Critics say utility plan may leave some in dark

Western Massachusetts Electric Co. is proposing to state regulators a pilot program for 600 to 800 low-income households in the Springfield area that would have some customers pay for electricity in advance. Others would be charged a premium for any power beyond what the company called the “basic’’ necessities of “clothes washing, water heating, cooking, refrigerators, and freezers.’’

Company officials say the plan, which they acknowledge as “provocative,’’ is designed to reduce energy use. Critics say it could leave low-income customers in the dark, despite state laws designed to protect consumers from utility shutoffs.

The plan “erodes important protections for low-income customers against shutoffs,’’ Coakley said in a statement to the Globe.

Coakley, who said she plans to “aggressively contest’’ the proposal, has registered “serious concerns’’ with the state Department of Public Utilities, as have officials from the state Department of Energy Resources and the Low-Income Weatherization and Fuel Assistance Program Network, a statewide group of assistance programs. The plan could “substantially raise bills for about half of low-income customers,’’ the group charged.

“It just seems punitive without any benefit,’’ said Jerrold Oppenheim, counsel for the group. “It doesn’t make sense to us to be encouraging, for example, a frail, low-income, elderly couple who are already pinching every penny to cut their air conditioner use on a hot summer afternoon when that may be what’s standing between them and the hospital.’’

The proposal was prompted by the state’s Green Communities Act of 2008, which requires utilities to conduct pilot programs to test how so-called smart grid technologies can help consumers cut energy use. None of the smart grid proposals from the state’s three other major utilities - National Grid, NStar, and Unitil - include plans to have customers pay in advance.

If regulators approve the Western Mass. Electric proposal, the company would ask low-income customers to volunteer for a six-month pilot program, choosing from two main options: a prepayment plan and a two-tier pricing system.

If credit runs out for a prepay customer, Western Mass. Electric would not necessarily cut the power off completely. The company could limit a customer’s electricity in a mini-brownout, shutting it off at intervals.

Under two-tier pricing, customers would get a discount for the first 300 kilowatt hours a month, but beyond that the price would go up from 8 cents to 20 cents a kilowatt hour, about 6 cents more than they pay now. Western Mass. Electric estimates average use at about 500 kilowatt hours a month.

With both plans, the company would install “smart meters’’ in select households that show customers how much energy they are using, and alert them when their account is running low.

“We know we’ve been provocative,’’ said Western Mass. Electric’s president, Peter Clarke. He defended the proposal, which he said was designed to help the disadvantaged cut their bills. “Every utility has got some share of low-income customers,’’ he said, but “no one is trying to understand how these technologies could help or hurt or affect their lives.’’

About 23,500 of Western Mass. Electric’s 210,000 customers have incomes below 60 percent of the median in Massachusetts and already pay a discount rate, according to the company. “Let’s see how we can deploy technology to help them manage their utility bills,’’ Clarke said.

At least a handful of utilities around the country offer pay-in-advance billing. Utility company officials in Arizona said one such program is popular there, where it serves 81,000 out of 935,000 customers in the Phoenix area. But critics here fear that prepayment would allow Western Mass. Electric to shut off customers who are otherwise protected by state law.

“The prepayment piece is pretty much a nonstarter,’’ said John Howat of the nonprofit National Consumer Law Center in Boston, adding the fear is that “the moment you run out of payment credits, your service is immediately and remotely terminated. No one knows about it. It raises health and safety concerns.’’

In Phoenix, customers who pay in advance use about 12 percent less energy than those who get a traditional monthly bill, according to the utility Salt River Project. “It really puts control into customers’ hands,’’ said Jennifer Collins, a customer service analyst with Salt River. “It’s not just for the credit-challenged. It’s not just for the green people. We have a huge mix of people in this program.’’

At the Arizona Residential Utility Consumer Office, a state agency that advocates for ratepayers, analyst William Rigsby said he was neither for nor against prepayment as long as customers freely choose that billing system and aren’t charged higher rates. He said he could definitely see the appeal for utility companies, which receive their money upfront, and said it might appeal to families trying to budget for their bills in advance.

“For it to be worthwhile for someone, you’d really have to know what your consumption habits are,’’ he said. “If you’ve miscalculated, you might come home and find the lights off.’’

Seth Kaplan, an environmental advocate with the Boston office of the nonprofit Conservation Law Foundation, said low-income households do not usually save as much energy as the programs intend. The perfect customer is generally affluent, Kaplan said.

“It’s the McMansions, the big houses with all the electronics - that’s where we’re going to see the benefits of smart grid,’’ he said.

Philip Giudice, head of the Massachusetts Department of Energy Resources, said the plan “felt draconian in how it was going to treat low-income folks.’’

The program, he charged, was designed less to test such technology than to change the way it charges low-income customers. Western Mass. Electric “has collection difficulties and they are looking at it like we all do: What’s the problem that I have, and how can I use this to solve my problem?’’ Giudice said.

“We picked up that undercurrent’’ of criticism in talks with officials, said the company’s Clarke, adding that was not the utility’s intention. The goal was to help customers change their habits and conserve, he said.

“We’re trying to be constructive,’’ he said.

Clarke said he hopes officials and advocates will give the plan a chance.

“Everyone wants to judge the outcome of the study before the study begins,’’ Clarke said, “and wait - isn’t that the point of the pilot program to begin with?’’

Erin Ailworth can be reached at eailworth@globe.com.