As Donald Pepe often does when something is brewing in the utility world, the Zelienople borough manager has been talking to his counterparts across the state and keeping an eye on what the big guys are doing.
Large public utilities are governed by the Pennsylvania Public Utility Commission, while Zelienople’s electric utility and the other 34 borough electric utilities in the state are not. Still, they look to the PUC as a reference on best practices in running their smaller utilities, Mr. Pepe said.
When the PUC ordered the large public utilities that it governs to stop shutting off non-paying customers because of the COVID-19 pandemic in mid-March, the vast majority of municipal utilities followed suit — Zelienople, with its 2,200 electric and water customers, included.
As the months wore on, Mr. Pepe and the rest of the little guys kept looking to Harrisburg to see when large utilities would be allowed to resume terminations.
“We willingly apply a lot of the PUC rulings because it’s the right thing to do,” he said.
But the months-long stalemate at the state commission, which has been short one member and has not been able to act on the utility termination ban because of an even split among its four commissioners, isn’t proving to be a helpful guide at the moment.
So municipal utility managers talk among themselves and then they do what they think fits the unique needs of their systems. For some — although it’s not clear how many — that means lifting the shutoff moratorium.
Zelienople sent notice last week that it would resume shutting off customers who are behind on their bill payments, encouraging them to call the borough to set up a payment arrangement.
It wasn’t an easy decision, Mr. Pepe said.
The utility was nearing the end of its annual winter shutoff moratorium, which goes from late November until early April, when the COVID-related termination ban extended that reprieve by five extra months.
As Mr. Pepe began to imagine what would happen if the COVID moratorium flowed into the next winter moratorium, he worried that customers who fall behind too much wouldn’t be able to dig themselves out of the debt.
“When these people come off the winter months, their bills are going to be astronomical,” he thought. “It’s not just us getting the money. It’s making sure the customers don’t get gobsmacked.”
To date, Zelienople has 36 accounts eligible for termination, and 24 of them were delinquent prior to COVID-19, Mr. Pepe said.
Data on municipal utilities and authorities is hard to come by without the PUC’s rigorous documentation requirements.
Mike Kyle, executive director of the Lancaster Area Sewer Authority, created a recent snapshot of where things stand for dozens of water and sewer authorities across the state. He fired off a quick questionnaire that he hoped would be a “historical data point” — a one-off survey to inform current thinking and to look back on.
Of the 50 responses, an overwhelming majority said they suspended terminations in early spring as the pandemic was just beginning its spread in Pennsylvania.
Mr. Kyle’s survey turned into a repeat enterprise — he has already done two follow-up polls and plans to continue the practice. The later surveys showed water authorities are resuming shutoffs.
The strain on the budgets of municipal utilities came through loud and clear in Mr. Kyle’s surveys.
“I absolutely know that there are revenue shortfalls across the board,” he said, adding that he was surprised that most utilities hadn’t yet adjusted their budgets to account for that.
The deficits come from the money lost by waiving penalties and fees — something that large utilities had done, as well — and, for the most part, by losing a large chunk of commercial business during the statewide shutdowns in the early months of the pandemic. The subsequent decrease in business activity compounded matters.
“Because we don’t pay dividends to stockholders or generate profit, authorities and municipal systems have less margin to weather the effect of non-payment,” said Matt Junker, a spokesman for the Municipal Authority of Westmoreland County, which resumed shutoffs on Aug. 15.
The authority “has a duty to the larger community to remain viable,” Mr. Junker wrote in a presentation he gave last week at an industry conference.
The authority, which supplies water and wastewater to more than 120,000 customers across a five-county region, has terminated 80 customers for non-payment in the past few weeks. It reconnected 54 of them after they paid their balances in full or entered a payment plan.
The number of delinquent accounts at the end of August this year was up only slightly over last year — less than 6%, Mr. Junker said. But the amounts owed on those accounts are nearly double the payments that were 30 days overdue this time last year, mirroring the trend among larger public utilities.
The agency expects that twice as many customers will seek payment arrangements this year, compared with last year.
In Grove City, where the borough’s electric utility lifted the shutoff moratorium in mid-August, payment arrangements have a small-town flavor.
A local church paid the utility bills for about a dozen customers in May, borough manager Vance Oakes said. The borough extended credit for two customers who have been hit by the pandemic.
With 3,000 electric customers, Grove City lifted its shutoff moratorium on Aug. 15 expecting very little impact on its community.
“We are fortunate that our residents seem to be in better circumstances than some other locations around Pennsylvania,” Mr. Oakes said.
Anya Litvak: alitvak@post-gazette.com or 412-263-1455.
First Published: September 7, 2020, 10:45 a.m.
