As utility bills continue to rapidly rise across North Carolina, utility shutoffs for nonpayment (particularly for residential customers) are coming into the spotlight. While shut offs are a long-established means of past due bill collection in the water and electricity industries, we do not often talk about what they do to the households that experience them or whether they are a sufficient indicator of affordability challenges in the service area.
So, let’s talk about them. What are shut offs? How often do they happen in North Carolina? How do they intersect with affordability?
Shut offs, also called “Disconnects due to Nonpayment” (DNP), are a last resort method used by utilities to pressure customers to pay their bills. During a disconnect, a staff person from the utility physically visits the home or business that owes the utility money and stops service to the premise- making it impossible for those in the building to use the disconnected service (water, power, etc.). Before a disconnect is conducted, utilities are often required to provide several instances of notification to the customer, which may include options to avoid a disconnect, like signing up for a payment plan or calling assistance programs for financial help.
On the one hand, disconnects are effective at getting customers to pay and we need well-funded electrical grids and drinking water systems to support healthy and successful communities. As we saw during pandemic-era moratoriums, when utilities no longer had the option to disconnect, past-due balances ballooned. On the other hand, disconnects are incredibly disruptive and stressful for the residents and families that experience them. Waterway has spoken with many customers in the middle of a disconnection, and the panic and fear they express when they cannot pay their balance is difficult to describe. What is the best policy solution?
In New Hanover County, where Waterway NC is headquartered, most residential customers receive their electricity from Duke Energy Progress and water from Cape Fear Public Utility Authority (CFPUA). Both of these utilities conduct disconnects for nonpayment, and more information is beginning to surface on how often they do it.
Let’s start with Duke Energy Progress, which has been required by the North Carolina Utilities Commission to provide a large amount of information on bill affordability as part of its participation in the Low-Income Affordability Collaborative. According to the Collaborative's final report, between February 2020 and February 2021, Duke Energy disconnected approximately 7,300 residential accounts per month.
According to a presentation to the CFPUA Sustainability Committee in August 2023, CFPUA disconnected an average of 503 residential customers each month between March 2022 and June 2023. CFPUA is not regulated by the NC Utilities Commission (NCUC) and is not currently required to regularly update those numbers. However, other water utilities such as Aqua and Carolina Water Service are required to do so. According to data from the NCUC, Aqua also averages disconnections in the hundreds per month.
While it is easy to see these numbers as sanitized statistics, they actually represent thousands of people. People who came home from work or from running errands to find that they couldn’t clean, or cook, or make food for their kids because they couldn't pay their bill. And the bad news is–households that experience disconnects because they can’t afford the bill aren’t the only households struggling with affordability. They are just the households that couldn’t find assistance in time, and thousands more are in precarious positions as well.
Like other manifestations of our current housing crisis, such as homelessness or eviction, utility disconnections are an extreme of the spectrum of affordability, not the entirety of it. Before someone gets disconnected from water, they may: borrow money from a friend, take out a payday loan, enter into a payment plan they know they can’t afford, or let the electricity bill go into delinquency instead. And, if we are only looking at disconnections as a metric, we will never know they struggled at all or how many people truly need assistance.
The truth is: disconnections (particularly extended ones) can be traumatic, full of stigma, and a threat to public health. We can, and should, significantly reduce instances of them. However, to truly ensure households can afford critical water and sewer services without losing access to other services, we must begin to look upstream of disconnect events and proactively address utility burden before it comes to that.
To Apply for our Long-Term Bill Assistance Program, please complete the survey here: https://www.waterway-online.com/apply.html
introducing the long-term water bill assistance program
This week, Waterway NC will begin receiving applications for our long-term water bill assistance pilot program. The program, a limited, six-month program for residents of New Hanover County, will make partial payments on water bills to proactively reduce household water burden and instances of water disconnection. This program changes the way we think about assistance. It moves us from the band-aid approach- where we are constantly reacting to disconnection notices- to a proactive approach that predicts bill affordability issues and seeks to address them before they snowball into a stress event.
Why is this program necessary? Because utility costs are rapidly rising, putting more residents at risk of losing access to water and power, and increasing the odds that they will experience major stress events like eviction or foreclosure. When we think about housing costs, we typically think only of the cost of renting an apartment or paying the mortgage on a home. But when you think of a home, you probably do not think of a place without running water or electricity.
Utility costs are housing costs. We know this because safe and dignified living cannot be sustained without access to water or power. Yet, most studies still do not include the cost of utilities when they think about affordable housing. Why?
In short, utility costs used to be a much, much smaller percentage of household take-home pay. Why rates are rising, and why financial assistance is difficult to find, will be the topic of several upcoming blog posts. The take away is: rates have been rising for years and there is now little excuse to ignore the trends. Let's look at our local numbers.
In New Hanover County, for example, most households buy water from Cape Fear Public Utility Authority (CFPUA) and electricity from Duke Energy Progress. Duke Energy Progress just received approval from the North Carolina Utilities Commission to increase its rates by 10.1% this year, followed by a 3.1% increase in 2024 and a 3.2% increase in 2025- bringing a typical bill to around $162 per month. This approval follows years of rate increases and additional fuel cost fees.
Cape Fear Public Utility Authority increased sewer rates this year and drinking water rates last year. In addition, the storm water and trash fees they collect on behalf of the City of Wilmington also increased this year. For a Wilmington resident, a typical water bill (assuming normal use) could be $117 per month now.
Combined, these numbers show that folks can expect to spend at least $280 per month on utilities, an amount that can easily mean they are spending 50%-75% of their income on housing when added to the cost of rent or their mortgage. And this number does not consider the hard truth that low-income households spend more on utilities, since their homes tend to be less insulated and are often served by older infrastructure and less-efficient appliances. Unfortunately, the corresponding truth is that utilities must prepare for the impacts of climate change and address decades of infrastructure degradation, which means rates will only continue to go up.
As these numbers rise rapidly, there is no corresponding rise in federal or state assistance for utility bills. If you are behind on your electricity bill, you may qualify for the Low Income Energy Assistance Program (LIEAP), a one-time assistance payment to help out with high bills in the winter. But only the lowest-income Americans are eligible. Most of the pandemic-era programs, such as those for rent, power, and water assistance, are now closed.
When someone is lucky, they may find help from their local Department of Health and Human Services, or from a nongovernmental organization like Catholic Charities or HelpHub in Wilmington. When someone isn't lucky, and their kids don't have water to take a bath or power to stay warm, they may resort to payday loans or other exploitative options that make the problem worse.
That's why, thanks to funding from the United Way of the Cape Fear Area and generous individual donors to Waterway NC, we are excited to start this small but powerful program that will study how we can do social assistance better. If you know someone that could benefit, please pass along the application. If you are able to donate to expand this pilot to more households, please consider doing so. Either way, we cannot wait to report on the results as they come in!
Wilmington, NC 28403 910-859-2811