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Prepaid Utilities: Don't Go There

By Kendall Taggart, California Watch

June 12, 2012 -- As state regulators consider a proposal from San Diego Gas & Electric Co. for a program that would allow customers to prepay their utility bills, a new report suggests that prepaid utility service programs risk the health and safety of low- and moderate-income households.

Prepayment programs allow companies to sidestep critical consumer protections that have evolved over decades, according to the report by the National Consumer Law Center. Research of existing programs in other states and the United Kingdom indicates that prepayment is targeted at low- or moderate-income consumers and results in more frequent loss of service for nonpayment.

Regulatory agencies need to carefully consider the potential tragic consequences of prepaid utility programs, said John Howat, the center's senior energy analyst and co-author of the report published Thursday.

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