Avista Utilities is proposing to eliminate a $3.50 transaction charge on debit and credit card payments, which costs residential customers hundreds of thousands of dollars per year.
The Spokane-based utility doesn’t profit from the fees, which are paid to a third-party vendor that processes the transactions. But the $3.50 charge is a frequent source of irritation to utility customers, according to recent Avista filings with state regulators in Washington, Idaho and Oregon. Regulators would have to approve ending the fee.
“Customers tell us that paying a fee to pay your bill just doesn’t make sense,” said Shawn Bonfield, Avista’s regulatory policy analyst. “Just about any other place where you use your credit and debit cards, you aren’t paying a fee.”
In addition, the $3.50 charge is more likely to affect low-income customers, including those who don’t have bank accounts, consumer advocate groups say.
Last year, the Washington Utilities and Transportation Commission looked into fees for debit and credit card payments for energy, water, garbage and phone bills. The investigation arose out of customer inquiries and highlighted wide differences in transaction fees, said Lauren McCloy, energy policy adviser to the commission.
Locally, Avista heard from customers that other utilities weren’t charging a fee for debit and credit card payments. Inland Power and Light, Vera Water and Power, Comcast and the city of Spokane were examples cited, Bonfield said.
Avista officials are expecting a decision from state regulators this month on abolishing the fee. If it is approved, the utility would end transaction fees on debit and credit card payments for residential customers in the fall, Bonfield said.
Writing a check remains the most popular method for Avista customers to pay their bills, accounting for 38 percent of payments. Other options for avoiding transaction fees are cash, money orders or a bill pay service connected to a bank account. Customers can also avoid the fees by logging into the “Avista My Account” portal on the company’s website to make payments.
About 5 percent of Avista’s receipts are collected through debit or credit card payments, and that’s expected to grow to 15 percent within the next two years.
Younger customers are more likely to use debit cards to pay their bills, Bonfield said.
Low-income ratepayers also are adversely affected by the fees, the Washington Attorney General’s Office of Public Counsel wrote in comments to state regulators.
The transaction fees are incurred on prepaid debit cards issued to individuals receiving government assistance, which hurts low-income families, the attorney general said. Utility customers should have the convenience of “paying with plastic” without incurring fees, the attorney general said.
If the $3.50 transaction fee goes away, Avista still will incur costs for offering debit and credit card payments. But those costs would be spread to all customers, making them nominal, Bonfield said.
Avista is working with a new vendor to handle debit and credit card transactions, and it will take 12 to 18 months for Avista to get an accurate idea of the program’s cost. During that time, the company would absorb the cost of the transaction fees, but they would be included in future rate cases, Bonfield said.
“Our expectation is that this will cost about $1 million per year for all three states,” he said.
If that estimate is correct, Avista’s residential ratepayers would pay about 12 cents per month on a typical electric and gas bill.
If state regulators approve the end to the transaction fees, there would be one exception, Bonfield said. A per-transaction fee still would be charged for debit and credit card payments at commercial pay stations, which are run by a different vendor. However, most customers who settle their bills at a pay station use cash, he said.