Universal default: Another payment prompter


By Betsy Loeff, contributing writer


Service disconnection isn’t the only threat utilities are holding over the heads of slow-pay customers these days. Since 2002, the Department of Justice has allowed gas, water and electric utilities to report consumers with unpaid balances to the National Consumer Telecommunications & Utilities Exchange (NCTUE), a database housed and managed by the credit-reporting bureau Equifax.

That means unpaid utility bills now contribute to a consumer’s overall credit score. It also means a late electric bill can affect a consumer’s home-mortgage or credit-card rates under the principal of “universal default.”

Universal default is one of those gotcha details hidden in the squint print of credit-card agreements. Credit issuers with universal-default clauses in their contracts can raise interest rates if they see that the customer missed a payment to some other company somewhere along the line.

Although utilities have been able to report to NCTUE for years, the situation is now gaining attention, and it could create bad press for gas, water or electric providers.

Syndicated columnist Chuck Jaffe mentioned the utility connection to universal default rules in mid January 2007, and the story was picked up by dozens of news outlets.

On January 3, 2007, Brian O’Connor of The Detroit News, wrote an article about a hapless DTE Energy customer whose late electric bill may chalk up between $3,000 and $4,000 in higher rates from other credit issuers over the coming year. Ten days later, O’Connor wrote another story under the headline, “DTE backs off on credit reporting.” In it, he reported that consumer outcry and the promise of a protest rally prompted DTE executives to meet with activists and “dial down the utility’s newly stringent credit-reporting policy.”


Betsy Loeff has been freelancing for the past 14 years from her home in Golden, Colo. She has been covering utilities for almost four years as a contributor to AMRA News, the monthly publication of the Automatic Meter Reading Association.

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