Newark, N.J.—New Jersey Public Advocate Ronald K. Chen today called on Verizon New Jersey to stop charging fees for residential telephone service, including a new $2 “low volume usage fee” and a proposed late payment fee.

Chen said that a letter sent to Verizon NJ stated: “It is common sense that consumers should not have to pay for services they are not using and haven’t signed up for.  The proposed late fees are also bad policy: low-income consumers would be hit hard, and your proposal has your company double collecting for late payments that are already accounted for in your rates. We will vigorously oppose these charges.”

Chen said the Public Advocate’s Division of Rate Counsel objects to Verizon’s practice of charging its residential service customers a “low volume usage” fee of up to $2 each month for long distance service even if they make no or few long distance calls. He said consumers are being unfairly treated and he is especially concerned that the charge will particularly hurt Verizon’s Basic Rate customers who have the company’s long distance service by default after some telephone companies got out of the market for long distance service.

Chen said the fee is being applied to Verizon consumers who have the company as their local exchange carrier and long distance service provider, but do not have a bundled calling plan for both services. In April, Verizon began billing its customers up to $2 a month if their long distance use falls below that amount. In 2000, the Federal Communications Commission terminated the low volume user fees charged by long distance carriers following a commitment by them to not charge the fee.

Chen commented:

“Although the $2 fee is characterized by Verizon as a long distance fee, the fee is a surcharge on basic service that cannot be imposed without the Board of Public Utilities’ (BPU) approval.  Verizon is free to set the per minute long distance rates it charges low volume usage customers,  but a blanket $2 minimum fee results in many ratepayers paying for services they never utilize. These costs for the network are already recovered in the basic local service charge and there is no need for an additional fee.”

Chen also said Rate Counsel has filed a letter with the BPU challenging Verizon New Jersey’s recent request to the BPU to receive a waiver that would allow the company to charge a late payment fee on a consumer’s monthly bill that could go as high as 18 percent annually.

Chen said:  “Contrary to Verizon’s arguments, the proposed late payment fee is a double recovery to Verizon because the approved Board rates now include an accounting for uncollected amounts, and late payment charges are not permitted to be assessed on ratepayers’ residential telephone service. If Verizon is allowed to collect these fees, Verizon would receive an annual $18 million windfall.”

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The Division of Rate Counsel is a division within the Department of the Public Advocate and represents the interests of consumers of electric, natural gas, water/sewer and telecommunications and cable TV service. Additional information on this and other utility matters can be found at the Division’s website at www.state.nj.us/publicadvocate/utility. The Department of the Public Advocate website is http://www.state.nj.us/publicadvocate