to UCAN's executive director, Kim Malcolm, the proposed
shut-off terms are in violation of regulatory rules and strip ratepayers of vitally important
" Prepaid Utility Service hurts the most
vulnerable households. When funds in
the account reach zero, service is cut off. "
-- Kim Malcolm, Executive Director, UCAN
A new study by the National Consumer Law Center shows that pre-paid utility payment
systems are putting the health and safety of moderate income consumers at risk by setting up
an "inequitable two-tiered customer delivery system." The report also says that utilities
across the USA are exploiting the poorest consumers by cramming "lucrative junk fees"
into the plans of prepaid customers, thereby increasing the costs of electricity.
SDG&E's proposal argues that users of pre-paid payment systems use 13% less energy, but
what it fails to mention is that the reason they are using less energy may be because
their service is being routinely terminated for non-payment.
According to the Los Angeles Times, pre-paid users of electric service make an average of
seven advance payments a month (that's about one payment every four-and-a-half days)
just to keep the lights on. What's more, a typical prepaid user is also forced to pay an extra
$10 a month in service surcharges.
The potential abuses for Prepaid Utility Services are so egregious that UCAN has joined
forces with four other organizations to fight SDG&E's proposal: TURN, The Utility Reform
Network, AARP, the American Association of Retired Persons, NAAC, the National Asian
American Coalition, and FACE, the Filipino American Caucus For Empowerment.
-- Channel 10 News - Critics Say SDG&E's Prepaid Plan Preys On Vulnerable Plan Offers Customers
'No Credit Check, No Deposit' Features. See Mark Toney of TURN and Bob Prath of AARP
-- Reader Column by Don Bauder, "UCAN to fight another SDG&E program to fleece consumers"
-- National Consumer Law on Prepaid Utility Services, Full Report, or Executive Summary
-- North County Times articles by Eric Wolff: "Prepaid is a bad deal for the most vulnerable
San Diegans," said David Peffer, an attorney with the Utility Consumers Action Network.
"They can have their power turned off within 24 hours." Also, this blog explains why Prepaid
is a bad idea and quotes "The problem is twofold," said Hayley Goodson, an analyst for The
Utility Reform Network. "First of all, prepaid customers would be charged the very same rates
for electricity. If they couldn't afford those before, they're not going to have any easier time.
(Second), prepaid service as SDG&E proposes it would allow SDG&E to dodge its responsibilities
to reach out to customers before disconnecting them."
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