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Despite expanding coronavirus crisis, some utilities may continue disconnections

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Despite expanding coronavirus crisis, some utilities may continue disconnections

As the COVID-19 health crisis causes layoffs and economic hardship across the U.S., many utilities have halted service disconnections to help ease some of the pain stemming from the pandemic.

But not all utilities are doing so on their own, and so a small group of federal lawmakers introduced a bill calling on all U.S. state regulatory authorities and utilities to ensure that "no electric or natural gas service to a consumer is terminated" for the duration of the emergency.

The Edison Electric Institute recently announced that its member investor-owned utilities will not be suspending service over unpaid bills "during these extraordinary times." And a significant number of states, including Maine, Kansas and Wisconsin, already have instituted mandatory service termination moratoria, according to Regulatory Research Associates, a group within S&P Global Market Intelligence.

READ MORE: Sign up for our weekly coronavirus newsletter here, and read our latest coverage on the crisis here.

But customers who purchase power through a cooperative or a municipal power authority may find that state bans on service disconnections do not apply to their local utilities, some of which are not voluntarily suspending disconnections.

For example, the town of Welsh, La., stated on its website that its municipal utility is "not governed by" the Louisiana Public Service Commission's edict to cease customer disconnects for nonpayment. The PSC's order only applies to for-profit utilities, the municipal utility explained. While the town's messaging leaves unclear whether consumers who are behind on their bills will lose service, the Energy and Policy Institute said a town employee confirmed that "disconnects for March have taken place [and there is] no plan to suspend them for April."

Representatives of the city of Bethany, Mo., which also operates a public power authority, said they have not suspended disconnections, but residents impacted by the pandemic are being given a 10-day grace period to pay their bills. Otherwise, Bethany is "not going to announce anything regarding our utility policy," city administrator Jake Taylor said March 31. While the city will work with those who call, Taylor said, "We aren't going to announce any hard-and-fast policy."

At Halifax Electric Membership Corp., Brady Martin, the manager of marketing and economic development, confirmed March 31 that the North Carolina electric utility had not put off service disconnections at that time but would comply with any orders that applied to it and mandated such suspensions.

Martin attributed the cooperative's position to the financial hardship it, with its roughly 11,500 members, could face if it were to cease disconnections. Although the North Carolina Utilities Commission has ordered utilities under its jurisdiction to halt service suspensions for the time being, unregulated utilities such as Halifax would be unable to recover costs related to such voluntary actions.

"With a rural electric co-op, unless we're mandated by the state which would take an executive order by the governor to do so — then we would not have a way to get relief from that," Martin said, adding that the utility "will proceed with [its] normal policy" until that occurs.

Halifax did not have to wait long for such gubernatorial guidance. Just hours later, North Carolina Gov. Roy Cooper issued an order that, among other things, established a temporary shut-off prohibition applicable to all utilities in the state, regardless of ownership or regulatory structure.

Some other states have not followed suit, and a small group of lawmakers that includes Sens. Edward Markey, D-Mass., Elizabeth Warren, D-Mass., Kamala Harris, D-Calif., and Kirsten Gillibrand, D-N.Y., accordingly have introduced a bill that would encourage states and utilities to take any necessary steps to ensure that service disconnections imposed on gas and electric service customers are paused for the duration of the pandemic.

The bill also recommends that "reasonable efforts are made to safely reconnect electric and natural gas consumers that have lost services," that "no electric or natural gas consumer is charged for reconnection services," and that consumers see no rate hikes as a result. In a statement, Markey said the country is facing "a national life-or-death emergency, and every single state and utility must take action now to keep people healthy at home and keep their lights on."

While the proposed legislation recommends certain consumer protection measures, it does not have any teeth. The bill merely "sets the sense of Congress" that states and utilities should temporarily halt disconnections and related fees. The power to actually mandate those policies falls within state jurisdiction, according to a news release from Markey's office.