This page is current only as of March 2002; not intended to be exhaustive or to substitute for legal advice that takes into account the specific facts of your case.

Scope

This outline primarily applies to investor-owned electric, gas, telephone, and water companies under the jurisdiction of the New Jersey Board of Public Utilities. These companies accounted for more than 724,000 residential account terminations for non-payment in 1998, according to the BPU.

Beyond the scope of this outline are the few municipal electric companies, many municipal water companies, and one Rural Electric Cooperative in New Jersey, none of which are regulated by the BPU. Each has its own termination rules, and due process protections apply with respect to municipal utility terminations. Memphis Light, Gas & Water Division v. Craft, 426 U.S. 1 (1978).

Bases For Discontinuance Of Service

• “The utility shall, upon reasonable notice, when it can be reasonably given, have the right to suspend or curtail or discontinue service for the following reasons:

  ...

  3. For any of the following acts or omissions on the part of the customer:

  1. Nonpayment of a valid bill due for service furnished at a present or previous location...;
     
     
  2. Tampering with any facility of the utility;
     
     
  3. Fraudulent representation in relation to the use of service...”
     
     

N.J.A.C. 14:3-3.6(a).

Notice

• “The customer shall be given a period of at least 15 days for payment after the postmark date indicated on the envelope in which the bill was transmitted. In the absence of a postmark, the burden of proving the date of mailing shall be on the utility.” N.J.A.C. 14:3-7.12(a).
  
  
• “A public utility may discontinue service for nonpayment of bills provided it gives the customer . . . at least 10 days’ written notice of its intent to discontinue.” Id.
  
  
• “A new notice shall be served by the utility each time it intends to discontinue service for nonpayment of a bill.” Id.
  
  
• “Before termination of residential service, [an] electric or gas utility representative shall notify an adult occupant of the premises or leave a sealed note in the event that no adult is on the premises. The note shall include information as to how the customer's service may be reconnected.” N.J.A.C. 14:3-3.6(c)(3).

Time Of Termination

• “Public utilities shall not discontinue residential service except between the hours of 8:00 A.M. and 4:00 P.M. Monday through Thursday, unless there is a safety related emergency. There shall be no involuntary termination of service on Fridays, Saturdays, and Sundays or on the day before a holiday or on a holiday absent such emergency.” N.J.A.C. 14:3-3.6(c).
  
  
• “No utility shall discontinue service unless the customer's arrearage is more than $50.00 or the account is more than three months in arrears.” Id.
  
  
• “If a residential customer offers payment of the full amount or a reasonable portion of the amount due at the time of termination, a utility representative shall be required to accept payment without discontinuance of service.” N.J.A.C. 14:3-3.6(c)(4).

Disputes

• “A utility shall not discontinue service because of nonpayment of bills in cases where a charge is in dispute, provided the undisputed charges are paid and a request is made to the Board for an investigation of the disputed charge.” N.J.A.C. 14:3-13(a).
  
  
• Lodging an oral dispute with the BPU is sufficient to prevent a threatened termination of service for 5 days, unless the BPU correctly determines that it is frivolous. “[T]he utility shall notify the customer that unless steps are taken to invoke formal or informal Board action within five days, service will be discontinued for nonpayment. Once a formal or informal dispute is before the Board, all collection activity on the charge in dispute shall cease.” N.J.A.C. 14:3-13(a).
  
  
• The toll-free number for the BPU customer service office is 800-624-0241.
  
  
• An oral dispute must be followed up with a written dispute within 5 days. An informal written disputed can be made by letter. The letter “must be signed and state the name and address of the complainant and the party complained of as well as the essential facts complained of, including the dates of acts or omissions complained of.” N.J.A.C. 14:1-5.13. A formal written dispute, which triggers administrative hearing rights, is invoked by filing a verified petition pursuant to N.J.A.C. 14:1-4.1, et seq. and 14:1-5.1, et seq.
  
  
• “When the Board has determined that a formal or informal dispute has been resolved, the utility is required to provide at least seven days written notice before service may be discontinued.” Id.

Winter Moratorium

• If service is not yet disconnected: “A regulated electric or gas utility shall not discontinue service during the period from November 15 through March 15, referred to in this section as the "heating season", unless otherwise ordered by the Board, to those residential customers who demonstrate at the time of the intended termination that they are:
  
  
  1. Recipients of benefits under the Lifeline Credit Program;
     
     
  2. Recipients of benefits under the Federal Home Energy Assistance Program (HEAP), or certified as eligible therefore under standards set by the New Jersey Department of Human Services;
     
     
  3. Recipients of Federal Aid to Families with Dependent Children (AFDC) [Read: TANF];
     
     
  4. Recipients of Federal Supplemental Security Income (SSI);
     
     
  5. Recipients of Pharmaceutical Assistance to The Aged and Disabled (PAAD);
     
     
  6. Recipients of general welfare assistance benefits; or
     
     
  7. Persons unable to pay their utility bills because of circumstances beyond their control. Such circumstances shall include but shall not be limited to unemployment, illness, medically related expenses, recent death of a spouse and any other circumstances which might cause financial hardship.”

  N.J.A.C. 14:3-7.12A(a) (emphases added).

• If service has already been disconnected: “Those residential electric or gas customers whose services have been discontinued for non-payment and have not been reconnected as of November 15, and who are otherwise eligible for protection under the Winter Termination Program, shall be required to make a down payment of up to 25 percent of the outstanding balance as a condition precedent to the receipt of services during the current heating season. The customer shall be notified, at the time of enrollment in a budget payment plan . . . that the 25 percent down payment shall represent a maximum required amount and is not to be regarded as a minimum required payment. The utility shall consider the customer's ability to pay in determining the appropriate level of the required down payment, but in no instance shall such required payment exceed 25 percent of the outstanding balance. The utility shall refer to the Board for resolution, all disputes regarding the appropriate level of down payments.” N.J.A.C. 14:3-7.12A(b) (emphasis added).

• Enrollment in a budget payment plan and good faith payments during the heating season are required. Utility allegations of failure to make good-faith payment despite ability to do so must be resolved by the BPU before any termination for this reason during the heating season. All energy-related financial assistance must be forwarded to the customer’s major heat supplier, if it is a gas or electric utility. N.J.A.C. 14:3-7.12A(c) - (e).

• Participation in an affected utility’s seal-up program, if available, is required for customers who are eligible for weatherization assistance. The utility is required to, among other things, provide information about the program, initiate contact with a contractor and provide a landlord consent form or a means to obtain one, to tenants. Tenants must seek landlord consent, but inability to obtain landlord consent is not considered refusal to participate in the seal-up program. N.J.A.C. 14:3-7.12A(h)(1) - (11). A BPU administrative review is required prior to termination during the heating season for alleged refusal to participate in a seal-up program.

• “During the heating season, the affected electric or gas utilities shall not request a security deposit or an addition to an existing security deposit from a customer who is eligible for and seeks the protection of the Winter Termination Program.” N.J.A.C. 14:3-7.12A(f).

• “During the heating season, all notices of discontinuance of residential electric or gas services shall be accompanied by a Winter Termination Program fact sheet, printed in both English and Spanish, setting forth all terms and conditions of the Program.” N.J.A.C. 14:3-7.12A(g).

No Termination On Sub-Freezing Days

• “Whenever the high temperature is forecast to be 32 degrees Fahrenheit or below during the next 24 hours, electric and gas utilities shall not, within any portion of their service territories, disconnect residential service for nonpayment of a delinquent account, failure to pay a cash security deposit or guarantee, or failure to comply with the terms of a deferred payment plan. The utilities may rely on forecasts obtained from national weather stations covering their utility facilities, including the Newark Weather Station and the Atlantic City Airport Weather Station.” N.J.A.C. 14:3-3.6(c)(5).

Medical Emergency

• “Discontinuance of residential service for nonpayment is prohibited if a medical emergency exists within the premises which would be aggravated by a discontinuance of service and the customer gives reasonable proof of inability to pay. Discontinuance shall be prohibited for a period of up to two months when a customer submits a physician's statement, in writing, to the utility as to existence of the emergency, its nature and probable duration, and that termination of service will aggravate the medical emergency. Recertification by the physician as to a continuance of the medical emergency shall be submitted to the utility after 30 days. However, at the end of such period of emergency, the customer shall still remain liable for payment of service(s) rendered, subject to the provisions of N.J.A.C. 14:3-7.13. During the period of medical emergency, the customer shall pay telephone tolls which are in excess of the average bills of the six months preceding the first 30-day period.
  
  
  1. The Board may extend the 60-day period for good cause. Such an extension shall be requested in writing by the customer and be accompanied by a current physician's note. Pending the Board's consideration and decision, utility service shall not be discontinued.
     
     
  2. Public utilities may in their discretion delay discontinuance of residential service for nonpayment prior to submission of the physician's statement required by this subsection when a medical emergency is known to exist.”

  N.J.A.C. 14:3-3.6(d).

Deferred Payment Plans

• “Whenever a residential customer advises the utility that the customer wishes to discuss a deferred payment agreement because said customer is presently unable to pay a total outstanding bill, the utility shall make a good faith effort to provide the customer with an opportunity to enter into a fair and reasonable deferred payment agreement(s) which takes into consideration the customer's financial circumstances.” N.J.A.C. 14:3-7.13(c).
  
  
• “In negotiating such a deferred payment agreement(s), a residential customer may not be required to pay, as a down payment, more than 25 percent of the total outstanding bill due at the time the agreement(s) is made or executed.” Id. (emphasis added).
  
  
• Separate deferred payment agreements must be available for each utility service the utility provides
  .
  
• “While a deferred payment agreement for each separate service need not be entered into more than once a year, the utility may offer more than one such agreement in a year. The Board may order a utility to accept more than one deferred payment agreement in a year if said action is reasonable.” N.J.A.C. 14:3-7.13(d).
  
  
• “A utility shall renegotiate and/or amend the deferred payment agreement of a residential customer if said customer demonstrates that his or her financial circumstances have changed significantly because of factors beyond his or her control.” N.J.A.C. 14:3-7.13(c).

Budget Billing Plans

• “Each gas and electric utility shall have available on request a budget billing and payment plan for residential accounts...” N.J.A.C. 14:3-7.11A(a).
  
  
• “A customer may go off a plan at any time, in which event the customer shall pay the amount owed for service rendered or, in the alternative, agree to a stipulated payment agreement according to N.J.A.C. 14:3-7.13(c).” N.J.A.C. 14:3-7.11A(a)(8).

Diversion Of Service

• “Where a tenant-customer alleges in good faith that the level of consumption reflected in his or her utility bill is unexplainably high, the tenant-customer may request the utility supplying gas and/or electricity to conduct a diversion investigation at no cost to the customer. Such request shall be made in writing by the tenant-customer by completing and returning to the utility a diversion investigation application provided by the utility. The application shall state that the utility may bill the customer for the cost of the second investigation within a 12-month period that fails to uncover the utility diversion. The utility must investigate the alleged diversion within two months of the receipt of the investigation request. Each diversion investigation must include a meter test conducted in accordance with N.J.A.C. 14:3-4.5.” N.J.A.C. 14:3-7.16(d)(1).
  
  
• “The utility shall furnish to the tenant-customer, the tenant-customer's landlord, and to the beneficiary (if different from the landlord) within 14 days of the investigation, a written report on the findings of the investigation.” N.J.A.C. 14:3-7.16(d)(3).
  
  
• “When the amount of an electric, gas, or water bill is significantly higher than the established consumption history indicated on the customer's account, and there is no apparent explanation for the increase (for example, severe weather conditions; changes in the make-up or the lifestyles of the members of the household), the customer's established consumption shall be given consideration, in addition to the results of any tests performed to deduce the accuracy of the meter, in the evaluation of whether or not the bill is correct and appropriate.” N.J.A.C. 14:3-7.13(g).

No Termination For Collateral Matters

• A general principle is there can be no utility service termination for collateral matters -- nonpayment of any charges other than current service charges for the utility service at issue.
  
  
• “[N]onpayment for business service shall not be a reason for discontinuance of residential service, except in cases of diversion of service, . . . nor shall notice threatening such discontinuance be given.” N.J.A.C. 14:3-3.6(a)(3)(i).
  
  
• “[S]ervice shall not be discontinued for nonpayment of repair charges, merchandise charges, installation of conservation measures and other non-tariff contracted service charges between the customer and the utility, nor shall notice threatening such discontinuance be given.” Id.
  
  
• “In the case of a residential customer who receives more than one utility service from the same utility and has subsequently entered into a separate [deferred payment] agreement for each separate service, default on one such agreement shall constitute grounds for discontinuance of only that service.” N.J.A.C. 14:3-7.13(d).
  
  
• No termination of local telephone service for non-payment of long-distance charges: “A basic telecommunications service provider may discontinue [basic residential local telephone service] only for non-payment of basic local telephone service charges.” N.J.A.C. 14:3-7.17(b)(1) (emphasis added) (operative since September 6, 2000).
  
  
• See also Third Party Liability and Backbilling, below

Third Party Liability

• A public utility cannot refuse or terminate service to a customer for the non-payment of anyone else’s debt, unless the doctrine of necessaries applies or the utility can present clear and convincing evidence of fraud.
  
  
• “The customer(s) of record whose name(s) appear on the bill shall be held responsible for utility service rendered.” N.J.A.C. 14:3-3.6(a)(3)(i).
  
  
• See Roger D. Colton, The Legality of Conditioning Utility Service on Payment of a New Roommate’s Old Debt, Clearinghouse Review, September-October 2001, at 330

  and

  Roger D. Colton, Limiting the “Family Necessaries” Doctrine as a Means of Imposing Third-Party Liability for Utility Bills, Clearinghouse Review, July-August 2001, at 193.

• Limitations on the doctrine of necessaries: a non-customer spouse can be held liable only if

  • A family exists in fact (e.g. no objective decision no longer to live together as a family)
    
    
  • The expense is on behalf of the family (e.g. not independent individual, personal, or business expense that does not contribute to the convenience, enjoyment, or comfort of the family)
    
    
  • The debt is for a necessity (e.g., not 900 or 976 calls)
    
    
  • The utility relied on the credit of the spouse (under the Jersey Shore case, it is not clear whether this is limited to a priority rule under New Jersey law)
    
    
  • An existing child support order may be found to preclude liability.

Backbilling (Mistaken Undercharges)

• Backbilling refers to billing for charges that were not billed at the time they were incurred because of a utility’s mistake. This can result in a claim that a large, unexpected lump sum is due.
  
  
• “No adjustment shall be made for a meter that is found to be registering less than 100 percent except in the case of meter tampering, non-registering meters or in circumstances in which the customer should reasonably have known that the bill did not reflect the actual usage.” N.J.A.C. 14:3-4.7(c).
  
  
• “In cases of a debit adjustment to a customer's account, except in cases of theft or tampering, the customer shall be allowed to amortize the payments for a period of time equal to that period of time in which the charges were adjusted. Debit adjustments shall be limited to a maximum period of six years.” N.J.A.C. 14:3-4.7(c)(1).
  
  
• Termination of service where backbilling has occurred should not be permitted
  
  
  • Bills for metered service must be rendered monthly, bimonthly, or quarterly based on actual meter readings or a BPU-approved estimating procedure. N.J.A.C. 14:3-7.9, 7.11.
    
    
  • Discontinuance is permitted only for "nonpayment of a valid bill." N.J.A.C. 14:3-3.6(a)(3)(i).
    
    
  • Where there was no valid bill rendered on a periodic basis as required in the regulations, no discontinuance should be permitted, though the underlying debt may still be owed.
    
    
  • Additional arguments for challenging termination based on backbilling are discussed in section 11.6 of the NCLC Access to Utility Service manual (2d ed. 2001).
    
    
• As in other situations, the utility must work out a fair and reasonable deferred payment agreement taking into account the customer’s ability to pay, with no more than 25% of the amount outstanding required up front. N.J.A.C. 14:3-7.13(c).

Fast Meters (Mistaken Overpayments)

• “Each utility shall, without charge, make a test of the accuracy of a meter upon request of a customer, provided such customer does not make a request for test more frequently than once in 12 months.” N.J.A.C. 14:3-4.5(a); see also N.J.A.C. 14:3-4.6 (BPU meter tests).
  
  
• “Whenever a meter is found to be registering fast by more than two percent, or in the case of water meters, more than one and one half percent, an adjustment of charges shall be made...” N.J.A.C. 14:3-4.7(a)
  
  
• “When the amount of an electric, gas, or water bill is significantly higher than the established consumption history indicated on the customer's account, and there is no apparent explanation for the increase (for example, severe weather conditions; changes in the make-up or the lifestyles of the members of the household), the customer's established consumption shall be given consideration, in addition to the results of any tests performed to deduce the accuracy of the meter, in the evaluation of whether or not the bill is correct and appropriate.” N.J.A.C. 14:3-7.13(g).
  
  
• “A public utility shall pay or credit interest at a rate equal to that prescribed by the Board in N.J.A.C. 14:3-7.5 (Return of deposits) on any overpayment made by a residential customer due to a billing error, unless the overpayment is fully refunded or credited to the customer's account within two billing cycles after written notification by the customer to the utility wherein the alleged error is identified, described and documented in sufficient detail.” N.C.A.C. 14:3-7.13(e).

No Late Charges

• “A late payment charge shall not be approved for a rate schedule applicable to. . . any residential customer.” N.J.A.C. 14:3-7.13(f)(2).

Bankruptcy

Utility debts are dischargeable in bankruptcy. The possibility of a bankruptcy can be helpful in negotiating a repayment plan, as the utility is at risk of getting nothing except possibly a new deposit.

The filing of a bankruptcy petition imposes a 20-day moratorium on disconnection by a monopoly service provider for nonpayment. 11 U.S.C. § 366. It also obligates the utility to reconnect any disconnected service immediately. In re Whittaker, 882 F.2d 791 (3d Cir. 1989). After that, the utility can discontinue service only (1) if it does not have adequate assurance of payment for postpetition utility service -- e.g., a new deposit under N.J.A.C. 14:3-7.1(c) (typically about twice the average monthly bill, net of Lifeline or other assistance paid directly to the utility), or (2) on the basis of default on payment for post-petition services.

Third Party Suppliers

• Interim standards governing third party suppliers have been codified at N.J.A.C. 14:4-1, et seq. See pp. 86-113, infra, for a summary and the text of the interim standards.

Additional Resources

• NCLC, Access to Utility Service (2d ed. 2001)
• Also see links below

Links

• Filing a Complaint with the FCC
  
  
• New Jersey Board of Public Utilities
  
  
• Public Utility Law Project