Sep 09, 2004
Subprime electricity
Reuters reports that TXU Energy, the biggest utility in Texas, intends to increase its rates -- but only for those least able to pay:

In a new rate-setting tactic for electric utilities, the unit of Dallas-based TXU Corp. plans bigger rate increases for customers with low "credit scores," which are numeric rankings that take into account customer histories of paying electricity, phone and cable bills, the Wall Street Journal reported.

I'm not sure whether this is more evil or stupid, but it's a whole lot of both.

Your "credit score" can be lowered for many reasons -- some legitimate, some arbitrary, many which you are helpless to change regardless of how responsible you may be. One variable which inevitably results in a lower credit score is a lower income.

That's hardship enough for lower-income families when a credit score is only being used for its intended purpose -- deciding whether or not to extend credit. But as credit scores begin to be used for purposes like this it is simple cruelty. This is simply a way to take advantage of the poor and powerless because they are poor and powerless and you can take from them whatever you like.

Credit scores are already being used now to deny people health and auto insurance, or to charge them a higher rate. They are being used by employers, to make sure they don't hire anybody who's unemployed. And now the poor will face regressive pay scales even for their heat and electricity.

And what happens when this portion of these low-income families' monthly budget increases? That's right -- their credit scores will go down. This is obscene. A clumsy measure of wealth is being used as though it were a precise measure of virtue and responsibility.

The bottom line is this: TXU wants to charge poor people a higher rate than they charge rich people. Why? Because those poor people were having trouble paying the lower rate. This ain't a bank loan, it's the freaking utility bill.

Eventually, they're going to figure out a way to charge poor people subprime rates for milk, eggs and butter.

"If they get away with this others will follow," Randy Chapman, executive director of the Texas Legal Services Center, told the newspaper. The Texas Legal Services Center helped uncover TXU's plan.

A state-funded consumer advocate in Texas told the newspaper her office plans to file a formal complaint with the Texas Public Utility Commission, asking it to issue an emergency order blocking TXU from imposing the rate changes.

If the emergency order and the likely lawsuits don't manage to stop this insane reverse-Robin-Hood maneuver, I have a backup plan.

I propose regulation, not just in Texas but nationwide, that rates for utilities and insurance policies based on credit scores may only impose penalties on customers whose score is at least 12 points below the national average.

The national average for a credit score, by the way, is 678.

In other words, let's sic the apocalypse nut-squad on 'em. For once I would agree -- these people really are the Antichrist.
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maybe poor folks should be charged more for groceries and gasoline as well.

This is just a publicity exposure on what many companies have been doing for Decades. I work in Credit qualification, financial eligibility checks, and customer acquisition for a living (for a major wireless carrier) and we treat customers the same way. The vendor I support provides the best credit qualification servcies on earth. (www.Lightbridge.com)Same thing for cars, boats, mortgages etc. Should credit qualification extend to utilities though? I don't think so. Everything is OAC these days (on Approved credit.) It is meant to reduce operational risk and expenditure of corporations from high risk customers.

There may be a very valid reason for this change. There are a high number of high risk customers in Texas. Alot of people who rack up major bills and dissappear, or never pay. This might just be cause and affect based on payment performance by this company's customer base.

Poor people can have good credit too though. You have to have financial discipline to control your spending and not over-extend yourself.

This type of ruling could also to be to protect better rates for thier premier customers.

Still doesnt make it right. They should look for an alternative IMO.

The best line was this one:
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They are being used by employers, to make sure they don't hire anybody who's unemployed.
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