COVID-19 Proclamation Implications For Municipal Utilities
Updated: Apr 14, 2020
By: Eileen M. Keiffer
Most people are familiar with the Governor’s proclamations ordering Washingtonians to shelter in place and temporarily suspending portions of the OPMA/PRA in response to the COVID-19 crisis. However, the Governor has also issued important proclamations relating to municipal utility operations and billing, Proclamations 20-23, and 20-23.1 (amending Proclamation 20-23).
These proclamations are titled “UTC-Ratepayer Assistance,” and the bulk of them relate to obligations and limitations for utilities regulated by the Washington Utilities and Transportation Commission. However, you may have missed the last paragraph of these proclamations, which is specifically directed at municipal utilities. In these proclamations, the Governor “strongly encourages” all utilities to take action to mitigate the economic impacts of the COVID-19 pandemic on their customers, including, but not limited to:
Acting to prevent disconnection of services due to non-payment during the term of the statewide emergency declaration;
Waiving late payments and fees;
Using payment plans to fulfill customer outstanding balances;
Employing internal processes and procedures to facilitate social distancing and proper hygiene practices, and
Closing facilities to the public.
Governor Inslee also strongly encouraged municipal and public utility boards and commissions to delegate authority to “senior utility executives” to take any and all actions necessary or appropriate to mitigate the economic impacts to their utility customers to address the COVID-19 crisis.
Does this mean that all customers are automatically excused from paying utility bills during the crisis? Of course not, and municipal utilities must determine how to follow the Governor’s recommendations without violating other existing legal principles. Article 8, Sections 5 and 7, of the Washington State Constitution, prohibit gifting of public funds for private use and against lending of public credit, except as necessary in support of the poor and infirm. The Washington Attorney General has issued a memo broadly suggesting that measures to promote the public health that incidentally benefit private citizens and entities will not violate the constitutional prohibitions on gifting of public funds. However, the memo does not expressly address utility bill relief measures. Therefore, payment plans and other deferral options should include the appropriate reasonable interest rate provisions, to avoid allegations that the payment plan or deferral gifts public funds or loans municipal credit (again, excepting support of the poor and infirm). Similarly, utilities should carefully consider other rate relief measures (such as late fee suspensions or waivers), and whether such measures are appropriate for all classes of customers, or whether such measures should be tailored to support low-income customers and the infirm.
The full economic implications of the COVID-19 crisis are yet to be seen, but can be expected to be severe. Consequently, municipal utilities can expect to experience a glut of late utility payments and increased difficulty collecting past due balances even after the crisis has concluded.
Of course, this article does not serve as legal advice and we encourage you to consult with your attorney as to what the Governor’s proclamations mean for your business operations. Stay safe, and as always, many thanks from all of us at Madrona Law Group for your public service!