Alphonse Mourad, controversial owner of several properties including 1,500-unit Mandela apartments on Washington Street in Roxbury, argues that the 18 percent interest charged on late payments could kill his business and others that fall behind.

Utility officials will not discuss Mourad's situation, but they reject the notion that their billing is unfair. After supplying a product and a service, it costs utilities money when the bill isn't paid, [William Lippincott] said.

Mourad filed a complaint against both Edison and Boston Gas with the Department of Public Utilities, asking officials to revise rates for late payments.

Full Text:
Copyright Boston Herald Library Dec 2, 1992
One of the city's feistier landlords says his dispute with utilities and state officials is a battle to stop a rip-off 18 percent rate for late payments.

Alphonse Mourad, controversial owner of several properties including 1,500-unit Mandela apartments on Washington Street in Roxbury, argues that the 18 percent interest charged on late payments could kill his business and others that fall behind.

Mourad said he has paid $1.1 million to Edison, but still owes $259,815, including $186,000 in interest.

"What was good in the 1970s when interest rates were high - is that good in 1992 when there is a recession and the prime lending rate is 6 percent?" said Mourad, a veteran of conflicts with local officials.

"They respond, `just pay your bill.' That's not the issue." Mark Cooper, research director of the Consumer Federation of America, agreed that the 18 percent rate is unfair in a time of low inflation and interest rates,

"I think 18 percent is outrageous," he said. "We're outraged that the credit card folks are still getting 18 percent."

But Cooper acknowledged that late payments have skyrocketed.

William Lippincott, manager of credit collection at Boston Edison, said businesses whose payments used to lag a month are often 60 days behind. Those which used to lag 60 days are now three months behind, he said. "It's a reflection of the economy."

Utility officials will not discuss Mourad's situation, but they reject the notion that their billing is unfair. After supplying a product and a service, it costs utilities money when the bill isn't paid, Lippincott said.

Late payment interest makes up for the cost of collecting bills as well as for carrying debts that are never paid, he said.

The rate was last changed in the 1970s. Since then, the Department of Public Utilities has routinely ratified it with each new utility rate case, said director Tim Shevlin. "We could say no, but we don't."

But if rates for late payments are lowered, they would encourage non-payment, he said. "Utilities are not in the business of extending credit. They are not lenders, so it's not relevant that the prime interest rate is only 6 percent."

Besides, if a business doesn't pay for the power it uses, the ratepayers will, Shevlin said.

What utilities should charge depends on how the cost of unpaid bills is defined, Cooper said. Is it the cost of the utility's borrowing short-term money to make up the shortfall? Or it is only the lost income for money the utility didn't have in the bank?

Short-term savings rates are about 3 percent.
Cooper recommends a rate similar to mid-range borrowing rates, now about 12 percent.

Mourad also has wider concerns. He said he believes utilities support city efforts to run him out of business so that Mandela can eventually be leveled as part of a high-profit redevelopment of the area.

Mourad said he fell behind in his utility payments while he was spending nearly $800,000 in legal fees fighting the city and the Boston Redevelopment Authority.