Due [date], 2013: $61.38
Due after [date]: $62.01
The penalties for paying my rent, internet, or credit cards all have some teeth to them, but 1%? It’s not like they shut the power off with one missed payment. I’ve noticed these very small fees in DC and central VA. Given that the power industry is somewhat more regulated than other industries, I’m guessing it stems from some external rules that are in place. Anyone know a bit more about this?
In a nutshell, late fees are (1) to offset the costs of any special handling your account requires because of delayed settlement and (2) to punish you for being late.
Since special costs are negligible these days and have been since computers started handling billing and AR accounting, the whopping charges you get from most companies are more about punishment and alternate revenue - even if they’re presented and described as special handling fees.
Power companies are tariffed like any public utility, meaning they operate under a massive set of rules and regulations mostly meant to protect the public they are serving. So their late charges are likely limited to some small finance charge/percentage or an agreed amount related to the real cost of any special handling. Or - they just haven’t found any need to augment their revenue stream by punishing customers who mail their payments late. Utilities often operate with a lien of some sort, so they are guaranteed to get their money in all but a few cases.
ETA: Not contradicting anything I already said, but power companies tend to operate on very old-fashioned accounting principles, like 1 or 2 percent discount for early payment and then a 10% finance charge rate after that point. That might be the small difference: pay before due, small discount; pay after, it’s net. (Let it go a long time and there might be additional charges proportional to the debt.)
My bank is a former credit union, now it’s a mutual bank, whatever that means. If you have an overdraft account set up, they’ll charge something like 24 cents if you pay off a $1000 overdraft in a day or two. It doesn’t even cover the cost of mailing a late payment, but they do anyway. Sure beats the Wells Fargo banks out there.
Pretty much all banks have some form of this. People who wander into a bank, set up whatever checking option seems cheapest, then spend years bitching about how the bank is perpetually cheating them - especially if they outgrow the terms of the “basic” or “starter” or “student” checking they chose - are ignorant of what banks are and how they work.
(It shows you how far back I go on this, but in my short banking career I saw dozens of people who set up per-check accounts where the fee was something like $1 a month and ten cents a check. They hit that adult stretch where you wrote 40-80 checks a month [this is the pre-ATM, pre-debit card era, kids] and they’d come in raging about being ripped off. The CSR would quietly waive that month’s charges… and convert their account to the unlimited-check model at $3 a month. While this is an 'orribly dated example, I talk to four or five people a year doing some variation of it, and they invariably find out their bank is ready, willing and able to accommodate them with a better-fitted plan.)
If your life is in flux, as most younger people’s are, it’s worth a chat with an account representative once a year or so to see if there’s a checking plan or ancilliary services that would make life more convenient or save you unnecessary charges. Keeping some money stashed in a savings account or money market account and allowing it to be tapped for overdrafts can save many headaches and expensive fees. (Putting more money in your checking bank can also get you into better free-services tier.)
I think my credit union also offered credit cards, so very easy to only have a few debits each month from the checking account.
Thanks for the power company reply above. Sounds like the fee reflects (somewhat) the actual cost of the delayed payment and processing.
Sounds like the opposite of my power company which offers a 20% ‘discount’ for prompt payment. So there’s a massive penalty for being late. Having said that though even at the late price they’re still cheaper than the local alternatives.
I don’t think I have any alternatives here.
And this is where I differ from other folks. I ask why everyone else has such high late fees…
Post #2 has a few clues. 
Yes post #2
Public utilities are regulated usually by the Public Service Commission, which rules (called tariff) vary state to state and many rules go very far back and change very slowly. Most of those don’t have today’s concept of fees and based more on a interest rate mindset, which is typically 1.5% where I am. Though that seems small, it is 18% annual, and for the time it was implemented was on the high side of reasonable.
Also many utilities if they overcharged a customer over time may be required to repay plus the 18% which quickly can be more in interest then principal if the overbilling goes back years.