Increase in delinquent water bills leads Petaluma to again suspend rate hikes

As total delinquent bills triple amid the pandemic, Petaluma leaders have again decided to forgo annual rate hikes.|

Petaluma won’t raise wastewater utility rates for customers this year, extending a rate freeze in place since last spring as the number of delinquent accounts has tripled since the start of the pandemic.

With 500 customers accumulating more than $600,000 in utility debt, the Petaluma City Council last week approved the continuation of fee increase freezes following what was already a year-long suspension initiated at the start of the pandemic.

Though the unpaid water bills represent a small fraction of the city’s $40 million annual revenue, Finance Director Corey Garberolio said the sharp increase in delinquent accounts - growing nearly threefold since the start of the pandemic - was cause for concern. Wastewater costs account for the largest component of customers’ bills.

“When you compare it to the overall picture, it’s a pretty small number,” Garberolio said. “However, that is comprised of hundreds of accounts. There are many people likely still affected by the pandemic. It’s hard to know for sure this is why accounts are delinquent, but we’re assuming it’s because of the pandemic and we want to continue to provide assistance.”

Petaluma updates its rates every five years, with the last such adjustment in 2017, adjusted annually to reflect the cost of inflation and increases in wholesale costs from the Sonoma County Water Agency.

The annual consumer price index rate increase would have bumped customer bills by an average of $6.25 per month, as set by the five-year increase schedule passed in 2017.

A new rate study is currently in process as well, which will set new water and wastewater rates for 2023 and sketch out a new five-year annual rate increase schedule.

Because the city’s water and wastewater rates will have remained stagnant over two consecutive years, Garberolio says they are likely to increase next year, and could jump beyond the average 2.5% annual rate increase in 2022 to include increased cost of service.

“If we’re looking at the cost of service and looking at our revenue structure, which is lagging behind a few years, we are looking at a potential for rates to increase to keep up with those costs,” Garberolio said.

City staff will return to council to discuss new rates for 2022, and bring council an option to either continue utility fee increase suspensions or return to scheduled increases.

As the COVID-19 pandemic approaches its 15th month, past due amounts for residential utility customers have soared, reaching $1 billion statewide, and state officials have embraced extended protections as a result.

The California Public Utilities Commission in February extended protections for utility customers, ordering energy, water and communications companies to suspend disconnections for nonpayment until at least June 30.

Sonoma County last month launched a $32 million aid program to help residents pay off rental debt, including past due utility bills, and Sen. Bill Dodd, D-Napa, has sponsored legislation that would establish a statewide water assistance fund to help customers pay past due bills.

Although Petaluma provides payment plans for customers struggling to pay, water is only one component of monthly utility bills, along with electricity, gas and garbage. And health officials worry about an impending avalanche of bills coming due this summer.

Elece Hempel, Executive Director of Petaluma People Services Center, said the countywide emergency rental assistance program she oversees frequently aids residents who have racked up substantial utility bill payments due to financial hardship caused by the pandemic.

“At least 35%, if not more, of those dollars we’re using to keep people in housing is going toward utilities,” Hempel said this week. “It’s shocking to see how far behind people are in their payments to PG&E, city water, garbage. And now, after many households had to get internet for their kids to go to school, they have internet bills.”

Contact Kathryn Palmer at kathryn.palmer@arguscourier.com, on Twitter @KathrynPlmr.

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