Elizabeth City officials are discussing the possibility of defying Gov. Roy Cooper’s executive order halting utility disconnections during the coronavirus pandemic.
The city last week sought a waiver from Cooper’s executive order extending the statewide moratorium on utility cutoffs until July 29. The moratorium, which Cooper first imposed March 31 for 60 days, not only prohibits disconnection of utility customers for nonpayment; it also disallows the charging of any late fees.
City officials said the waiver is needed to ensure Elizabeth City’s electric utility fund doesn’t run out of money by August. Currently, about 26 percent of the city’s utility customers aren’t paying their monthly bill, causing a significant cash flow problem for the city.
City Manager Rich Olson told City Council Monday night that he hoped to have a decision on the waiver request from Attorney General Josh Stein’s office by Wednesday. Stein is granted authority under Cooper’s order to grant waivers from the moratorium to utilities like Elizabeth City that are not regulated by the N.C. Utilities Commission.
Olson told council that if Stein’s office doesn’t grant the waiver, his “professional recommendation” would be to defy Cooper’s executive order and allow the city to resume utility disconnections and the charging of late fees.
“Let (the governor) sue us,” Olson said. “It is a lot easier for us to defend a lawsuit if sued instead of suing the state. By the time we do that (sue the state), it’s going to be too late. We are already about to go in the hole right now.”
If Stein’s office doesn’t grant the waiver, council would have to call an emergency meeting to discuss defying Cooper’s executive order. Council’s next scheduled meeting is July 13 but Olson said the city can’t wait that long.
“We would provide a more detailed plan to City Council if that waiver is rejected,” Olson said. “We would tell you what we would be doing.’’
If, however, the waiver is not granted and city decides not to defy the executive order, then City Council could be forced to raise electric rates. That has the potential to increase customers’ electric bill by as much as $48 a month.
In documents the city submitted to Stein’s office, the city said that prior to the moratorium, it sent out disconnection notices for failure to pay to 18 percent of utility customers each month.
The city, however, relies on disconnection as a tool to collect utility payments. Of that 18 percent, only 5 percent ended up having their utilities disconnected for nonpayment, and only .5 percent of those remained disconnected for more than 72 hours.
Since Cooper’s moratorium was put in place, however, the city has seen the number of customers not making payments on their utility bills climb to around 26 percent, reducing the city’s “unrestricted cash balance” to $5.1 million, which is about 64 days cash on hand.
Olson said that the minimum cash balance the city “can afford” in the electric fund is $3 million. If the current trajectory of unpaid bills continues, by early August the city will not be able to pay its electric department employees, make its debt payments or pay its power bill.
“These executive orders have had a devastating effect on the city’s financial well-being,” Olson said. “We could have made it for 60 days. But 120 days, we just can’t go that long when you have roughly 30 percent of your customers not paying their bill.”
Olson said Elizabeth City was the first city to request a waiver from Cooper’s order pausing utility cutoffs but it may not be the last. Five more municipalities are in the process of following suit and are using the city’s waiver request as a template, he said.
Asked about the city’s threat to defy the governor’s order if the waiver isn’t granted, Laura Brewer, a spokeswoman for Stein’s office, said in an email the attorney general would have a response later.
“I’ll be in touch when we have more information to share,” she said.
Stein’s deputy general counsel, Blake Thomas, sent the city a response to its request for the waiver on Friday. In the letter, Thomas asked if the city would it be open to the idea of a “hardship exception” for those who’ve lost their job if granted the waiver. Thomas also asked if the city had explored all options for “payment flexibility” with its electricity supplier that wouldn’t result in contractual default or a negative credit rating for either the city or the supplier.
Thomas also asked if Elizabeth City City Council planned to go forward with raises for council members and the mayor. He said the AG’s office wanted to “understand why the city believes ... these pay raises are consistent with Elizabeth City’s claim of financial hardship.”
Council approved $250-a-month pay raises for councilors and the mayor Monday night as part of next year’s city budget.