CONSUMERS: Pity the Suppliers

A Detroit man files for a loan with the Dial Financial Corp.: $600 to pay his overdue fuel bill. The Georgia Power Co.’s Atlanta switchboard hums with a record 70,000-plus calls a month, mostly from hard-pressed customers complaining about the jump in utility charges. In St. Louis, Cleo Starks, 40, marches down to the Laclede Gas Co., her $300 fuel bill wadded in her fist, and punches the daylights out of Inez Paoletti at the customer service desk. “I don’t know what happened,” Starks told police. “My mind just snapped.”

Consumers are reacting to high-rise fuel costs—heating bills have doubled this year for some Americans—with a mixture of anger and befuddlement and an increasing reluctance to pay up. Most of the foot dragging is in the Midwest, hardest hit by the Big Freeze. Some 21,000 Chicago-area residents are in serious arrears to the Peoples Gas Light & Coke Co. for a total of $7.5 million —about double last year’s debt. The Gas Service Co. of Kansas City, Mo., reports that 21% of its 753,000 customers are behind in their payments to the tune of $5,159,000—over a fourth of its January sales. At Detroit-based Michigan Consolidated Gas, just recovering from a strike of meter readers, overdue bills total $15,067,660—more than half the company’s entire net income for 1976.

Cash Crisis. Most gas retailers operate on a close-to-the-knuckle cash flow; they must pay their suppliers on demand, often on a day-to-day basis. Most Midwestern utilities are able to maintain this balance of payments because consumption is way up and the majority of customers are still paying. But in New England, where homeowners typically heat with oil, the cash crisis is becoming lethal. Wholesalers, especially the major oil companies, have screwed down credit limits so tight that dealers in Boston are being given as little as five days to pay for shipments. At the same time, unpaid bills from lallygagging consumers are piling up as never before. “I got more customers out 90 days than I care to talk about,” says Litchfield Oil Co.’s Ken Knight of Lowell, Mass. For all of New England’s 2,200 fuel oil companies, unpaid accounts are running from 17% above normal for larger dealers up to a ruinous 38% for small operators. Since October, 26 dealers have been forced to go out of business because their cash flow dried up; another 175 are expected to drop out before the end of winter.

Despite the pressures on them, most fuel and utility companies are willing to strike a deal with dilatory customers. But with fuel consumption running 20% ahead of normal in some areas and costs soaring, the bite remains real enough. Says Litchfield’s Knight: “It’s a real dog-eat-dog winter.”