Our Opinion: Wilson utility late fees should help customers, not pad city slush fund

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Wilson Energy customers who struggle to pay their utility bills may be astonished to learn what becomes of the late fees they’re charged.

Each year, the city-owned electric company transfers $280,000 in late-fee proceeds to a Wilson City Council piggy bank known as the Community Investment Grant Fund. The money is divvied up between charities and special projects at council members’ discretion. Earlier this month, the council doled out $200,000.

We don’t object to giving reputable nonprofits a boost, but what’s irregular, unorthodox and just plain wrong is that these funding requests evade necessary scrutiny in the annual budget process, where residents could weigh in during a public hearing.

Instead of asking city taxpayers to chip in collectively, council members force the mostly low-income Wilsonians who pay their bills late to subsidize elected officials’ preferred charities. The late fees function partly as a regressive tax.

Wilson Energy bills 35,000 utility accounts every month, and over the past two years, an average of 22 percent have incurred late fees, according to information compiled by city spokeswoman Rebecca Agner. In 2016, the public utility collected $965,717 in late fees. In each of the two years prior, Wilson Energy raked in more than $1 million.

“The city has a business cost to servicing past-due accounts,” Agner said in a statement. “Once a late fee has been assessed, required legal notices must be prepared and mailed. Several customer service representatives spend a majority of their time corresponding with customers with late balances.”

While it’s true that Wilson Energy incurs costs when bills go unpaid, the late fees are punitive, not just restorative. If more than a quarter of late-fee proceeds exceeds what Wilson Energy needs to maintain service, then customers are being overcharged.

Bills are mailed 18 days before their due date. After a two-day grace period has elapsed, customers are charged a late fee of $10 or 1.5 percent of the bill, whichever is greater.

Wilson Energy should not be making a profit on customers’ misfortune in a community with the state’s fourth-highest unemployment rate, a place where more than one in five families are considered food-insecure. It’s Robin Hood in reverse — ripping off the poor to pad a slush fund maintained by a governing body that controls a $235 million budget.

If late fees generate at least $280,000 in pure profit, either the amount of the fees should be reduced or Wilson Energy should use the money for a service-related purpose. We happen to have one in mind.

New Wilsonians who have less than stellar credit are required to pay utility deposits of $215 to $430 in order to establish residential electric, water and gas service. The city takes in $350,000 per year in deposits, which are refunded to customers after a year of satisfactory payments.

Customers don’t receive the interest their money earns because Agner said it would be “nearly impossible” to calculate individual accruals. Presumably, the city pockets all proceeds of the interest-free loans it forces struggling ratepayers to extend.

“Deposit requirements protect all customers,” Agner says, noting that the city of Wilson wrote off $327,537.50 in uncollectable bills last year.

Advocacy groups including the North Carolina Justice Center and AARP of North Carolina say excessive utility deposits hurt the poor and elderly by requiring lump-sum payments that squeeze folks on a fixed income. Turning on the lights shouldn’t require a $400 ransom.

If Wilson Energy held onto the $280,000 per year in late-fee profits it now diverts to the city council slush fund, it could maintain a reserve balance for write-offs that would, in a couple years’ time, eliminate the need for deposits entirely. The reserve would serve the same risk management purpose as deposit collection without the service signup sticker shock.

Wilson’s current utility policies seem designed to extract the greatest amount of money possible from the people least able to pay. Leveraging late fees to replace high-dollar deposits is the kind of compassionate customer service Wilsonians ought to demand from their elected city councilmen.