October 21, 2013
Among the dozens of people who face eviction each morning in a Downtown courtroom, there are some who have made all of their rent payments.
Their mistake was a late utility bill.
While regulated utility companies do not evict customers, the same does not apply to “submeter” companies that handle electricity and water billing for some apartments and condominiums.
A Dispatch investigation shows that some submeter companies use a lack of regulation in Ohio to make substantial profits on the resale of utilities to a largely captive audience. They charge a premium of 5 to 40 percent compared with the regulated price of electricity, with little or no disclosure. This practice would be illegal in most states.
For these companies, threatening eviction is a tool to get customers to pay bills, some of which have been weighed down by above-market prices and a host of fees.
“It was a horrible experience and it threw me off track,” said Simone Stevens, 26, who moved out of her Northeast Side apartment this year after receiving an eviction notice from a submeter company, American Power & Light.
The electricity bills in her small unit were sometimes more than $200 per month, and she fell behind. Once the late fees began to accumulate, the monthly total rose to more than $350.
“I didn’t think the bills were going to be that high,” she said.
In May, she hastily moved out ahead of an eviction, following two years at the address. Her court file is thick with paperwork from American Power documenting the charges, fees and late payments.
Consumer advocates look at cases like this and see a system that they think is out of control. While they acknowledge that tenants must take responsibility for their bills, the advocates place much of the blame on what they call predatory pricing and aggressive collection tactics.
“To me, it’s not any different than if the landlord hired a lawn-care service, and a lawn-care service could evict people,” said Emily Crabtree, a lawyer who represents low-income tenants for Columbus Legal Aid.
Is this legal? Like so many aspects of the submeter industry in Ohio, there are no clear rules.
“I didn’t think they could evict you,” said a woman, in her 20s, who got an eviction notice this year from American Power. She was able to negotiate a payment plan and stay in her home. She asked that her name not be printed because she is concerned about retaliation by American Power.
“One minute, when I got the bill, it was $200 and something dollars, and then it was $500 and then it was $1,000, and I was like, ‘How is that possible?’” she said.
American Power initiated 51 eviction cases last year, according to Franklin County Municipal Court records. The company has filed 159 such cases since 2010, and has several current cases in the system.
Bill Finissi, American Power’s vice president, would not agree to an interview. On Friday, he e-mailed the following statement:
“As a proportionate share of the utility costs are part of the tenant’s monthly rental obligation, the landlord uses the eviction process in lieu of disconnection to enforce payment as well as all other terms and conditions in the mutually agreed-upon signed rental document. Prior to eviction proceedings, we work hand-in-hand with the individual tenants in order to assist with any difficult financial times. The eviction process is our last resort after attempting to work through the situation with the individual tenant.”
Another submeter company, Nationwide Energy Partners, opened 278 of the cases from 2002 to 2011, but none since.
“We never will evict a customer because of late energy bills,” said Mike Palackdharry, Nationwide Energy’s president.
In Ohio, it is not unusual for a lease to say that the tenant must maintain payments for water and electricity. The contracts often say that failure to pay those bills can be grounds for eviction by the property owner or manager.
What is highly unusual about the American Power cases is that the property owner is not the one taking the action. The owner allows the electricity provider to initiate the process and file for a court order.
Consumers seek help from the Public Utilities Commission of Ohio and the attorney general’s office, and they find that the agencies can’t do anything because submeter companies are not regulated.
Many customers reach out to the Central Ohio Better Business Bureau, a nonprofit group with no legal authority, which has seen a sharp increase in inquiries about submeter companies in the past few years.
For someone who might be days away from eviction, there isn’t much the BBB can do, said Joan Coughlin, a vice president in the office. “We would hear that by the time the complaint could be closed, the renter would be evicted,” she said.
Crabtree, the legal-aid lawyer, has said in court filings that submeter companies do not have the legal authority to do evictions. When she made this argument in a July case against American Power, the company stopped trying to evict the customer.
An Ohio court has never ruled on the limits of eviction powers in situations like this.
Crabtree also questions the legality of another American Power practice: charging customers for court and attorney fees, even if the tenant’s case is resolved before going to court. The extra charges can add up to several hundred dollars, on top of what the customer already owes.
“To charge someone for court costs when you haven’t incurred the costs, that’s unjust enrichment, and you can’t do that,” she said. “It’s unconscionable.”
The threat of eviction makes consumers less likely to fight utility charges that they see as excessive. This is what happened for a man at Northpark apartments on the Far North Side. He refused to pay an electricity bill while he waited for American Power to give him an explanation for some of the fees.
“They said, ‘If you don’t pay it, we’ll evict you,’ ” said the man, who asked that his name not be used because he is still in the apartment and is concerned about retaliation.
Soon after, American Power posted an eviction notice on the outside of his door. He paid his bill.
Many of the people who face eviction are in apartment complexes that cater to low-income tenants. They did not budget for above-market electricity costs and sometimes cannot afford to pay.
If they are evicted, though, they lose their security deposit and they have a black mark that will show up on background checks. So, tenants will go to great lengths to avoid eviction, even if it means spending less on groceries, medication and other necessities, Crabtree said.
“You’re asking tenants to make a choice they shouldn’t have to make,” she said.