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State fines Puget Sound Energy $100,000 for mismanagement of customer accounts

Bellevue-based Puget Sound Energy was fined more than $100,000 Tuesday for numerous violations in handling accounts, primarily of low-income customers who were disconnected from service due to nonpayment.

The $104,300 penalty handed down from the state's Utilities and Transportation Commission (UTC) covered 1,043 violations of consumer protection rules, 965 of which were for failing to correctly apply the state's refusal of service rule.

The rule states that energy companies must give customers a chance to start over when they've amassed a past debt. They must be allowed to reconnect with a two-month deposit payment and a $37 reconnection fee. PSE forced its customers to repay the entire debt before energy would be restored.

"There were occasions where they (PSE) told the customer they needed to pay the entire amount before they could reconnect," said Sharon Wallace, the UTC's assistant director for consumer protection. "In that case it would end up with the customer remaining disconnected because they didn't have the money or they needed several months to pay."

These rules are in place to make sure that even if customers are unable to pay for gas or electric service they still have access to power, Wallace said.

PSE spokeswoman Dorothy Bracken confirmed PSE's practice of requiring the entire past due amount prior to reconnection, but since working with the state on this investigation, policies have been changed to reflect the rules.

Bracken added that the violations did not represent customers. She said 965 of the violations occurred on 26 accounts, with the fine amount and number of infractions growing because of lag time before correction in policy.

The state UTC also found that PSE was incorrectly applying financial assistance money to accounts. Wallace gave an example of a customer who became disconnected because of debt, and then established a new connection, but quickly was unable to pay. When that customer was able to find assistance, PSE was applying it to the prior debt, instead of current fees, Wallace said.

"This customer is facing disconnection again because they didn't have pledge monies applied to their current debt," she said.

The investigation began in 2009, when the UTC conducted a routine audit on customer complaints against PSE like it does on all energy companies. Many of the complaints focused on the refusal of service rule. The UTC then launched its investigation, in which the infractions were discovered between June and December 2009.

Wallace said she sent a letter to a number of energy companies the UTC felt weren't correctly applying the rule, but even after the warning, PSE continued its policy until the investigation began.

"We had learned in 2009 that the prior approach we were taking was not the right process according to Washington state rule," Bracken said. "Since then we have changed our practices to simply seek deposit and reconnection fee when the customer account is disconnected for nonpayment."

PSE now has 15 days to formally respond to the investigation, which Bracken said PSE knew about well before its public release this week. Wallace said the company can either pay the fines, enter mitigation to seek a lower payment amount or request a hearing.

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