Cities face choice: Keep your lights on or theirs
Posted July 3, 2020
Updated July 7, 2020
Raleigh, N.C. — When the coronavirus pandemic first hit, Gov. Roy Cooper ordered utilities not to cut off customers who couldn’t pay their electric or water bills. Now, some cities that run those utilities say they’re going broke because so many people are taking advantage and skipping payments.
Water and sewer systems are run by cities, and in some parts of the state, power, gas, and even cable are also city utilities.
Cooper's emergency Executive Order 142 stopped all utilities – investor- and citizen-owned alike – from cutting off services through the end of July for non-payment of bills. But that order wasn't limited to people who've lost jobs or income due to the pandemic.
Paul Meyer, executive director of the North Carolina League of Municipalities, said some who could pay are abusing the option.
"We’re seeing freeloading all across the state. People just say, 'Hey, they’re not going to turn my power off, so I’m not going to pay,'" Meyer said. "So, we've seen collection rates plummet."
The bills will eventually come due, but Meyer said he doesn’t believe city utilities will ever recoup all of the money, noting that they lost $75 million in March and April alone.
"It was well-intended," he said of the executive order. "I get that. It really was. But when you put people behind four and five months on their payments, you know how this goes. People just won’t ever be able to pay."
That’s an even bigger problem for small cities. Utility services can make up half of their budgets.
"This economic downturn may be the straw that broke the camel’s back for those towns," Meyer said.
State Treasurer Dale Folwell said that, if smaller cities' utilities go broke, the cities might, too, at which point his office has to take over their administration.
"The ones I’m particularly concerned about are the Eastern Municipal Power agencies," Folwell said, "and those are the citizen-owned utilities east of Raleigh."
Among them is the town of Elizabeth City. It was recently granted a waiver to start collecting payments from the order by state Attorney General Josh Stein because the city was a week from having to shut down entirely.
Another affected city, LaGrange, is taking the governor to court over the order.
Folwell said he'll ask Cooper at Tuesday's Council of State meeting to extend the same waiver to all citizen-owned utilities, allowing them to start collecting on overdue accounts immediately.
"They have been dealing for decades with folks who have trouble paying their bills," Folwell said.
"Ultimately, if these bills aren’t paid, we’re putting these citizens in a hole they can never climb out of," he added. "Eventually, that’s going to result in much higher rates – not just for these utilities but also property taxes, which is the last thing that rural North Carolina needs, especially eastern rural North Carolina."