Gas Company Abandons Plan To Report Delinquent Customers To Credit Agencies

Last fall, CenterPoint Energy—Minnesota’s largest natural gas supplier—announced it was considering reporting the payment histories of its customers to credit reporting agencies in an effort to reduce delinquencies. Advocates said this was a stupid idea, because the people who can’t pay their gas bills are too poor to pay their gas bills, and derogatory credit only makes life worse for them. Now they’ve said they won’t (at least for now). Good.

The Houston-based company, Minnesota’s largest natural-gas utility, told the Star Tribune that it still considers credit reporting one of several appropriate ways to collect past-due payments. It also considers those collections crucial for keeping rates down for all customers.

But it has chosen not to begin such a program because “we feel it is important to focus our attention on exploring alternatives,” the company said in a prepared statement.

(Thanks to Kris!)

“CenterPoint’s credit-reporting plan is dropped” [Star Tribune]

RELATED
“Centerpoint suspends program to report deliquent customers” [MPR]

Comments

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  1. RenardRouge says:

    How is not reporting them helping? That’s the whole basis of credit reports to help creditors determine if the customer is worth the risk.

  2. ShortBus says:

    How’s reporting supposed to help delinquencies? If you can’t afford to keep your heat on, odds are your credit score is the least of your worries.

  3. Jon Mason says:

    Urm… maybe I’m looking at this from a different point of view – but putting a note on someone’s credit score isn’t a “punishment” – a credit score is supposed to be a guide to lenders as to how much of a credit risk you are? So isnt the fact that you arent paying your gas bills something the lenders should know about your payment behaviour?

  4. dh86sj says:

    By not reporting the delinquencies, they are artificially inflating (or not appropriately deflating) the credit scores of the non-payers. By mis-measuring the risk of lending to that individual, it leads to a higher cost of lending for those of us who are not delinquent. Thats the financial side, but it fails to take into account the social aspect of the reporting.

  5. Hoss says:

    Let’s face it — most of us pay our utilities on time. If there is no downside to paying several months behind, I’d think we are fools for not taking advantage of the free loan

  6. Squeezer99 says:

    why not? i think its a good idea to report to the credit agencies when you can’t pay your bills.

  7. chrissv says:

    I fail to see how this is any different from me (being a poor person), taking a credit card (which I miraculously quailfied for), and buying groceries, and then not paying (because I am too poor to afford groceries).

    Is it the fact it is a gas bill that is the issue? Failure to pay is failure to pay either way.

  8. laserjobs says:

    I know if I was moving I would find out how long it would take before they shut off the gas, then stop paying the bills.

  9. arch05 says:

    “people who can’t pay their gas bills are too poor to pay their gas bills”

    Bullshit. People who don’t pay their gas bills are dishonest freeloaders.

  10. bohemian says:

    Don’t think this was benevolence on the utilities part. They said there were so many people behind right now because of the economy, high other costs, higher cost of nat. gas and cause it is winter in MN that they decided it would be too much of a mess.

    Up north there can be lots of people that go behind but get their bill caught up through a budget arrangement or some other work-out. There was also a huge cut in federal heating assistance so there are some poor people having an even harder time trying to pay their bill.

    Generally MN does a good job of trying to play the middle man to make sure people don’t freeze to death and to assure that the gas company can still get their money.

  11. JiminyChristmas says:

    @chrissv: Speaking from my home in lovely St. Paul, MN I can tell you, yes, it being the gas bill is the issue. We’re not talking about a discretionary commodity; around here you need heat to survive. By way of example, it was -15F Saturday night.

    Look at it this way: if you are desperately poor you can get Section 8 for housing, food stamps for groceries, and Medicaid for health care. By comparison, federal energy assistance, though it exists, is pretty stingy. The average benefit in Minnesota is about $600/year for families who qualify.

    Having paid plenty of monthly gas bills in the $200 range (that’s even with the thermostat at 62F) that gives you an idea of how far $600 will get you. Especially when you’re poor you pay through the nose for heat. Finding affordable housing means you likely end up in an older structure; without modern insulation or heating equipment. You’re double-screwed when you rent. Heat often isn’t included, so the landlord has no incentive to provide an energy efficient system. Of the four rentals I lived in prior to getting my own place all of them had boilers from the 1930s or before.

  12. StevieD says:

    Too poor to pay?

    BS

    In my area a local city annexed a local community and in the process also acquired the water provider to that community. While this entire process was in the courts being settled over a couple year period, one of the bright-eyed-bushy-tailed community dwellers decided upon herself to stop paying her water bill claiming “too poor to pay”. She even got some of her fellow community dwellers to join her in the boycott of not paying their water bill.

    Of course the guy selling the water system had no need to aggressively pursue the customers as he could just claimed the debt to him on the business ledger. And the city paid the $ and acquired the assest… meaning debt owed by the citizen.

    And the city promptly wrote off all outstanding debts. Average debt was $1600. Total write off was over $100,000.

    My firetrucking tax dollars hard at work bailing out firetrucking freeloaders that claim they are “too poor to pay”.

    BS

    Report their arses.

  13. spryte says:

    Sooooo….according to most of you, there are no poor people? There are only lying cheating freeloaders who are laughing all the way to the mall while not paying their gas bill?

    I guess none of you have ever had money problems.

    The thing is, most people will pay their gas bill if they can…so if they don’t pay it it’s likely because they CAN’T, and not necessarily because they went on a shopping spree. For people who live paycheck to paycheck (and in some areas, like mine, it’s practically unavoidable unless you’re an effing millionaire, so don’t start whining about people needing to save money), one unexpected expense can cause a lot of difficulty in a given month. And I don’t know anyone who would rather have an iPod than heat.

  14. xian says:

    Detroit Edison (now DTE Energy) started doing this over a year ago. They report on everyone, good or bad, but you only get bad info posted if you are 60+ days late (according to wikipedia, at least…I wouldn’t know, I pay my shit when it due).

  15. CumaeanSibyl says:

    I’m glad they’re doing this because I don’t think FICO should be able to rule our lives.

  16. evslin says:

    @Hossofcourse: Wouldn’t be a free loan for me, my utility companies charge late fees if I don’t pay my bills on time.

  17. Kevin Cotter says:

    They can’t shut the gas off in Minnesota during the winter. I don’t remember the exact months, but if it’s cold out you CANNOT shut the gas off.

  18. Landru says:

    It seems like nobody here has had a serious illness, or has lost a job.

  19. StevieD says:

    @Landru:

    There is a difference between stuff happening and intentionlly failing to pay your bills or choosing to buy the big screen TV over paying your bills.

    As mentioned the laws in MN and many other states will prevent the utility company from suspending service. Good law, but unfortunately the deadbeats of the world know the laws and exploit the weaknesses in the laws.

    BTW the deadbeat that I previously mentioned is an ex-employee of mine. Before getting canned she would spend her lunch breaks telling other employees how she was pulling one over “the man”.

  20. Riddar says:

    I know there are legit reasons why people can’t pay, but I can’t help but look at credit scores as an important informative tool. As in the kind where artificially inflated credit scores may lead to some sort of pressure to issue loans that may be riskier than they seem at first glance. Maybe things like this on a larger scale are the reason everyone is yelling ‘recession’ now?

    On a side note, the outstanding payments work out to a tad over $1,000 per community served or $30 per customer, according to their claimed coverage area.

  21. Jon Mason says:

    @spryte: Sure there are people who are struggling to meet bills through no fault of their own. And that stinks. But if they are so poor or in debt they can’t pay their gas bill then lenders should have that information. And that stinks too, but it’s the world. The credit score system should not hide certain facts in order to act as a system of social welfare – and in fact, if they finally passed the law banning companies from raising interest rates based on delinquency on other accounts, this wouldnt even be an issue – as in a perfect world a higher credit score should only really affect future credit applications, not current loans.

  22. bohemian says:

    If utility companies do start doing this they should be required to show good activity also. Our credit actually went down because we had supposedly no activity for a long period of time.

    We were doing the right thing and spending within our means. So we were paying our basic expenses like utilities and rent rather than credit cards, car loans or anything like that. So we were showing worse for doing this. Blech.

  23. gingerCE says:

    When I was poor and in college, I lived in a cheap apt. that had a heating system but I never turned it on. I went to sleep with my teeth chattering a few times, but I never paid more than $12 a month in gas bills. I couldn’t afford to pay more. I know someone struggling to get back on her feet after a period of being unemployed so this winter, she didn’t turn on her heater. If you don’t have the money, you shouldn’t turn it on–sad but true.

    As for reporting it to the credit agencies, I see nothing wrong with it but only if once the bill is paid off, the creditor will take it off the report immediately instead of waiting til it comes off by itself (which can be years).

  24. KernelM says:

    @gingerCE: Did you live somewhere where people die from cold temperatures in the winter?

  25. ludwigk says:

    @gingerCE: living in southern Maine, where its warmer, we once can out of oil during the winter. Within hours we had ice crystals forming along the window glass and edge. There are places in this country that are not livable without heat

  26. KJones says:

    @masonreloaded:

    Insurance companies in some/many states have been using poor credit ratings as justification for charging higher insurance rates for home and car insurance. Being poor or having bad credit doesn’t make someone a bad driver, but such people are being forced to pay more anyway.

    [www.bankrate.com]

    [www.insurancescored.com]

    Insurance companies have no evidence to back up the claims, yet are doing it without any regulation. Don’t be surprised if it happens more often.

  27. Riddar says:

    @KJones: No, not paying bills doesn’t make them a worse driver, but it does make them less likely to pay their other bills. That is a reasonable thing for the insurance company to know.

  28. KJones says:

    @Riddar: No, not paying bills doesn’t make them a worse driver, but it does make them less likely to pay their other bills. That is a reasonable thing for the insurance company to know.

    Provide some evidence before making that claim. Had you bothered to read the second link, you would know there is absolutely no evidence for it, just an attempted cash grab by insurance companies. Ask yourself two questions rationally:

    1. Who is going to drive more recklessly, the person who can afford the deductable or the one who can’t?

    2. Who is going to drive more carefully, the person who can’t afford the deductable or the one who can?

    Post hoc ergo propter hoc is not just lousy logic, it’s deceitful and used to rationalize all sorts of bullshit, such as creationism, “pre-emptive strikes”, “porn causes rape” and “marijuana leads to other drugs”.

    They’re all lies told by people with agendas and without evidence to back them up.

  29. Riddar says:

    @KJones: Jumping to conclusions, much? All I said was that a person who pays every single bill on time (and has that reflected in their credit report) is likely to continue making every single payment on time. Someone with a habit of late or missed payments over several years straight, either by carelessness or honest-to-god need, is *more* likely to miss payments.

    Once again, my assumption was someone who doesn’t pay their bills is LESS LIKELY, not UNLIKELY, to pay their bills. I am not judging them as people. Chill.

    I mean honestly, this is not a huge jump of logic here. Someone with a bad record over the course of the last few years is more likely to miss a payment than someone with an impeccable record. To say otherwise is like saying people who have already had several accidents should get lower rates, they have learned a lesson.

    But in all seriousness, if you think that this is logic that I have used to promote war, rape, creationism, and drug abuse/oppression, furthering my agenda through Consumerist comments, that’s fine. Disregard the above explanation, your idea is more fun.

  30. Bob says:

    In 2008, Lon R. Greenberg (CEO of AmeriGas) earned a total compensation of $5,720,227. That’s where your money goes. Maybe if they got rid of Greenberg, they could lower our gas bills.