KY senators OK plan to allow water bill late fees, even if state regulators say ‘No’
The Kentucky Senate on Tuesday revived a bill to let water districts impose a 10 percent late fee on customers even when the Public Service Commission says those fees create an unjustified hardship on poor people.
After stalling the bill for a week, the Senate Natural Resources and Energy Committee removed late fee language that would have gone further, extending it to all state-regulated utilities. Instead, it limited the bill’s scope to the state’s 105 water districts.
However, another section of House Bill 272 would let all utilities continue to cut off service to late-paying customers during declared states of emergency, such as the COVID-19 pandemic, regardless of whether a moratorium has been imposed on such terminations.
The bill proceeded to the full Senate, which later Tuesday voted 25-to-10 to approve it. The House concurred with the Senate’s changes to the bill and sent it to Gov. Andy Beshear for his signature or veto.
The bill’s Republican sponsors said rural water districts must be able to protect their steady cash flow by imposing penalties on customers who miss payments.
“From a utility standpoint, especially among these small utilities, cash flow is everything,” state Rep. Josh Bray, R-Mount Vernon, told the Senate committee. “They’re having to buy their water in most circumstances. So if they’re not bringing in adequate cash flow to cover it, they’re gonna go to default. And I’ve seen that happen.”
The sponsors agreed to an amendment exempting water district customers who get financial assistance with their bills from charitable funds, such as the Low-Income Household Drinking Water and Wastewater Emergency Assistance Program.
However, critics said the bill still unfairly penalizes poor households and neuters the PSC, the state regulatory agency responsible for protecting Kentuckians from abuses by utility companies.
The bill targets the PSC, which last year imposed temporary moratoriums on utility late fees and service cutoffs because of the economic recession caused by the pandemic.
The moratoriums expired by year’s end. But the PSC in recent months told four water districts and electric utility Kentucky Power to stop charging late fees.
After studying data it collected from a broad swath of utilities during the moratoriums, the PSC concluded that late fees create “a hardship” for poor people already struggling with their bills but show “no material effect on the percentage of customers paying on time.”
When the PSC determines that a fee is unjust and arbitrary and bears no relation to a utility’s actual costs, then it should be able to order a utility to remove it, said Tom FitzGerald, director of the Kentucky Resources Council.
Instead, language in the bill explicitly states that water districts won’t have to provide any evidence to justify late fees, such as showing that they need to recover lost costs that could raise other customers’ bills.
People who are struggling to pay their household bills only get pushed deeper into debt by late fees, FitzGerald told the senators.
“If you are a person for whom a 10 percent late fee on top of your bill doesn’t affect your budget, then more power to you,” FitzGerald said. “But there’s a lot of folks out there ... for whom it’s a big deal.”
State Sen. Johnnie Turner, R-Harlan, said many of his Eastern Kentucky constituents recently were inundated by record-breaking floods. It’s unfair to expect them to stay on top of their bills during this chaotic period, but the bill specifically does not allow any exceptions for emergencies, Turner said.
“There’s no exceptions for late,” Turner said. “All those people in Beattyville who are under all that water, if they don’t have their bill and can’t pay it on time, they’re gonna pay a 10 percent fee.”
Among the companies and utility industry groups lobbying on the bill this winter have been the American Water Works Association (Kentucky-Tennessee chapter), the Kentucky Rural Water Association, LG&E Corp. and the Kentucky Association of Electric Cooperatives, according to legislative ethics records.
This story was originally published March 16, 2021 at 3:11 PM.
