putting the negotiation back into negotiated payment plans national community action foundation...
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Putting the Negotiation back into Negotiated Payment Plans
National Community Action Foundation (NCAF)
Roger D. Colton
Fisher, Sheehan & Colton
Public Finance and General Economics
(voice) 617-484-0597
November 2007
One-strike you’re out provisions.
Ability-to-pay is more than level of income; includes “fragility” of income.
Low-income disproportionately hourly wage workers.– No paid leave– No flex time– “Involuntary part-time employment”
Put in income assumptions. Put in renegotiation clause. Even if refused, of legal significance.
– No “agreement”--duress– Adhesion contract.
The need for “cure” provisions
Many regs provide that a utility is not required to offer a new payment plan.
Be sure to distinguish between:– New payment plan– Renegotiated payment plan– Cure of payment plan default.
Considering “ability to pay” (1 of 2)
Universal regulatory requirement is to consider “ability to pay.”
Circumstances of concern:– Standardized payment plans– Maximum payment plan lengths– Deadlines for completion of payment plan
Considering “ability to pay” (2 of 2)
Aspects of “ability to pay”:– Absolute income– Relative income (poverty level)– Discretionary income– Fragility of income– Seasonality of income (income, expenses)– Ability to meet exigencies
Procedural aspects– Requirement to “offer” payment plan.– Void ab initio– Signature as waiver
Force a utility to exercise discretion.
Most regs do not establish a set time for payment plans.– “Up to 12 months”– “At least” 12 months.
It is necessary to distinguish between:– Utility practices– Utility tariffs– PUC regulations.
A refusal to exercise discretion is legally “arbitrary and capricious.”
Force a utility to consider all relevant factors.
Most regs require a consideration of set of specific factors in setting payment plan.– Time arrears outstanding.– Reason for arrears.– Ability to pay.
Basic rule of law: a failure to consider all relevant factors makes a decision “arbitrary and capricious.”
Document factors and payment plan demands based on that/those factors.
Negotiate time up-front
Often a time-sensitive reason for nonpayment. The need is not simply to spread payments out,
but to get beyond the period of need. Mortgage workouts are precedent. Exchange higher downpayment for delayed
payment.
– E.g., use EITC to make initial payment for delay in additional payments for 3 months.
– Pay EITC in Month 1--next payment Month 4.
Negotiate for non-level billing plan
Most regs do not require levelized payment plan payments.
Most regs require a consideration of ability-to-pay in setting payment plan payment.
Consider household income. Consider household expenses, including other
energy expenses. Lower summer/winter payment plan payments.
Negotiate for “free” or “reduced” months
Most regs do not require equal payment plan payments.
Most regs require a consideration of ability to pay in setting payment plan amounts.
Consider fixed non-recurring expenses in setting payment plan payments.
School and Christmas obvious. Document other non-recurring expenses: winter clothes, car/home insurance/school activities/property taxes.
Negotiate absolute cap on payments
Most regs require a consideration of ability to pay in setting payment plan amounts.
Setting an absolute cap on the payment plan payment is reasonable.
For example, the payment plan payment is not to exceed average monthly bill.
Break arrears into multiple parts
Genesis of notion of multiple payment plans in some of the arrearage forgiveness provisions of USF programs.
Take arrears $500 or $1,000 at a time per payment plan.
– Once completed, negotiate payment plan on next increment.
Collecting anything is better than collecting nothing.
For more information:
http://www.fsconline.com
(Library *** News)
