For years, residents who have struggled to pay their utility bills have turned to the state’s low-income heating and electric assistance program, known as LIHEAP.
Considering the COVID-19 pandemic has led to widespread economic suffering, there could be an assumption that applications to the program would have increased tremendously since March. In reality, the opposite is true.
Ralph Izzo, the chair and CEO of Public Service Enterprise Group, said application to LIHEAP are way down — a scenario that will have far-reaching financial implications for all residents in the state.
The situation has become dire enough that state Sens. Steve Oroho (R-Sparta) and Joe Pennacchio (R-Montville) have sent a warning letter to Joseph Fiordaliso, the president of the New Jersey Board of Public Utilities, urging the BPU to take preemptive measures.
“If these payments aren’t made, it will fall on the backs of ratepayers, and we don’t want them stuck holding the bill,” they wrote. “We need to come up with a plan now.”
Here’s how the state reached the situation:
The origin
Izzo said he can only assume that many customers are confusing a moratorium on utility shutoffs with a feeling that those bills will be forgiven. Why else, he said, would residents pass on a chance for help?
“I can’t figure any other reason why they would — because, if I thought a bill was going to come through, I would do all I can to keep it as low as possible,” Izzo told ROI-NJ. “We have tremendous empathy for people who are out of a job or had their hours reduced, and we’ll work with them to manage the situation. But don’t drop one of the most important mechanisms you have been using in the past.
“That suggests that there’s a misunderstanding about what is going to be at the end of this process.”
The impact
Izzo said PSEG and all utilities have programs that help ensure customers who cannot afford their bills will be able to keep their service. One form of assistance is to have customers who can pay subsidize those who cannot.
The current total of the nonpayments is reaching an untenable amount. Izzo said payments that are more than 30 days late usually run $150 million to $200 million a year. They have now reached nearly $400 million.
“It’s a massive increase,” Izzo said. “It’s a doubling-plus. We can’t hemorrhage an average of $200 to $400 million on an annual basis. So, there’ll be an additional strain that will be put on paying customers to dig us out of this hole.”
The solution
Oroho and Pennachio said the BPU must play a role in establishing policies for repayment and creating payment plan options for ratepayers.
“BPU should start the discussions now and come to the Legislature with ideas if necessary,” they wrote.
Izzo said PSEG is reminding customers to use LIHEAP, as they have in the past.
“We are contacting customers and letting them know, ‘This is a bill you’re accumulating that’s going to come due — and you’re not availing yourself of something that is there for you and you’ve used in the past,” he said.
The worry
Oroho and Pennacchio said the state must make sure that those skipping payments are the customers that truly need to.
“It makes sense to limit a moratorium to homeowners, tenants and businesses who have been financially impacted as a result of this pandemic,” they said. “The law of unintended consequences is always lurking, and I hope we can avoid situations whereby someone had the ability to pay, but took advantage of a moratorium and now finds themselves in financial distress because they now have to settle their bill.”
Izzo supports their mission.
“I think the senators are spot on: We have to make sure that, when we adjust utility bills, rent or whatever the case may be, you don’t have a cascading problem of people just thinking, ‘Well, that’s just going to be forgiven.’
“Because that impacts the landlords, the utilities, the banks and, ultimately, everyone.”
