Raw deal: Insurance shouldn't be forced on sewer customers
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The Pittsburgh Water and Sewer Authority's new contract for water and sewer line protection smells bad.
A new $5 monthly charge is being tacked onto bills for water and sewer line protection, but customers were never asked to sign up for it. Instead, those who don't want the insurance, or who may already have it from another provider, must fill out a form and submit it to opt out.
That's not right. Consumers typically cannot be charged for a service unless they decide to buy it. In fact, under the city code, private companies are prohibited from using the "opt-out" method of drumming up new business. But, as a government entity, the authority is exempt from that provision. The company that previously offered the insurance to authority customers used the "opt-in" method. That company, Linebackers Inc. of Wexford, found most customers didn't want it.
Equally troubling is how Utility Line Security of Forest Hills wound up with this deal. In June, when Linebackers' five-year agreement was coming to an end, it had the option to rebid and the authority placed newspaper advertisements seeking others. ULS, just weeks old at the time, was the only other bidder, and it got the work. It was to charge $8.50 a month, with coverage limits of $7,500 for sewer work and $3,500 for water lines.
After several months, though, only about 5 percent of customers had opted in for the service. City Councilman Patrick Dowd, an authority member, said he was pushing for coverage for more people because of the despair voiced by residents when they learned necessary repairs would cost them thousands of dollars.
But authority lawyers advised against simply mandating the coverage for fear the utility then would become responsible for the customers' portion of the lines. Rather than issue requests for new bids, based on the opt-out method, the authority accepted a revised offer from ULS. The company agreed to spend up to $1 million to cover the cost of separating customers' gutters from their sewer lines at no cost to them, service that would affect more than 4,000 homes. In exchange, ULS would have a much better shot at getting the authority's 130,000 customers to purchase the insurance because it now could use the opt-out provision.
First Published February 12, 2010 12:00 am
