SF3991

Purpose

• The bill updates rules for how utilities handle payment plans, reconnection, and late fees for customers, with a focus on cold weather protections and clarity around costs. It aims to balance keeping service affordable during difficult times with limits on fees and charges.

Main Provisions

• Payment agreements for higher-income households during cold weather

  • People whose household income is above 50 percent of the state median income have the right to a payment agreement that takes into account their financial circumstances and other extenuating factors.
  • During the cold weather period, these customers may not be disconnected if they make timely payments under an accepted payment agreement, and they must be reconnected if they meet the terms of that agreement.
  • A certain prior rule (Subdiv. 7 paragraph b) does not apply to these higher-income customers.

• Reconnection fees

  • If service was disconnected for unauthorized use or tampering, a utility may charge a reconnection fee based on the cost to reinstate service as listed in the utility’s tariff.
  • A utility may not charge a reconnection fee for a residential customer whose service was disconnected due to the customer’s failure to pay a bill.
  • Unauthorized use means using utility services in a way that breaches the service contract or tariffs, for reasons other than not paying a bill.

• Late payment charges

  • A late payment charge may be imposed only if:
  • the delinquent amount exceeds $100,
  • the charge reflects a reasonable approximation of the actual cost to carry the unpaid balance, and
  • the utility does not impose more than $50 in cumulative late payment fees on a single customer in a 12-month period.
  • Exemptions from late charges:
  • low-income households or those in designated low-income programs,
  • households that have entered into and are reasonably up to date on a payment agreement.
  • For rate-regulated utilities (public utilities or electric co-ops), a late payment charge may be imposed only if the commission finds, with clear and convincing evidence, that the late charge is just, reasonable, and in the public interest.

Significant Changes to Existing Law

• Adds new protections and rules for reconnection fees and late charges, including:
  • A new subd.8 that allows reconnection fees only for unauthorized use or tampering and not for nonpayment.
  • A new subd.9 that places specific limits and exemptions on late payment charges, plus a requirement for regulatory approval in certain cases.
  • An amendment to provide payment agreement protections for higher-income households during the cold weather period, with an exception to a prior provision for these customers.

Practical Implications

• For many households, especially those with incomes above 50% of the state median, there will be a formal path to a payment plan during cold weather, with protection against disconnection if they meet the plan.
• Utilities can charge reconnection fees only in cases of unauthorized use or tampering, not simply for failing to pay a bill.
• Late fees are capped and mostly limited to customers who are not low income or already in approved payment arrangements; oversight by the Public Utilities Commission is required to ensure any late fees are fair.

Important Terminology and Concepts (embedded terms to recognize)

• payment agreement
• 50 percent of state median income (50% SMI)
• cold weather period
• may not be disconnected
• reconnected / reconnection
• unauthorized use
• tampering
• reconnection fee
• tariff
• delinquent amount
• actual cost to carry the unpaid balance
• cumulative late payment fees
• $50 cap (per 12 months)
• low-income households
• low-income programs (e.g., specified sections)
• rate-regulated utilities
• public utility / electric cooperative
• commission (licensing/regulatory oversight)
• just and reasonable / in the public interest

Relevant Terms payment agreement 50 percent of state median income cold weather period disconnected reconnected reconnection fee unauthorized use tampering tariff late payment charge delinquent amount actual cost to carry the unpaid balance cumulative late payment fees $50 cap low-income households low-income programs rate-regulated utilities Public Utilities Commission just and reasonable public interest