The Washington Utilities and Transportation Commission has fined Puget Sound Energy $250,000 for violating a 2010 commission order meant to curb improper handling of disconnections of low-income customers who fall behind in their payments.

The state regulatory commission originally penalized the company $104,300 in October 2010 for improperly handling accounts of customers, including many low-income customers disconnected for nonpayment. In addition to that penalty, the company was ordered to make corrections to 26 specific customer accounts identified by UTC staff.

In the 2010 order, the commission also penalized PSE for improperly applying energy assistance pledge funds made to low-income customers' accounts. Energy assistance pledges are intended to help consumers keep the lights and heat on during the winter. Commission staff cited PSE for improperly applying those funds to a prior balance, which led to additional threats of disconnection for customers.

But since 2010, state regulators charged that PSE had violated the order 515 times. The company recently agreed to a settlement of the case that included the $250,000 fine.

The commission reports that PSE has now provided refunds and credits to the mishandled customer accounts, and changed its billing practices to ensure that customer payments are applied correctly.

The company also agreed to make a $75,000 contribution to its low-income assistance program. The utility is not allowed to pass the penalty costs to customers through rates.

Bellevue-based PSE serves more than 1 million electric customers and about 785,000 natural gas customers. The company does not provide natural gas in Whatcom County, but does provide residential electrical service to Bellingham and the rest of Whatcom County, except for Blaine and Sumas. Those two cities have city-owned power systems.

PSE spokeswoman Dorothy Bracken said the money for the fine would come from company owners, not from customers.

"Based on the thorough two-year review and guidance by UTC staff members, Puget Sound Energy is confident we have implemented improved procedures for the handling of customer accounts that are disconnected for nonpayment and then reconnected for the start of either electric or natural gas service," Bracken said in an email.

Reach JOHN STARK at john.stark@bellinghamherald.com or call 715-2274.