It has been almost six months since the pandemic swept across the United States, and water utilities and their customers are feeling the financial consequences, though they vary widely across utilities, reports Circle of Blue.
A new report by the Environmental Finance Center of the University of North Carolina has found the effects seem manageable for water utilities from a state-wide perspective, but individual utilities face significant challenges and do not have reserves to endure prolonged COVID-19 conditions and the implications for their finances.
Of concern are several utilities with arrears that amount to more than 5% of revenue, with more than 40% of their customers with arrears, more than 20% eligible to be disconnected, and/or owing more than $500.
Meanwhile, taking a broader view, the report analysed trends in arrears for 147 utilities that did report arrears every month between April and July, finding that the per cent of accounts past due was stable, while the amount of average arrears increased. A smaller number of utilities reported data that allowed comparisons with 2019: 84 utilities experienced an increase between 17% and 29% in the number of households with past due accounts compared to the same period (April to July) in 2019. In terms of total arrears, for 89 utilities reporting that type of data, it was 42% higher at the end of July 2020 than at the end of July 2019.
At the end of August Gov. Ray Cooper announced a $175 million package of financial aid to help households undergoing economic hardship as a result of the pandemic pay their rent and utilities (water, gas and electricity), as well as small local governments. The financial aid programs will likely be running by mid-October.
The advocacy group North Carolina Justice Center worries that the package may not be large enough and calls for $400 million to pay off utility past-due balances. Al Ripley, director of consumer, housing and energy affairs for the advocacy group describes a “patchwork” in the state, where depending on where you live, you have different options. Most residents are served by municipal water providers, while a small part of them are served by private utilities, regulated by the NC utilities Commission. The governor moratorium on shutoffs applied to the first, and lasted from March 31 to July 29. Meanwhile, the Utilities Commission’s moratorium lasted from March 19 to September 1. Debt repayment terms also differ. While the threat of shutoffs can prompt payment, it would exacerbate their situation of customers experiencing severe financial stress.
Many factors come into play in terms of which utilities will be most affected by revenue losses, according to Elsemarie Mullins, co-author of the report. The length of repayment plans, the portion of the debt recovered, residential versus commercial customers and the changes in usage by the latter, etc. Smaller utilities are expected to suffer more long-term effects, and regional mergers are an option to contemplate.