‘Impending doom:’ What if you can’t pay your utility bills after COVID-19 grace period?
You don’t have to pay your power or water bill right now if you can’t afford to. But what happens in several months if you’re faced with back payments and still can’t pay?
Consumer advocates have started raising concerns about mounting debt for utility customers in the midst of an economic downturn.
Under Gov. Roy Cooper’s Executive Order 124, utilities cannot disconnect service or charge late fees for unpaid bills during a 60-day period that began March 31. According to weekly reports compiled by the N.C. Utilities Commission, about 276,000 past-due residential accounts have not been disconnected since the order went into effect.
As of April 25, uncollected late fees total about $6.8 million. After the 60-day grace period expires, the order mandates that customers have at least six months to pay off their debt.
But consumer advocates are raising concerns that a minimum six-month repayment period for debt accrued under the order may not be long enough, particularly with unemployment spiking to historic levels. Appalachian Voices, an environmental advocacy group, is calling for Cooper to extend the executive order past the end of May while also expanding the minimum repayment period to 12 or 18 months.
“The Governor appreciates the utility companies that stepped up even before his order and he will consider all the facts including the financial impact of this virus on people before deciding on a potential extension,” Ford Porter, a Cooper spokesman, said in a written statement responding to questions from the News & Observer about whether Cooper consider the group’s requests.
‘An untenable situation’
Rory McIlmoil, Appalachian Voices’ senior energy analyst, said the six-month repayment minimum in Cooper’s order will likely be insufficient. Customers could be paying their current bills and those accrued during the pandemic while also trying to navigate an uncertain job market, McIlmoil said.
If they’re unable to pay down the debt in the time frame established by their utility, they could lose service later this year.
“You’re still going to have a lot of people unemployed who may have been able to pay their bill in normal times who now won’t, plus the people who normally aren’t able to pay their bills,” McIlmoil said. “It’s just an untenable situation.”
McIlmoil also suggested that North Carolina explore a plan similar to Ohio’s Percentage of Income Payment Plan Plus. The plan caps payments at 6% of income for low-income homes heated with gas and 10% for those heated with electricity, with the state subsidizing the remaining balance.
Utility companies and consumer advocates urge customers set up repayment plans as soon as possible. As of April 25, about 7,700 of the 276,000 residential accounts that became eligible for disconnection since the order was signed had negotiated such plans. That’s only about 2.8% of all accounts.
Dorcas Ministries in Cary is receiving about twice as many financial requests and three times as many food requests than usual, said Jill Straight, Dorcas’ director of client services. Generally, Straight said, clients believe that rent is the most crucial bill to pay right now and that they’ll reach an arrangement with utility providers later.
Straight said her agency is concerned about “this snowballing of bills with no resolution in sight on income and when folks are going to be able to get back to work.”
“So there’s definitely a sense here among staff of impending doom.”
Elsewhere in the Triangle, Central Piedmont Community Action, which serves Chatham, Durham, Orange and Randolph counties, has also seen increased demand. Since March, Central Piedmont has helped 35 clients with utility assistance and 32 with rental assistance, said Natasha Elliott, the agency’s executive director. That’s up from 12 and 15, respectively, during the same period last year.
At Dorcas Ministries, Straight recommends that clients to set up payment plans with their utility companies, but not many do.
“There’s too much uncertainty for people to obligate themselves to a payment arrangement because it is an agreement,” Straight said. “And it’s hard to make an agreement when you don’t know the future.”
That uncertainty means utilities should be open to giving customers longer repayment periods, said Fenaba Addo, a Duke University visiting professor of social policy who studies the effects debt has on families. In an already stressful time, debt can add to what she defined as “chronic stressors.”
“What would be helpful for consumers is a signal or some sort of message that companies are understanding the financial situation and working through this with them, not that it’s just another business or barrier during a time that is already so stressful in so many other pockets of their lives,” Addo said.
Utility payment plans
Duke Energy, the state’s largest utility, had the most past-due residential accounts, with roughly 48,400 spread across the state as of the April 25 report. Of those, only about 400 had established repayment plans.
“What we’re asking customers to do right now is reach out to us and let us know if they’re having any issues so they can get on a payment schedule and avoid getting such a large balance that will be harder to pay off later on,” said Neil Nissan, a Duke spokesman.
Anticipating the impact a faltering economy would have on customers’ ability to pay bills, Nissan added, Duke stopped shutting off service in mid-March, prior to Cooper’s executive order. Since the utility implemented that policy, about 113,000 customers have avoided disconnection — a larger number than those included in the state reports because it covers a period starting on March 13, prior to Cooper’s order, and extends to May 12.
Duke intends to continue setting up payment plans once the freeze on disconnections is lifted, potentially extending beyond six months, Nissan said.
Raleigh Water shuts off service after customers reach $125 in debt. Typically, there are between 1,000 and 1,100 customers at that point, said Robert Massengill, the utility’s director. Right now, between 10,000 and 11,000 customers would be eligible for shut-off, including about 9,000 residential and 200 multi-family accounts, he said.
As of Tuesday afternoon, bills in arrears totaled about $5.74 million at Raleigh Water — about $3.74 million from single-family homes.
“We’re going to work with each customer depending on what their situation is, how far they are in arrears, how much it is and try to make reasonable payment plans,” Massengill said.
As of April 25, Raleigh Water had established 476 repayment plans for debt accrued since March 31, according to the Utilities Commission reports. That was the fourth-highest total for any utility in the state.
Typically, Massengill said, repayment plans run between six and 12 months. He used the example of a customer who has built up $300 in debt and may have a 10-month plan to repay it, with $30 tacked on to their regular bill each month.
“We’re going to try to make it affordable for the folks who have been impacted by this thing,” Massengill said. “The last thing we want to do is turn water off.”
This reporting is financially supported by Report for America/GroundTruth Project and The North Carolina Local News Lab Fund, a component fund of the North Carolina Community Foundation. The News & Observer maintains full editorial control of the work. To support the future of this reporting, subscribe or donate.