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Utility Collection: Facts and Learn How to Handle Utility Debt Collection

Utility Debt Collection Facts

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Betsalel Cohen
UpdatedJul 15, 2024
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    4 min read
Key Takeaways:
  • Is your utility regulated by your state public utilities commission?
  • How to find your state utility regulator.
  • Beware: Your state's statute of limitations may not apply.

Utilities are an integral part of our daily lives, providing essential services that keep our homes comfortable and our lives connected. Utilities are essential for our survival. They provide warmth in the cold winter months, keep us cool in the summer heat, give us hot water for bathing, and connect us to the world via the internet.

But what happens when financial challenges strike and you find yourself unable to pay your utility bills? Unpaid utility debt can lead to collection calls, or service cuts.

Learn more about utility debt, utility collections, and your rights. Finding effective strategies to manage and resolve utility debt can help make sure you can maintain these essential services without undue stress.

Who regulates utility bills and debt?

When it comes to debt collection, utilities are unusual and do not follow the same laws credit card issuers, automobile finance companies, or mortgage lenders must follow.

Utilities are not bound by any federal consumer laws, and it is unsettled if utilities even need to honor the same state statutes of limitations everyone else must follow when it comes to collecting unpaid bills. Some utilities report to your state’s public utility commission and must follow its rules. Other utilities, including one or more providing services to you right now, are barely regulated at all and do not need to pay attention to a utility commission.

RegulatorType of utility
State Public Utility CommissionElectric* Natural Gas Telecommunications*
Municipal or No RegulatorWater Sewer Cable/Internet

* May be locally regulated if municipally owned

Utilities regulators. Source:

How long can a utility company chase you for debt?

The duration for which a utility company can chase you for debt typically depends on the statute of limitations in your state. This statute varies by state and type of debt, but for utility debts, it generally ranges from 3 to 6 years.

However, it's important to note that these limitations may not strictly bind some utility companies, and the rules can vary depending on whether the utility is regulated or unregulated.

If the debt is sold to a collection agency, the Fair Debt Collection Practices Act (FDCPA) rules apply, but this also doesn't change the original statute of limitations for the debt. Always check your specific state laws and consult with a legal expert for the most accurate information.

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Gas and Electric Utility Collections

Gas and Electric utilities are usually subject to rules created by your state’s public utility commission. If you have a problem with your gas or electric utility, your first step is to contact your state’s utility regulator. Start with this list of regulatory commissions to find your state’s utility regulator.

Your state regulator may or may not have authority over your utility. Investor-owned utilities are highly regulated. Municipal and rural electric cooperatives (co-ops) have less or no regulation. When you contact your state regulator, learn if your utility is regulated. If your utility is subject to state regulators, learn the rules they must follow concerning debt collection. State regulators usually post these rules, sometimes called "Consumer Rights," on their Web sites.

Here are some of the issues you need to learn:

  • What is the time limit for collecting the debt?
  • What payment plans must utilities offer?
  • Are utilities allowed to cut-off service during winter months?
  • What, if any, grant programs are available to the unemployed, people on fixed incomes, or the disabled?
  • Does the regulator offer a consumer-aid or ombudsman’s office to mediate disputes?

Note that the statute of limitations may apply to the utility trying to collect the debt from you actively. However, you may not be able to get service if you have an outstanding bill. Why? In general, businesses have the right to transact business with whom they wish. If you owe someone money, even if the debt is from 50 years ago, they can do business with you on the condition the old debt is paid. In all but two states, the passing of a state statute of limitations does not cancel or forgive a debt.

Use the information you learn from your state utility commission to resolve the debt.

For example, if you cannot afford to pay your utility bill, learn if you live in one of the 20 states that offer programs for the unemployed or people with low or no income. Learn if there’s a level-payment plan or low-income discount that might reduce your bill. Apply for a grant or deferment, if available.

If you are disabled, some states outlaw the disconnection of your utilities if the utility knows you are disabled.

Collections by Municipal Utilities

What should you do if your state utilities commission does not regulate your utility?

Municipal and customer-owned utilities must follow published rules for operating as public utilities. Here, you will need to contact the customer service staff at your utility to learn what payment plans it offers. If you get no satisfaction in dealing with the customer service staff, contact a local legal aid society to enlist the aid of a lawyer in breaking the logjam.

Make sure you agree to a payment plan you can afford.

Collections by Unregulated Utilities

Some utilities are not regulated, or are not required to offer payment plans. For example, propane and heating oil companies and satellite TV providers are not regulated but are subject to state debt collection laws, like any other business. If you have a problem with non-utility in your state, contact your state attorney general’s office, and file a complaint.

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Utilities Collections by a Collection Agent

If you move from a utility’s service area or otherwise no longer receive services from the utility, the utility may ask a collection agent to collect the account, or sell your account to a collection agent.

The fact the collection account was based on a utility debt does not change the rules collection agents must follow. In other words, collection agents must follow the Fair Debt Collection Practices Act (FDCPA) regardless of the collection account’s source.

Bills Action Plan - Dealing with a utility collection debt

If your utility is regulated, go to your state regulator's Web site to learn the rules your utility must follow. Apply for aid if you are unemployed, low-income, or disabled. Unregulated utilities must follow self-imposed rules for customers unable to pay a bill. Consult with your state attorney general if a utility is not following your state's consumer protection laws.

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Debt statistics

Mortgages, credit cards, student loans, personal loans, and auto loans are common types of debts. According to the NY Federal Reserve total household debt as of Q1 2024 was $17.69 trillion. Housing debt totaled $12.82 trillion and non-housing debt was $4.88 trillion.

A significant percentage of people in the US are struggling with monthly payments and about 26% of households in the United States have debt in collections. According to data gathered by from a sample of credit reports, the median debt in collections is $1,739. Credit card debt is prevalent and 3% have delinquent or derogatory card debt. The median debt in collections is $422.

The amount of debt and debt in collections vary by state. For example, in New Jersey, 22% have any kind of debt in collections and the median debt in collections is $1273. Medical debt is common and 11% have that in collections. The median medical debt in collections is $472.

To maintain an excellent credit score it is vital to make timely payments. However, there are many circumstances that lead to late payments or debt in collections. The good news is that there are a lot of ways to deal with debt including debt consolidation and debt relief solutions.



DDanielle Wilson, Jun, 2021

Im move in July 1 2021 and I called my electric company and I gas company They’re saying that my bills went to a collection agency!! They’re saying that the bills over 22 years old I don’t know how that will be because at that point I was a minor I was only 15 years old and I like to talk to someone about my bills

JJosh, Aug, 2021

Hello Danielle.

Thank you for reaching out. We would be more than happy to direct you to one of our affiliates who can discuss your bills. Should you like to speak with someone directly you can converse with Freedom Debt Relief at 800-852-1431. We also recommend exploring our website at to review other affiliates that may assist you in your financial needs.

Regards, Josh