City leaders authorized Denton Municipal Electric and other city utilities this week to use property liens as a way to collect large unpaid bills — primarily from commercial customers.
The new authority cannot be used to collect unpaid bills from homeowners in their primary residence or from property owners whose tenants skip out on a city utility bill, according to the city’s customer service manager, Ethan Cox.
The authority also cannot be used to secure bills that are currently past due — Denton has about $5.2 million in unpaid utility bills dating from October 2006.
Cox briefed the City Council on the matter during its Sept. 18 work session. The council granted the authority during its regular meeting Tuesday night.
The city staff plans to use liens on future past-due accounts of $1,000 or more, Cox said. In seeking the authority, Cox told the council that the city would continue to file suit to collect past-due accounts of $5,000 or more. Both tactics are considered “last resort,” he said.
The city has other collection strategies and continues to refer past-due accounts to its collection agency, Credit Systems International. The agency has about a 21 percent recovery rate for the city, and keeps between 18 percent and 22 percent of what it collects, Cox said.
Of the $5.2 million owed to the city, about 62 percent comes from more than 16,000 customers who owe, on average, about $200. At the upper end, about 400 customers owe, on average, more than $4,000 each.
Cox told the City Council that targeting that second group with the large outstanding balances was reason for asking for the authority to use liens. While he couldn’t say what percentage were commercial customers that owned the property with the past-due bill, he assured the council that only a “handful” of residential customers ever got that far behind and could be in that group.
DME won’t cut a residential customer off during a dangerous heat wave, and that sometimes leads to large past-due bills, Cox said.
Some council members questioned whether the city’s new collection and credit policy, which has proven effective, would mean less unpaid debt and less of a need for the tactics. Since the policy went into effect in 2011, the city has 28 percent fewer delinquent accounts each month and has seen a 48 percent reduction in uncollected debt, Cox said.
The new policy is controversial because it screens customers and charges deposits based on their credit history.
Previously, the city charged a fixed amount for deposits — one amount for residential customers and another amount for commercial — in order to turn on the power and receive other city services.
Some residents organized a petition drive to repeal the policy, saying it punished the people who could least afford the deposit increases. The petition stalled when the city secretary refused to certify it, and the petition organizers have since sued the city.
The case remains pending in a Denton district court.
PEGGY HEINKEL-WOLFE can be reached at 940-566-6881. Her e-mail address is firstname.lastname@example.org .