Hydro One and the pros and cons of pre-authorized...
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Jun 02, 2015  |  Vote 0    0

Hydro One and the pros and cons of pre-authorized payment plans: Mayers

Hydro One’s billing mess shows how automatic billing plans can work against you.

SIDEBAR

5 things to know about pre-authorized debits

• Make sure the agreement covers the amount to be withdrawn, the frequency of the withdrawal and a clear way to cancel.

• Don’t be pressured. If you feel uncomfortable, arrange for another way to pay, or take your business elsewhere.

• Make sure you have enough money in your account. If not, the biller may withdraw the funds at any point during the next 30 days.

• Check your statements regularly to ensure that it is working properly.

• Always keep a copy of the agreement.

Source: Canadian Bankers Association

OurWindsor.Ca

Hydro One introduced a new billing system in May, 2013. What followed was erratic and sometimes incorrect bills for tens of thousands of its 1.3 million customers.

Some would get multiple bills at once and then nothing for months. Some got estimated bills for a year or more. Others found their bank accounts emptied as Hydro One realized its errors and took catch-up payments without telling them. When they complained nothing happened.

Provincial Ombudsman Andre Marin took up their case in Feb. 2014 and launched an investigation. He said long suffering Hydro One customers were victims of “egregious errors and baffling bills.”

Marin followed up last week with a new report in which he said many Hydro customers had been mistreated and misled. Thousands of them were trapped in a billing nightmare because the utility chose to lie about how serious the problem was, Marin said. As the problems got worse, Hydro One’s response was to become more deceitful. Rather than owning up, it covered up. The utility obstructed and evaded questions from his office, the minister of energy’s office, Hydro One’s board of directors and the Ontario Energy Board, Marin told reporters.

There are a couple of lessons from this story. It is a good illustration of the importance of the oversight of monopolies through agencies like the provincial ombudsman or the auditor general. It’s all too easy for a monopoly to become a silo of self-interest where the customer comes last.

Since you have nowhere else to go, they don’t have to treat you particularly well. A monopoly can brush your concerns aside because they are inconvenient.

Another lesson is that you should be careful to whom you give your approval for automatic billing plans.

Last February, my colleague Ellen Roseman wrote about a cottager whose Hydro One electricity meter had been read once in 2008 and once in 2010 – well before the new billing system. He had been paying monthly amounts based on estimates.

One day he got a bank statement showing that Hydro One had removed $11,907 from his bank account. The utility had finally taken an actual reading and decided to take all it believed it was owed. Since the customer had agreed to a pre-authorized payment plan they took it all out at once.

On one hand, pre-authorized plans are great because they’re convenient. By automating bill payments you can set it and forget it. The bill comes in and the money goes out. You can pay attention to more important things. No more worries about late fees.

For those who funnel spending through a credit card to gather points for a rewards program, automatic plans help the rewards add up. It works as long as you’re disciplined enough to pay off your bill every month.

The downside of these plans is that you’re giving up control of your bank accounts to a third party. If you read the fine print it will usually say that you agree to let the biller take out the amount the bill on a certain day each month. (This is a good reason to separate your credit cards from your banking. Your credit card agreement likely allows the issuer to recover the entire balance at its discretion. If the card is issued by your bank, they also have access to your accounts.)

The amount may end up in dispute, but you pay first and fight to get it back later. Sometimes, as in Hydro One’s case, getting it back or even getting a fair hearing can be difficult.

This is why every company you deal with likes automatic billing. They don’t have to worry about collecting. Even better, they can count on your inertia to maintain the arrangement in perpetuity. When you aren’t paying attention, you don’t notice service charges, rate changes or other fees. Or balloon bills – until it’s too late

Patricia White, executive director of Credit Counselling Canada, a non-profit debt consolidation agency, says the only automatic payment plan she has is for her local newspaper. The rest of the bills she pays as she goes.

She believes automatic plans can work for monthly payments that are fixed, such things as realty taxes, or home or auto insurance. Since they are reviewed annually, you can decide once a year whether to renew or cancel.

As for the rest of your bills, she recommends taking the few minutes each month to review them. It keeps you in touch with your spending and gives you a better fix on where the money is going and if something has changed.

“If you are going to use automatic payment plans use them carefully,” she says. “It’s much better to maintain control. Paying a bill every month forces you to pay attention and that’s a good thing.”

When utilities like Hydro One runs roughshod over their customers, it’s tough for consumers to fight back. But even there, opting out of automatic payment plans leaves you in charge and will help you spot problems at an early stage which makes them easier to resolve.

Toronto Star

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