Can I take legal action against an electric company charging me excessive fees?

Utility companies include certain private businesses offering essential services to individuals, including transportation, water, communications, and electricity. These private businesses are generally subject to certain state and federal regulations.

Recently on our legal forum a user asked, “If I have been charged hundreds of dollars in fees by an electric company am I able to take legal action against them? What are my legal rights?”

Excessive fees and electric companies

Most of us have come to expect that we will be nickel and dimed for services. Unfortunately, in some states, the fees that utility companies charge may be allowed under current state laws. For example, in the state of Texas there are a variety of fees you may legally be expected to pay including:

• Disconnection and reconnection fees. In Texas, there are a few companies that may charge as much as $100 for an expedited reconnection.
• Conservation fees or minimum usage fees which could be as high as $20 per month (even after companies encouraged customers to reduce their usage of electricity)
• Extra fees to get copies of billing records
• Extra fees if the customer makes too many payments in a month
• Extra fees to talk to a live customer agent
• Unusual fees from complicated fee structures

What can I do about excessive electric fees?

Unfortunately, most fees are detailed in contracts or notifications to customers, which means they may be legal. There is some good news, however. For example, in Texas, consumers are allowed to choose their own energy company, which may allow you to avoid certain fees by understanding the contracts of each company and choosing the provider with the lowest fees.

Consumers who do not have time to scour contracts, however, can also make sure they understand common fees which are shared by all providers including:

• Bounced check fees
• Collection fees
• Missed bill penalties
• Late fees
• Termination fees.

Electric companies in Texas also have state approval to charge an Advanced Metering Charge and an Energy Efficiency Cost Recovery Factor.

Excessive fees- It’s a nightmare

Even if you understand that fees will be charged, however, everyone can agree that trying to understand the legal contractual language on electric company contracts can be a nightmare.

What can you do to make the process simpler and easier to understand? Dave Lieber, in his recent article published in The Dallas Morning News titled, “The Watchdog: Texas electricity companies profit from fees that some call money for nothing” listed several good recommendations for avoiding excessive fees.

• Understand when your electricity contract expires.
• Be prepared to sign up with a new company about a week before a contract’s expiration date.
• In Texas, use the powertochoose.org website to shop. Then check a company’s own website to verify the accuracy of the terms offered.
• Review texaselectricityratings.com.
• Study both the Electricity Facts Label and the Terms of Service before signing a contract.
• Ask questions of customer service reps on the phone before signing.
• Make sure you understand the extra fees before committing.

What if I cannot pay my electric bill?

Understanding contracts and making good decisions before you sign up for electricity may be well and good, but what do you do if you’ve already accrued fees you cannot pay?

If you are unable to pay your electric bill you should contact the electric company immediately. In some cases they may allow you to create a payment plan which allows you to repay them over an extended period of time.

In some cases, electric companies may also have the right to make you use a pre-payment meter, which means that you will have to pay for services in advance. The good news, however, is that some states have regulations which determine how many days they must allow from non-payment to disconnection. As mentioned above, if your electricity is disconnected they will generally charge you a fee to reconnect.

General protections from disconnection may also be offered to certain groups of individuals including those who are mentally challenged, the disabled, or the elderly. Review information from the electric company to find out if you are a protected class.

Discharging electric fees with bankruptcy

Another option if you have overwhelming unsecured debts is to file bankruptcy. Chapter 7 bankruptcy discharges unsecured debts, including any past utility fees. Chapter 13 bankruptcy will not immediately discharge utility debts but will group the debts together with other unsecured debt payments and allow debtors to pay a portion of the debt over a 3 or 5 year repayment period.

What happens after the bankruptcy when you try to reconnect your utilities? The good news is that bankruptcy laws bar the electric company from refusing service to you based on the unpaid debt that was discharged.

The electric company may be legally allowed to charge you a deposit to reconnect service, but only if this is a common practice for all customers who have had their services disconnected and reconnected due to non-payment. The electric company may also be legally allowed to charge you a reconnection fee, but only if this is a common practice for all customers who have had their electricity disconnected.

Bottom line:

If you have already accrued excessive electric fee debts there is not much you can do about it except potentially discharge it through bankruptcy, repay it, or ignore it and wait for them to potentially take you to court. If you have not chosen an electric company it is important to do the necessary research to avoid paying fees BEFORE choosing an electric company.