Caught on tape: How PSEG supervisors use threat of shutoffs to get customers to pay up

The state Department of Public Service has expressed "significant concern" about reported comments made by PSEG supervisors at a recent industry conference detailing the sometimes-aggressive tactics the Long Island utility contractor uses to get customers in arrears to pay up.

A recording of conference panel sessions in Florida obtained by Newsday provides a rare window into the daily practices of bill-collecting specialists who focus on customers more than 90 days late paying their bills. 

The recordings contain several references to the threat of shutoffs to get customers to pay up and detail new areas of promise to help bolster PSEG's recent successes in arrears collection, including a pending focus on accounts of those who have died and vetting the elderly in arrears to verify their shutoff-protected status.

The tactics were described as always conscious of legal guideposts for collections, some including outside contractors who are rewarded for higher collections with more larger allotments of accounts in arrears.

Among the comments were one in which a supervisor explained how shutoffs can motivate customers to pay: "People think much better in the dark," said PSEG supervisor Mike Sedlak, according to the recording. He detailed how smart meters have eased the job of shutting off service to customers and described how the company can customize strategy by region. 

"So if I want to treat the Rockaways different, and I want to get out in the Hamptons and Montauk, I can do that," he told attendees.

DPS spokeswoman Kim Mashke said the state agency has "engaged with PSEG Long Island to understand how the utility intends to address the allegations," some of which were originally published in a New York Times story. Mashke directed further inquiries about the comments to PSEG, which manages the LIPA grid under a recently renewed five-year contract extension valued at $493 million.

PSEG spokeswoman Katy Tatzel, in a written statement, said a Newsday synopsis of the conference comments "does not align with our values and will be thoroughly investigated." 

She said PSEG "recognizes the hardships many of our customers face and takes pride in the many programs available to help."

Both PSEG and LIPA said they have not heard the recording, though it was unclear whether the supervisors on the panel were questioned about their presentations.

Newsday reported last week that the number of Long Island customers more than 60 days late paying their electric bills has dropped sharply over the past year, to 83,524 in March, compared with more than 111,000 for the month a year ago. The drop came despite a power supply charge that has risen nearly 30% in the past four months amid volatile fuel prices. 

PSEG supervisors at the conference indicated their methods for collecting overdue accounts were increasingly effective despite internal challenges, and they indicated an eagerness to do more, including pursuing $1.5 million in past-due bills from the estates of those no longer living.

Newsday obtained and reviewed a full copy of the recording in which Sedlak and fellow collections supervisor Brianna Maye provide a sometimes-unvarnished view of their practices, even while expressing dissatisfaction over the utility’s budget and the press of performance metrics.

Sedlak opened his session of the March 16-18 conference at a Miami resort by noting "all these tons of vendors that are here that offer the coolest products in the world, right? The problem with PSEG Long Island — we have no money," he added, to laughter. "And every year the metrics get more and more difficult to achieve."

He spoke of recent successes in meeting all three major performance metrics for collections "for the first time in six years," mostly through "process improvements" that put customers on repeat and regular notice about their late bills and, for the worst offenders, the threat of a shutoff. 

PSEG's contract with LIPA demands increased levels of performance, including in collecting past-due bills. Sedlak explained: "I swear, every single year I sit with my manager ... and they give me this rock and tell me, squeeze more water out of this rock, right? It’s extremely frustrating. So we developed some specialized teams."

Those teams include ones that manage specific customer sectors, including delinquent commercial accounts, and the "senior impaired, medically protected EBT [electronic benefit transfer] type customers" on social services, adding, there’s "tons of opportunity there."

State law and LIPA's tariff provide specific protections against imminent shutoffs for those on public assistance, those over 62 and those with medical conditions — and PSEG supervisors indicated they always operated within those constraints.

Once a non-paying customer becomes "field eligible," meaning certain protections against collections ease, Sedlak noted, "We hit them with a reminder right away."

"We give them three days to go ahead and cure that account," he said. "If they don’t cure that account, we send a second email that says, 'hey, just a reminder you have a past due balance, go ahead and cure your account.'"

"That lasts for three days," he added. "On the second part of that three days, they get a termination notification that says, I’m coming today."

The result? PSEG termination notification emails went from 25% "liquidation" or payment in three days to over 60% in three days, because late-paying customers are "starting to learn the cycle. ‘Once I get this email I know what the next action’s going to be, [and] if I don’t respond to that email I know what’s going to happen next.’"

He added, "People think much better in the dark, all right?" to audience laughter.

One area of focus has been to vet customers who requested special shut-off protections, many from a pandemic moratorium, including senior and medically protected customers. "These are the guys that say 'I’m over 62 years of age or I’m blind or I need a wheelchair,'" Sedlak said. The problem in New York, he said, is that a customer gets the protection just by calling up and attesting to it, no questions asked.

"So what we found is that in our field-eligible portfolio in 2023 coming out of the moratorium, there was a large influx of customers that were coded senior and/or impaired that truly were not senior and/or impaired," he said.

After following all the rules in terms of notifications to the customer and social services, he said, "you’ve got to go back and turn off the service. What we found is that the majority of customers who had this code on their account aren’t even a customer of record anymore. They’re probably dead for a while, right?"

For accounts of those who have died, Sedlak said the team sometimes found "the son or the daughter or some other party is living in the location. And never applied for service. Those are the customers that I’m after. It’s not grandma wheeling the oxygen tank to the door, asking what I want. What we were able to do with that process is go ahead and reduce our field eligible portfolio by 87% within a year and a half."

Sedlak described how his team can get an elderly customer to pay. On day 17 within a 20-day window of a potential shut off, he said, "I make another outbound call and say, ‘Hello, grandma, I’m coming if you don’t take care of this issue,' right?"

One audience member asked whether PSEG took into consideration "concerns about oxygen tanks or anything else?" Sedlak said such a customer can fill out medical paperwork to prove hardship, with five days to file it to avoid termination. "If they don’t? We’ll cut them back off. That’s always the process."

During the same program, Maye described how PSEG has increased its information-sharing with outside collections agencies, from quarterly to monthly reports on their success, and incentivized them with a contest, of sorts.

PSEG has a program called Champion Challenger which, at the end of each quarter, rewards each collection agency that "comes in first place for the tier" of agencies with back bills paid, awarding it an additional "5% of allocation" of arrears accounts, while those who come in last "will lose 5% of allocation." She said the process "really works because obviously the agencies want more accounts."

Looking forward, she said, PSEG is eyeing a plan to look at "final deceased" accounts that are "just sitting in a warehouse now," with about $1.5 million in uncollected bills in the last two years "that we think we can collect on."

"To me every dollar counts," Maye said, "and the more important part of starting this process is going to be looking forward, because then when the account first is first marked deceased you can get to a deceased agency right away, rather than waiting because we know that these probate claims will be more successful."

By Mark Harrington

mark.harrington@newsday.comMHarringtonNews

Mark Harrington, a Newsday reporter since 1999, covers energy, wineries, Indian affairs and fisheries.