As Moratoriums End and Bills Come Due, Cities Offer Utility Relief

Utility shut-off moratoriums are beginning to expire.

Utility shut-off moratoriums are beginning to expire. Shutterstock

 

Connecting state and local government leaders

Many residents are struggling to pay utility bills during the pandemic, dealing with escalating balances. But local relief programs aren't designed to help everybody.

Even before the pandemic, Chicago residents owed the city $330 million in missed water payments, with much of the debt concentrated in the city’s predominantly Black and Latino neighborhoods. 

With many residents now out of work because of the coronavirus-fueled downturn, even more could end up racking up utility debt. To help people cover these bills, Chicago this month announced a new relief program for city-provided utilities. Under the initiative, the city will offer reduced rates to low-income homeowners and allow those who make payments on time for one year to erase all debt owed to the city. 

It is one of several programs cities launched this month to help residents keep up with critical bills.

Reshma Soni, Chicago’s comptroller, said that the program is meant to help address “regressive policies that have disproportionately impacted our most vulnerable residents.” An investigation by public radio station WBEZ last year found that water and sewer prices in Chicago dramatically outpaced other cities along the Great Lakes, while escalating water shutoffs disproportionately affected low-income residents. 

“We’ve made progress in lifting the burden of debt borne from antiquated practices that led to income inequities, and the Utility Billing Relief Program builds on these efforts, especially now when so many Chicago residents are crushed under the economic strains of the Covid-19 crisis,” Soni said in a statement.

The program covers public utility bills including water and sewer; bills from privately owned utilities, like gas and electricity, will not be eligible for relief. Only homeowners are eligible to participate. 

After she took office in the spring of 2019, Mayor Lori Lightfoot stopped the city’s practice of shutting off water if people were behind on their payments. The utility program is part of a broader city effort to back off from collecting excessive late fees for things like parking tickets or city sticker violations—but it also comes at a time when many families are struggling to afford utility payments due to the economic downturn caused by the coronavirus pandemic.

The need is there. When the city announced a rent and mortgage assistance program in April, more than 80,000 people applied for 2,000 grants. On Monday, Lightfoot said the city would spend $33 million in federal coronavirus relief to provide grants to 10,000 more households.

When it comes to the growing debts people might owe on utilities, several other cities are trying a similar approach to help residents get out of or stay out of debt while businesses remain closed and many are unemployed.

Jacksonville, Florida provided $200 prepaid debit cards to residents who were behind on utility payments; all 10,000 cards were claimed within four days. The city council of Kyle, Texas is issuing grants to residents who have lost their jobs and need help paying for utilities provided by the city, or who need money to handle late fees and service disconnection fees. Portland, Oregon has prioritized small businesses owned by women and people of color for their utility relief programs, allocating $1 million dollars to grants for utility payments.

City officials are often painting these programs as investments in the future. Portland Water Bureau Director Mike Stuhr said in a statement that “by investing in small businesses today, the utilities are also helping to ensure that these ratepayers can continue to invest in our sewer, stormwater and water infrastructure for decades to come.”

In other states and cities, officials are grappling with how to handle residents and businesses who accrued months of unpaid utility bills during shut-off moratoriums put in place at the beginning of the Covid-19 pandemic. The moratoriums, which were designed to help renters and homeowners who were struggling with other bills, have been extended into August and beyond in some places, but are starting to expire in others. In some states, utility companies will be allowed to charge late fees for missed payments, meaning a wave of shut-offs may arrive for those who are still out of work or otherwise financially strained. 

In Wisconsin, the state's Public Service Commission voted unanimously in June to allow their shut-off moratorium to expire in July. Fourteen of the 15 members of the Milwaukee City Council urged the commission to reconsider, arguing that threatening to disconnect households from utilities like cooling and light was “an unconscionable breach of basic decency.”

"[The] earlier decision to suspend disconnections through July 25 was made in the good faith belief that by the end of this month some end to the economic devastation that has been brought to this state by the COVID-19 pandemic would be in sight,” the group wrote. “No serious person believes this relief has come or will come any time soon.”

When the commission met again in late July, they reversed the decision and extended the moratorium until September.

In other places, a moratorium extension looks unlikely. In North Carolina, the moratorium protecting households from water, sewage, and electricity shut-offs is set to expire on Wednesday. An estimated 1.3 million households are behind on payments and could be eligible for shut-offs. Gov. Roy Cooper said that the moratorium was not sustainable, especially in municipalities where a significant percentage of households are behind on payments.

Some cities in North Carolina are working to set up assistance programs for residents who might soon face a utility shut-off, either by setting up payment plans for past-due bills or by using CARES Act funds to help low-income residents who can’t pay off their debt. 

Fayetteville Mayor Mitch Colvin told local news station WRAL that the city is setting up a cash assistance program worth up to $2,000 that residents can use to pay for utilities, as well as other expenses like rent and mortgages. "The governor's order will expire pretty soon for utility payments ...  we want to be prepared to make sure our residents have the help they need," said Colvin.

Emma Coleman is the assistant editor for Route Fifty.

NEXT STORY: Facing Poll Worker Shortage, One State Offers Credit Hours to Lawyers Who Volunteer