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NY approves $672 million bailout for utility customers not in low-income programs

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SYRACUSE, NY – State regulators today decided to pay $672 million in overdue utility bills for thousands of households and businesses that have racked up charges during the Covid pandemic.

Customers, who might otherwise face termination of service, will be entitled to assistance regardless of income.

The cost will be borne by all utility payers, who will pay a surcharge on gas and electricity bills for one to 10 years, depending on which utility serves your area.

The state’s Public Service Commission approved the unprecedented bailout in response to a mountain of unpaid bills that piled up during the worst of the pandemic, when there was a moratorium on service disconnections. The seven commissioners unanimously supported the initiative at their monthly meeting.

Without the bailout, utility companies faced the possibility of canceling hundreds of millions in bad debts and shutting down service to hundreds of thousands of customers, PSC staff told commissioners. Such outcomes would not only wreak havoc on struggling families, but would also be at least as costly as rescuing, PSC staff members said.

The financial assistance approved today is aimed at customers who did not qualify for a previous round of limited aid to low-income families. The new money will pay bills for homes and small businesses, regardless of income, as long as debts accrued before May 2022.

Last June, the PSC approved a similar $587 million program to pay overdue Covid-related bills for low-income customers who qualify for utility bill discounts. This initiative was paid for with a mix of state and federal funding, as well as a surcharge on utility bills.

The new phase, for non-low-income customers, will be fully funded by a surcharge on the electricity bill. Over time, utility customers will pay $824 million to fund the program, including utility transportation charges during the period the money is being raised.

The new surcharge will add approximately 0.5% to customers’ bills, PSC staff said. National Grid estimated that surcharges for a typical upstate residential customer would be 49 cents per month on the electric bill for four years; and 29 cents per month on the natural gas bill for two years.

Statewide, the $672 million program will relieve 56,000 small businesses and 478,000 households of some or all utility debt accrued prior to May 2022. There is no application process. Dealerships will identify customers with arrears accrued before May 2022 and apply a single credit to their account.

The money should completely eliminate old debt for about 75% of recipients, and will help the rest get into manageable payment plans with their dealership, the PSC team said. In the meantime, the commission will suspend all residential service terminations until March 31 or until credits are applied, whichever is later.

Each dealership is required to release program details in the coming weeks.

When the Covid pandemic hit, New York imposed a moratorium on closing public services, the only state to do so. There were an estimated $780 million in overdue utility bills at the time. Eighteen months later, when the moratorium was lifted, unpaid bills had risen by more than $1 billion, PSC staff members said.

As of September 2022, 1.2 million residential customers and 128,000 small businesses are more than 60 days past due on their utility bills. They owed $1.95 billion, more than double the normal level of unpaid debt in pre-pandemic years.

The plan for paying arrears was crafted by a working group that includes officials from the Department of Public Service and other state agencies, representatives from public services and consumer groups. According to the group’s report, an analysis of unpaid utility bills indicated that more than 95% of customers showed at least one of these signs of financial difficulty:

— They received multiple “final disconnect” notices but did not resolve the account.

— Previously, they had an overdue bill repayment agreement.

— They previously participated in the utility’s low-income program.

— They have already received HEAP benefits.

— They are elderly, blind, disabled or on life support equipment.

Consumer advocates who were part of the PSC working group supported the debt relief plan but argued that utility shareholders should bear 50% of the cost. They pointed out that many of the state’s utilities have increased shareholder dividends during the pandemic, while customers have struggled to pay rates that are already high.

Utility companies have agreed to waive $101 million in bad debt collections beginning in 2022. That’s more than other state utilities have contributed to reducing arrears, PSC staff said. .

In the end, consumer groups joined the plan, in part because officials estimated that, in the long run, it would cost customers more to do nothing.

If a large portion of delinquent bills go unpaid, utility companies will be forced to write off huge amounts of bad debt – as much as $702 million, the working group estimated. They would seek to be reimbursed for this and other costs related to unpaid debt the next time the PSC sets its rates.

In approving the bailout today, several commissioners noted that utility rates remain unaffordable for many customers, with or without a pandemic.

“The accessibility issue is not going to go away,” said Commissioner John Howard.

Do you have a news tip or story idea? Contact reporter Tim Knauss: email | twitter | | 315-470-3023.