Post by: Elsemarie Mullins, Project Director, EFC at UNC
On October 5th, two House Democrats, Harley Rouda and Rashida Tlaib, submitted this letter to ask the director of the CDC to give a nation-wide moratorium on water disconnections due to non-payment through the state of emergency because of COVID-19. While this is at the federal scale, many individual utilities and states already declared moratoria in 2020, though some of those have expired by now (mid-October). Utilities and state and local government officials recognize the value of access to clean and safe water during the pandemic, and utilities are motivated to avoid disconnections for public health and customer service reasons, as well as to minimize the cost of operations associated with disconnections and reconnections. Still, disconnecting a customer from water service is seen as an important tool for revenue collection in the water/wastewater industry. According to data from 84 North Carolina water and wastewater utilities provided to the North Carolina Utilities Commission, an average of 13.7% of a utility’s customers were past due on their bill in June of 2019 (pre-COVID). Providing notice of disconnection or disconnection itself can be effective for encouraging payment of these late bills, but how effective they are is unclear.
Aside from whether or not the CDC has the authority to mandate a nation-wide moratorium (or if they should do so), the question of how effective disconnections are, and how necessary for financial sustainability of a utility, is still relevant to utility staff and policy makers at the state and local levels. The study of disconnections (and alternatives to disconnections) isn’t new (see Beecher, 1994) but what is new is the wide-spread moratoria on shut-offs and the increased interest in legislating water disconnection moratoria.
Even with previous interest in water affordability and collection practices, there is very little information about the scope and cost of disconnections and reconnections publicly available. The most comprehensive study found was published in 1976. In it, author Maryann Roulier presents results of a survey of 59 utilities from across the U.S. and concludes that there is no one best way to collect revenue, but a notice of disconnection or disconnection itself can be effective to encourage payment. However, there is no mention of the cost of the disconnections to the utility itself. There is a more recent fact sheet and an article published in April 2020 from the Pacific Institute about disconnection practices in California, which mentions that disconnections can be costly to utilities, but again, gives no data about the cost of those disconnections.
Since the pandemic, and with this expanded interest in disconnections and moratoria, several states have required utilities to report the number of disconnections and reconnections (North Carolina and Michigan, among others). Additionally, California requires the reporting of disconnections, which was proposed before the pandemic. There have also been reports by private groups in the past, such as Food and Water Watch, and there have likely been local data collection efforts by utilities and consulting firms. However, even with the information of where disconnections occur, the data on that (at least prior to the moratoria) is scarce and doesn’t help states, utilities, and researchers determine the effectiveness of disconnections in enforcing collections, whether trends statewide or regionally indicate that utilities are facing harder challenges in enforcing collections over time as rates go up, or if utilities cover the costs of disconnections and reconnections.
There are good reasons for this knowledge gap—utilities can be (and usually are) reluctant to share details of disconnections. Also, it can be difficult to calculate the full cost of disconnections when you try to include administrative costs and analysis, and sometimes disconnections can serve as providing information to a utility about which properties are vacant. However, there are also good reasons for utilities to measure this information and to make it available for use. How will decision makers know how important disconnections are if there is no data to back up the claims? How will a utility decide it’s worth the cost of meters and radios to perform disconnections remotely if they don’t know how much revenue they recover from different types of customers who typically get shut off? How much does it cost a utility and its paying customers when staff disconnect non-paying customers?
Current data, with appropriate analysis, could go a long way in finding some answers to these questions and helping decision makers and utility staff sort through all of their options when it comes to collections and disconnections.
If you are aware of publicly available disconnection data or you are utility who is willing to share your data, please reach out to me at email@example.com.