If, through negligence, neglect or just bad luck, someone destroys your property, they’re typically liable to repair or replace it.
Or are they? The answer is not as simple as you might think.
Here’s this week’s reader question:
I live in Florida. About five months ago I awoke to find four of my kitchen appliances were all burnt out. I called my electric provider, who came out and discovered that my terminal out at the street was severely corroded and caused the “negative neutral” that fried my appliances. They fixed the terminal but, despite much effort in communicating with the company and their insurance company, they denied any liability. Meanwhile, I have four appliances that are shot to the tune of about $1,250. I don’t know where to turn. It was their equipment which they neglected to properly inspect and maintain that obviously caused the problem. I would really appreciate any advice. I’m retired with a fixed income and probably can’t afford an attorney. Has anyone ever won a case against a utility company with similar circumstances? — Keith
Before we get to Keith’s troubles, here’s a video I did last year. It’s called “Why Today’s Appliances Suck.”
Now, let’s get to Keith’s question.
If someone messes up your stuff, they have to pay. Right?
Generally, the answer to that question is yes. If I run a red light and hit your vehicle with my car, I’m responsible for the damage to both you and your car. If you drop a bowling ball on my foot, you should have to pay my medical expenses. When we’re at fault, we pay. That’s only fair.
As most of us have discovered, however, life isn’t always fair.
I sent an email to the Florida Public Service Commission asking about damage to appliances through the negligence of a utility provider. The following is part of the response I got back from their spokesperson. It’s from the Tariff, the set of rules defining the relationship between a utility and its customers.
The [utility] company will use reasonable diligence at all times to provide continuous service at the agreed nominal voltage, and shall not be liable to the customer for complete or partial failure or interruption of service, or for fluctuations in voltage, resulting from causes beyond its control or through the ordinary negligence of its employees, servants or agents.
The customer shall indemnify, hold harmless and defend the company from and against any and all liability, proceedings, suits, cost or expense for loss, damage or injury to persons or property, in any manner directly or indirectly connected with, or growing out of the transmission and use of electricity on the customer’s side of the point of delivery.
So this says the Public Service Commission is granting immunity to the power company for any problems it causes, including those resulting from the ordinary negligence of its employees.
Why would a Public Service Commission, whose job it is to represent customers, let utilities off the hook? In a 2012 article from The Palm Beach Post concerning another customer whose appliances were fried in a situation similar to Keith’s, a spokesperson from the Public Service Commission said this:
These clauses protect the company from excessive insurance costs, keeping electric rates reasonable. Without these provisions, insurance costs to the company would be passed on to the consumer, making electric rates prohibitively expensive.
That statement would make a lot more sense if public utilities were nonprofit organizations rather than for-profit monopolies. Nextera, for example, the company that owns Florida Power & Light, made $423 million in profits in just the last quarter.
That’s probably more than Keith and I made combined, although we’re liable when we screw up.
They might pay anyway
Sometimes utility companies will pay. In the article from The Palm Beach Post I quoted from earlier, for example, the homeowner was offered compensation by Florida Power:
After Juno Beach-based FPL offered to pay $5,500 of the $9,616 claim, Dan McCallum, 75, contacted the Florida Public Service Commission. He also sent that complaint to FPL, which then upped its offer to $7,300.
One gets the impression that it was the noise McCallum made that resulted in the higher offer from FPL. So I thought maybe I’d try to make a little noise and see if that would help Keith. I sent an email to Florida Power & Light’s media relations department, explaining his situation and asking for an explanation. That was weeks ago. Still waiting for a reply.
You can still sue
The response I received from the Florida Public Service Commission included this sentence: “If a customer believes the utility is at fault for damage done to equipment, that needs to [be] pursued in civil court.”
So court could be an answer. As Keith points out, attorneys aren’t cheap. Still, if he doesn’t get any satisfaction by complaining to the company or Public Service Commission, I’d suggest two additional possibilities.
The first is to talk to a consumer attorney. (You can find one here.) Initial appointments are generally free, so there’s nothing to lose. Best case? They take Keith’s case on a contingency basis, write a threatening letter to the company and get a check. Worst case? They say there’s no way to win and won’t take the case. With a phone call or two, Keith can find out.
But here’s an idea I like even better. Keith should sue FPL in small claims court. He won’t need a lawyer. Small claims courts encourage consumers to represent themselves. FPL, on the other hand, will send a lawyer, one that will probably cost them more than the $1,250 Keith is asking.
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I founded Money Talks News in 1991. I’ve earned a CPA (now inactive), and have also earned licenses in stocks, commodities, options principal, mutual funds, life insurance, securities supervisor and real estate. If you’ve got time to kill, you can learn more about me here.
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