Credit: Matt from Flickr (CC BY-NC 2.0)With hundreds of thousands of customers, including up to 90% of commercial users, falling far behind in paying utility bills, New Jersey is looking at how, if even possible, consumers and small businesses will pay back accounts that were more than $442 million in arrears as of mid-October.
The proceeding, initiated by the New Jersey Board of Public Utilities (BPU), is so complex that the Division of Rate Counsel and consumer advocates have urged the agency to suspend new rate increases by utilities until after the public health emergency created by the COVID-19 pandemic ends.
The pandemic has led to a surge in unemployment, a huge downturn in the economy, and left parts of the public struggling to balance where to spend dwindling household income: on putting food on the table for families, avoiding eviction, or paying utility bills.
At this point, there is some consensus even among some utilities that a one-time COVID-19 arrearage forgiveness program is needed to address the scope of the problem, although where the money to fund such efforts will come from is hardly resolved.
There is little dispute about the extent of the problem.
Compared to a year ago, the number of commercial customers who get gas from a utility that are behind on payments is up 90%. For residential users, that figure is up 39%. For electric-only customers, 42% of residential users are behind payments and 63% of commercial are, as well.
For clients who pay for both gas and electricity, the numbers are higher: 63% of residential and 89% of commercial users are behind in their payments.
Those numbers do not include customers of water utilities.
Potential impact on reliable service
“If not addressed, the impact on those in arrears and those still able to pay their bills and the utilities may jeopardize reliable service in our state,” said Rate Counsel director Stefanie Brand in a brief submitted in the case.
The BPU, too, has worried about the growing debt, and has encouraged customers behind on their bills to begin paying something if they are able, so bills do not pile up over time. It also encourages customers to contact utilities and sign up for so-called deferred payment agreements to pay down balances over 12 to 24 months.
“The board is deeply concerned with the growing arrearages, which is why we expanded the scope of the proceeding at the end of October to address the issue,’’ said Peter Peretzman, a spokesman for the board.
By August, several months into the pandemic, those facing shutoffs if a moratorium on disconnections had not been enacted, included 500,000 residential customers and 50,000 commercial accounts, according to Evelyn Liebman of AARP New Jersey. The moratorium is now scheduled to be lifted in March.
“Utilities, in general, always dealt with some amount of writeoff,’’ said Sheryl Carter, director of the power sector, climate and energy program for the Natural Resources Defense Council. “What’s different is the magnitude.’’
It’s an issue nationwide
And it is a problem not confined to New Jersey. An estimated 15% to 20% of utility customers are at least 60 days behind on paying gas and electric bills, according to the National Energy Assistance Directors Association. By the end of the year, arrearages could reach $32 billion nationwide, the group said.
The extent of the problem has led states to try new ways to help customers pay off their debts.
“Some states now offer a payment assistance program that offers debt forgiveness for customers who face financial hardship, for example by forgiving a portion of arrearages for each timely payment received,’’ Brand said. One state caps the percentage of its customers who each utility may disconnect for nonpayment.
Public Service Electric and Gas also recommends the state establish a forgiveness program or set up “some sort of crisis fund for utility customers’’ with financial problems, according to comments the utility submitted to the board. “However, it would be wholly inappropriate to impose that requirement obligation on the utilities themselves,” the company said.
Furthermore, the state’s largest utility described plans to suspend new utility base-rate filing and infrastructure programs as “short-sighted and could result in further damage to the state economy.’’
The company also argued the suspension of new utility filings would impede the state’s progress toward its clean-energy goals, which seek to transition to 100% clean energy by 2050. This past week, both Atlantic City Electric and South Jersey Gas filed new rate cases involving infrastructure improvements.
But AARP countered that “in light of the new economic realities, the board should reevaluate all nonessential utility expenditures and stem a potential flood of additional rate increases that could hit ratepayers during this period and a time they are least affordable.’’
Among those issues the organization cited were ratepayer subsidies to build electric-vehicle infrastructure and continued ratepayer subsidies and bailouts for power plants.
State, federal assistance?
In the end, state and federal assistance to deal with the problem is likely to be necessary, according to the National Resource Defense Council’s Carter. In an interview, Brand agreed, saying utility shareholders also are going to have to help.
“I’m sure ratepayers will have to pick up some of it,’’ she said, “but you can’t expect to put it all on the backs of ratepayers. There has to be contributions from shareholders.’’
In New Jersey, bad debt from customers of electric and gas utilities is eventually deemed uncollectible, and utilities recover those costs from a special fund financed by all other ratepayers with a surcharge on their monthly bills. Water utilities do not have their opportunity.
If all of the current arrearages are dumped into that account, that will only make it more difficult for other ratepayers to pay their own utility bills, increasing the problem, Brand said.
The BPU expects to hold public hearings on arrearage issues early next year and anticipates taking action before the expiration of the current moratorium on shutoffs on March 15, Peretzman said.
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December 14, 2020 at 12:09PM
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Many NJ utility customers way behind on bills. Pressure to suspend rate increases - NJ Spotlight
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