April 08, 2009
It's a crime. And it can lead to jail time and civil fines. But it can also cause death and destruction. It's about stealing electricity -- an offense that recently triggered a blaze in a Philadelphia row home that killed a young mother and her small child, all by circumventing the meter and plugging right into the abuser's circuit box.
Hard times and high prices tempt people. But power theft is unsafe and illegal. It can impact corporate financials and the resources that utilities would allocate to the delivery and generation of electricity, affecting entire communities. And if that message doesn't sink in, then effective prosecution will.
Theft has been discovered in industrial, commercial, agricultural and residential properties. The methods of tampering used vary from the crude to the sophisticated. Besides doing an end-around the meter, some users try to jam them so that they don't properly register while others plug into their neighbors' gas and electricity lines. In the case of electricity, it can lead to electrocution and fires. In that of gas, it can cause explosions or carbon monoxide poisoning.
According to the International Utilities Revenue Protection Association, 80 percent of theft cases are found in the residential segment while 20 percent are discovered in the commercial and industrial sectors. However, the commercial and industrial sectors account for 80 percent of the revenue that is lost from "stolen electricity." Electric Power & Light says it's a $6 billion-a-year problem, which represents one percent to three percent of the industry's annual revenues.
"Energy theft is an issue, of course, but a more accurate reflection of the economic situation is what's happening with late payments," says Pat Hemlepp, spokesperson for American Electric Power. "As of today we haven't seen a significant change in the percentage of customers who are in the 'beyond 90 days' category that is subject to disconnect. Of course, layoffs really didn't start hitting the vast majority of our service territory until very late in the year, so we are watching this closely."
The utility says that it has among the lowest electric rates in the country and that such bills are relatively less when compared with cable and cell phones. Nevertheless, AEP, which serves such hard-hit states as Ohio and Michigan, estimates that it checked out nearly 3,200 cases since the beginning of this year. While that represents a 27-percent increase from the year before, Hemlepp says that the utility is conducting an increasing number of investigations each year.
Indeed, utilities can learn about malfeasance from a variety of sources, notably those meter readers that run visual checks and who may notice some unusual trends. Modern meters today are furthermore equipped with devices to aid power companies in their efforts to short-circuit such crimes. But many utilities without the latest technologies still rely on old-fashioned legwork and hot tips from other faithful customers.
Charging Ahead
Consider The United Illuminating Co., whose field worker discovered some hanky-panky outside a residence in Erie County, New York. An electrical contractor there had bypassed the meter and had run wires right into his home. He was charged with larceny, or the stealing of $13,500 in electrical power since 2003.
Similarly, some Kansas City Power & Light employees found a meter into which holes had been drilled, with wires subsequently stuffed inside so as to jam it. The Kansas City Star there reports that in the first two months of 2009, the utility saw a 15- to 20-percent rise in electricity thefts over the same time period last year. The same newspaper says that providers in Memphis, Tenn., have recently seen a 56-percent rise in thefts.
USA Today, meanwhile, published a story that says 14,000 customers in Philadelphia had their power cut off in early 2008. Of those, a third were then found to have gained illegal access to electricity last year. It adds that power disconnects across the country have doubled in the last year and now account for four percent of all residential accounts.
The cost of absorbing delinquent power bills or stolen electricity is passed on to others. For their part, utilities try to inform consumers and to dissuade such activity, emphasizing that the industry participates in programs to assist those in need. As such, they go on to say that pilfering won't be tolerated and it will be prosecuted.
Kissimmee Utility Authority in Florida is fighting back by trying to eliminate theft and to reduce related costs. It trains law enforcement officials so that those officers can investigate anyone found diverting, bypassing or tampering with an electric meter. In Florida, theft of utility services can be charged as first-degree misdemeanors that can bring jail time and fines.
"In good times and in bad, there are those people who try to beat the system or feel it's necessary to try to work outside of the system," says Betty Turner, a spokeswoman for Nashville Electric Service, whose comments appeared on WSNN Television there. "We have those customers, and we're working to try to curtail that as much as possible. We don't want anyone to get hurt or to go to jail because of their need for electricity."
There may be no readily apparent names and faces. But stealing electricity is not a benign crime. Not only are the losses passed on to other paying customers but utilities also employ thousands of workers while a multitude of shareholders depend on their fixed dividend payments. It's thievery -- whether it's manipulative traders trying to jack up prices or average citizens trying to get their power and gas for free.
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Ken Silverstein EnergyBiz Insider Editor-in-Chief
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