Can utility co. charge 10% "late penalty" when current charges are being paid timely but customer has past due balance?

Question

Local utility company has a written 30-day due date for utility bills.  If not paid w/in 30 days, assess a one-time 10% penalty, plus .5% monthly interest for past-due balances.  
 
If customer has a past-due balance, utility company then puts "DUE UPON RECEIPT" on the monthly bill and imposing a 10% penalty on the CURRENT CHARGES if paid after the due date, which is the same day the customer gets the invoice. Thus, unless the customer can completely pay the past due balance AND the current balance the day the invoice is received, another 10% penalty is applied.  
 
EXAMPLE: 
 Jan 1 invoice for $300 in utilities. Customer makes $100 payment on Jan 30.  
New invoice on Feb 1 with $20 penalty for $200 past-due + $300 in new utilities.  Total due: $520.  
Customer makes $300 payment on Feb. 28,  paying new utility charges w/in 30-day window 
New invoice Mar. 1- utility company charges $30 penalty + .5% interest on past-due balance.  
 
Legal? Seems to short-circuit 30-day rule.

Maurice Mandel II · Answer

It appears that the utility company is applying your payments to the oldest debt, not the current debt, this means as long as you keep a past due balance you are going to be assessed late fees for underpayment of the bill. To avoid this you would have to pay off the current balance 100$.  I would question the March 1 $30 charge because your past due is only $220, so they overcharged you on the penalty.  One of the problems with fighting with your utility company is that they always have the last word and if you don't pay what they demand, they cut off your service and then won't allow you to have an account with them.  It isn't fair or right but that's the way it is.  There are also programs for people to spread out utility bill payments when the utility has high and low seasons (i.e. gas bill in the mountains where colder in winter, more gas for heating)  You should look into your utility to see if they have such a program.

James L. Arrasmith · Answer

Utility companies may charge a late penalty for past due balances, even if current charges are being paid on time. It's best to review your contract or contact the utility company directly to understand their specific policies. You can discuss any concerns with them and explore alternative arrangements if needed.

Q: Can utility co. charge 10% "late penalty" when current charges are being paid timely but customer has past due balance?