Photo by Jim Massara
Kevin Greiner of Gas South said that about 8 percent of his company’s residential customers in Clayton County are on the Pay As You Go plan.
MORROW What do you do if you sell a needed service but you have to turn away half of the customers who want it because they’re bad credit risks?
Gas South solved that problem — and profitably, according to president Kevin Greiner — with a Pay As You Go program for its natural gas services.
Greiner, who also chairs metro Atlanta’s 2012 United Way campaign, spoke Thursday before the Clayton County Chamber of Commerce. He talked about both United Way and the Pay As You Go program, which he said was in part inspired by discussions with non-profits like United Way that gave his company perspective on how best to serve less credit-worthy customers.
When Gas South started the program in 2008, gas providers generally asked their riskier customers for large deposits upfront, which many couldn’t afford. Gas South was turning away about half of the customers who applied for its service.
“That’s one of the paradoxes of the free market — customers who can least afford to pay for certain products and services often end up paying the most,” said Greiner. “I wouldn’t trade the free market for anything, but it’s one of those things we all struggle with in business.”
The problem would then be made worse when those who could just barely afford gas service would finally be cut off because they couldn’t pay their bills. Past due bills were often as high as $1,000.
Greiner said he was surprised then when social-service agencies told him they could help more people — not fewer — if their overdue gas bills weren’t so high by the time these people reached them for help.
Gas South responded with its Pay As You Go program, which required no deposit but relatively quick payment.
The catch? If you’re five days past due, the gas goes off.
Initially, staff at Georgia’s Public Service Commission didn’t like it — at all.
“That was a controversial aspect of this program,” said Greiner. “Their [PSC’s] first reaction to it was ‘No way. What are you guys thinking?’”
Gas South’s persistence — and a favorable vote by PSC commissioners — eventually allowed the project, which Greiner said has been successful, sustainable and profitable for his company.
The program has served 65,000 households over a four-year period, with about 15,000 of those customers graduating to less expensive standard-payment plans after a year of paying bills on time.
According to Greiner, Gas South serves a little more than 10,000 accounts in Clayton County, most of them residential. Currently, 747 of those customers — or about 8 percent of the residential customers — are in the Pay As You Go program. An additional 455 Clayton County customers graduated from Pay As You Go to other rate plans due to a good payment history.
Another aspect of Gas South’s Pay As You Go Program is reporting positive credit behavior — instead of only reporting late payments — to the major credit reporting agencies. This way, Greiner said, customers can work toward rebuilding damaged credit ratings.
He added that the success of Gas South’s program, which is about to celebrate its fourth anniversary, helped pave the way for other, similar programs from other gas providers.
“I wouldn’t say it’s a cure-all for underserved communites,” Greiner said. “I also wouldn’t say it’s an easy business proposition. This is still tough stuff.”