NPU continues to see impacts of COVID-19

Moratorium on shut-offs enacted during pandemic

Norwich — Norwich Public Utilities continues to suffer major revenue losses of close to $1 million per month caused by the COVID-19 business shutdowns and customers’ inability to pay monthly bills, NPU officials told utilities commissioners Tuesday.

NPU officials used actual revenues through May 31 and projections through Sept. 30 to reforecast sales revenue, bill collections, expense cuts to meet the shortfalls and a plan to boost cash reserves by seeking a line of credit for the natural gas and electric divisions.

Based on the revised projections, NPU has seen a drop in total revenue of $956,000 per month during the COVID-19 pandemic. Laura Huren, NPU financial planning manager, said utilities officials projected a drop in revenues for the period from June 1 through Sept. 30 from the budgeted $30.2 million to the revised total of $26.4 million, a 12.6% drop.

Consistent with earlier COVID-19 figures, NPU is anticipating a 5% increase in residential utility use, with more people staying at and working from home. Commercial utility revenues, however, are projected to be down by 28.5%, industrial down by 27.5% and public facilities revenue down by 25.5%.

During the pandemic, NPU has enacted a moratorium on utility shut-offs for customers unable to

pay and deferred interest on overdue payments for hardship customers. Normally, NPU has about 1,500 customers signed up for hardship programs, but the utility usually receives about 50% payments on their bills. Now, those residents are unable to pay any portion of their bills, for a loss of cash receipts of $204,000.

And an additional 2,500 customers are unable to pay, Huren said, leading to a drop in cash receipts of $672,000, including a 10% contingency on the total.

Overall, 3,713 customers have back due bills, totaling $1.88 million, down slightly from the May estimates. NPU created a special COVID-19 payment arrangement, and 514 customers have enrolled in the plan, with bills totaling $838,000.

On Tuesday, the utilities commission voted unanimously to extend the utility shutoff moratorium for both commercial and residential customers to Sept. 9 — Gov. Ned Lamont’s estimate for when the COVID crisis could end. The commission will reassess the moratorium date as Sept. 9 approaches to determine whether the crisis has passed.

Commissioners said to resume shut-offs any earlier would hurt small businesses just starting to reopen, as well as customers just getting back to work.

NPU estimated total cash receipts are down by $1.4 million per month, with an anticipated decrease of $279,000 in cash received from billings per month.

In response to the revenue fall, NPU has cut expenses by $712,000 per month through Sept. 30, deferring some capital projects. In late May, NPU announced it had reached agreements with the three labor unions to defer raises until Dec. 31. NPU has reduced overtime by 40% and has not hired seasonal staff, Huren said.

NPU’s estimated cash balance for the period from June 1 through Sept. 30 is projected to drop by $6.4 million, from $38.2 million to $31.77 million, a 16.9% drop.

To boost cash reserves, NPU is considering taking out a line of credit for the natural gas and electric divisions. The line of credit would cover disasters, such as hurricanes, and property damage caused by other catastrophic events.

NPU Division Manager Steve Sinko said NPU will work with the city’s bond counsel and city officials to write an advertisement for requests for proposals for an electric line of credit of about $2.5 million to $3 million, and a line of credit for natural gas of $1.5 million to $1.75 million.

“A line of credit could potentially be used short-term to partially stabilize reserves,” the NPU COVID-19 forecast report stated. “If downward trends continue, longer term solutions will be required.”

Board Chairman Robert Staley said NPU might find that banks would not charge interest if NPU doesn’t use the money. He also suggested NPU could keep that money in reserve as a safety cushion while using some of its cash reserve for utility improvements NPU might otherwise put off because of lack of cash.