Public Utilities

HOW LONG WILL THE ATTORNEY GENERAL
PERMIT UTILITY COMPANY USURY?

- PRESS RELEASE -
for immediate release

V & M MANAGEMENT CO, INC.
10 HAMMOND STREET
ROXBURY, MASSACHUSETTS
(617) 445-0650

While Attorney General Harshbarger is portraying himself as the great protector of the consuming public, the Boston Gas Company remains unfettered in its usurious overcharging of interest on unpaid bills - a practice that harms both public and private interests. As a result of its policy of compounding interest charges, Boston Gas has charged certain consumers as much as 44% interest, all while the prime rate and other key bank rates continue to hover below 6%.

On February 4,1975, the Massachusetts Department of Public Utilities authorized the Boston Gas Company, among other public utilities, to impose a monthly late charge of 18% on overdue commercial accounts (past 25 days). Boston Gas justified this chargeon the grounds that commercial and industrial users were not paying their bills on time, and were building arrearages which caused the Company to experience cash flow difficulties and incur expensive, short-term borrowing to cover expenses.

In 1977 and 1978, the Department went even further, and confirmed the utility company practice of charging interest on overdue amounts, as well as charging a 1.5% per month late charge on any unpaid Interest charges as well. This long standing practice has transformed the already excess "simple," authorized interest rate of 18% on unpaid sums into usurious effective interest rate of 21.35%

In February of this year, V & M Management Co., Inc., the owner of the Mandela Apartments in Roxbury, challenged these strangling and usurious anti-consumer interest charges by lodging a complaint with the Public Utilities Department The Mandela project, which houses 1,500 low income, federally subsidized tenants, had also been victimized by Boston Gas, which charged
V & M an effective interest rate of 43.8%, calculating combined usage and late charges. The burden of these

1 Source: Transcripts of Boston Gas accounts 19-2332-0898-41 (560 Shawmut Avenue) and 19-1477-0898-30 (10 Hammond Street), Boston Gas Company (prepared by M. Robinson). Charges have posed a serious threat to the project's financial viability and threaten to force the project into receivership, displacing 1,500 low income, minority tenants.

Official sanction of these astronomical interest rates gives the utility companies both license and incentive to commit commercial larceny by allowing the companies to make more money on charging interest than by providing basic utility services. Armed with the power to charge both simple and compound interest, utilities can attach and foreclose on properties that cannot pay these shylocking rates.

Especially in these recessionary, economically troubled times, the Department of Public Utilities has a public duty to stop these usurious interest charge practices. The Attorney General also has a public responsibility, on behalf of the consumers, to investigate and remedy these unfair, anti-consumer, anti-tenant interest pyramiding practices. The 24% increase in second mortgage foreclosures currently seen is only the tip of the iceberg. If landlords cannot obtain some relief from these usurious utility overcharges, the the Department of Public Utilities and the Attorney General may sound the death-knell of affordable housing in Boston. The Attorney General's job is to protect consumers - after all, the utilities are not consumers.

* Al Mourad is President of V & M Management Co., Inc., and has been a Roxbury resident and landlord committed to affordable housing for almost two decades. He invites similarly victimized commercial utility consumers to join in a class-action lawsuit intended to remedy these unfair practices.