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PSC drafts rule to prevent utility payments at payday loan facilities


ST. JOSEPH, Mo. – The Public Service Commission met at the Missouri Western University Hearnes Center today for their regularly scheduled agenda meeting, approved three orders and discussed in depth a possible rule change to allowing utilities to use payday lending facilities as payment locations.

Commissioner Kenney
Commissioner Kenney

Most utility companies in the state to do not use payday loan facilities as payment locations – most are found in urban or suburban areas. Commissioner Bill Kenney commented that the locations he found were in his former senate district – Blue Springs and Lee’s Summit.

Several groups came forward to comment, ranging from utility companies and short term loan providers to social and educational groups, during the comment period from May to June.

“Allowing payday loan storefronts to serve as pay stations for utility bills puts our families at risk!” said Sister Berta Sailer – a cofounder of Operation Breakthrough in Kansas City. “A parent with limited resources is easy prey for lenders who will entice them to borrow in order to keep heat or lights on. I ask that you investigate alternative sites.”

Utility wise, Summit Natural Gas commented that it does not have any locations at payday lending facilities. Empire Electric said the same, but added further comment saying they prefer flexibility for pay locations.

“Empire prefers to maintain the flexibility to select its own pay station locations,” said Diana Carter, attorney for Empire Electric. “Pay stations are for the convenience of Empire’s customers and aid in the collection of utility payments, and Empire submits that each regulated utility should be able to exercise its own informed judgment and make these types of managerial decisions without unnecessary interference.”

PSC Staff issued a report in mid-August recommending the Commission not draft the rule, with their reasoning being “the Commission’s authority for doing so is at best unclear.” Missouri Energy Development Association submitted comments agreeing with Staff.

“MEDA compliments Staff on its management of the workshop and the thoroughness of its Report,” read the supplemental comments. “MEDA supports the conclusion reached by Staff that the Commission should not embark on promulgating a rulemaking, the purpose of which would be to arbitrarily prohibit or restrict a utility’s ability to contract with third-parties, including payday loan establishments, to act as authorized utility pay agents. MEDA concurs in Staff’s observation that the Commission’s statutory authority to address this issue is at best unclear. Staff notes that payday loan establishments are engaged in a lawful business that is regulated by the Missouri Division of Finance.”

OPC responded to Staff’s report stating it did not agree that authority was unclear.

“[T]he Commission has clear authority to regulate billing and collection practices affecting utility customers and the jurisdiction to determine that practices of such lenders exceed what is in the public interest, and so, prohibit public utilities utilizing certain short-term lenders as pay stations,” read OPC’s response.

Chairman Kenney
Chairman Kenney

Today, Chairman Robert Kenney said, “Let’s take a stab at formulating some language,” supporting “the language that was proctored by the Office of Public Counsel.”

Kenney opened the discussion, saying it may be questionable that the Commission has the authority to create such a rule, but answering his own quandaries about whether a rule would be good public policy.

“I was persuaded several years ago that it was a bad idea to locate pay stations at these facilities,” the chairman said, saying that having these locations available for payment gives a “signature of approval.”

Commissioner Stephen Stoll sided with Chairman Kenney, saying there was a public demand for a rule.

“I received phone calls from folks urging us to promulgate a rule,” Stoll said.

After Stoll discussed stakeholder involvement with Chairman Kenney, he concluded that a rule should be drafted.

“The one thing is that I think having the utilities logo on the door lends credence to their legitimacy,” Stoll said. “People can still go there to pay a bill. We should move forward to making a rule.”

Commissioner Bill Kenney seemed to side with Stoll and Chairman Kenney, saying the practice “preyed on those with limited options.” Bill Kenney responded to Stoll’s stakeholder involvement quandary, saying payday loan interests that he spoke to were not concerned with a rule.  Bill Kenney named consultant for the payday loan industry, Mark Rhoads, as someone he sat down with to discuss the matter.

“My understanding is that they are concerned that utility payment at a payday store may entice a customer to take out a payday loan,” Rhoads told The Missouri Times. “First of all, from an industry standpoint – even if that were true – we don’t see anything wrong with it. It is much cheaper for a consumer than paying a disconnect and a reconnect. Secondly, we did some research, which we submitted to the commission, which showed that there is not a direct tie to the payment of bills and taking out a payday loan. We think that the Commission, and while we understand their concern, is trying to solve a problem that doesn’t exist.”

QC Holdings submitted comments in June to the Commission, providing information about the industry. The comments explain that the Community Financial Services Association represents more than 300 Missouri short-term loan centers.

“CFSA members QC Holdings, Advance America and Check Into Cash are the largest providers of short-term ‘payday’ loans in the state,” states the comments. “All three companies serve as an agent for third parties that accept utility payments on behalf of a variety of utility companies. QC, for example, via its Moneygram service, accepts payments for utility bills in about 85 of our 100 Missouri branches.”

“If it is the Commission’s opinion that Missouri consumers should pay no additional fees when making utility payments, we have no objection to this proposal,” continued QC Holding’s comments. “However, we strongly contest the unsupported opinion that payday loan stores are taking advantage of bill pay customers. As noted below, there is almost no overlap between bill pay customers and payday loan customers.”

Commissioner Rupp
Commissioner Rupp

“A couple of the utilities mentioned that if we were to impose a rule, we would cause a hindrance to those who have to travel [to pay their utilities],” Bill Kenney said, saying the locations he found were in suburban Kansas City, not requiring much travel at all. He agreed that he did not want to see payday loans “legitimized” by utilities, supporting the creation of a rule.

Commissioner Daniel Hall said that he was unsure of how clear the Commission’s authority was regarding drafting such a rule, but said the rule should not include liquor stores or casinos as payment locations.

“We should tie any rules to a particular interest rate,” Hall said.

Commissioner Scott Rupp defended flexibility of choice in payment locations, saying that he did not “see an issue at this time.

“I don’t think it is the role as a commission to prevent people from making poor choices,” Rupp said.

Chairman Kenney closed discussion wanting a rule formulated.




Tariff and New Orders
  Item No. Case/Tracking No. Company Name/Brief Description Lead Staff/Additional Staff Contact(s)



Kansas City Power & Light Company — Notice Acknowledging Annual Update Report and Closing File Pridgin



KCP&L Greater Missouri Operations Company — Notice Acknowledging Annual Update Report and Closing File Pridgin



Summit Natural Gas of Missouri, Inc. — Order Regarding Partial Stipulations and Agreements Jordan


Case Discussion
  Item No. Case No. Company Name/Brief Description Lead Staff/Additional Staff Contact(s)
Rule to be drafted



Commission — Memorandum: Discussion of Staff’s Report Regarding the Need for a Rule to Prohibit Utilities from Using Payday Type Lending Facilities as Authorized Pay Stations Woodruff



Summit Natural Gas of Missouri, Inc. — Prehearing Discussion – Michael Stark v. Summit Natural Gas of Missouri, Inc. Jones



Liberty Utilities (Midstates Natural Gas) Corp. — Prehearing Discussion Pridgin


Other Discussion
  Other Description Brief Description Lead Staff/Additional Staff Contact(s)
Commission Scheduling Matters Kenney (Robert)
Legislation Kenney (Robert)
Budget Kenney (Robert)
Comments submitted as edited Other Draft FCC reply comments regarding Connect America Fund Phase II. Van Eschen, Dale
Closed Session Kenney (Robert)
Litigation Kenney (Robert)
Litigation External Litigation Harden
Personnel Kenney (Robert)

The Commissioners held public meetings in north Missouri afterwards regarding the Grain Belt Express line.

The PSC will meet next Wednesday at noon, due to evidentiary hearings for the Liberty Utilities case. There will be no meeting on the 17th.