Delinquent city water accounts are soaring in Phoenix as officials continue their pandemic-related policy of not turning off the tap for households and businesses that aren’t paying their bill.
More than 21,500 Phoenix households have run up a tab totaling $7.3 million while 609 businesses owe another $2.2 million, according to a report that the City Manager’s office sent City Council last Thursday.
Combined with accounts that stole water and now owe $1.1 million, delinquent Phoenix Water Services Department customers – 22,923 businesses and households – owe $10,489,000, according to the report. Total project revenue from all water accounts is estimated at $850 million this year.
The total now owed for water services is more than five times the $1.8 million in delinquencies the city faced just two years ago and there appears to be no plan for recouping the money any time soon.
Aside from a closed-door discussion of the problem, City Council has yet to address the problem and apparently won’t be taking up the matter until it returns from summer break.
“We are planning for a discussion with Council in the fall when they are back from break,” administration spokeswoman Stephanie Bracken told AFN Friday. “In the meantime, we are working closely with residents who are in need of some help paying their bills through our various assistance programs.”
To help customers pay their water and other utility bills, the city early last year allocated $1.6 million in federal pandemic relief funds through several different programs.
Then, on Dec. 17, the city started spending another $2 million that Council allocated for water bill relief. That fund ran dry in less than three months as 3,657 customers took advantage of it.
In the meantime, the number of delinquencies is increasing.
In the week ending June 21, 20,628 delinquent accounts owed a total $10,472,276. A week later, the number of delinquent accounts jumped to 22,923 for a total debt of $10,489,075.
In March 2020, the city launched a deferred payment arrangement program that allows residential customers to identify themselves as delinquent, but its effectiveness in debt collection is unclear.
“The arrangement protects the customer from delinquency action and assures no financial penalty, such as late fees, will be charged,” the City Manager’s report explains.
But it also notes, “Customers enrolled in a DPA are not required to make a payment on current or accumulating billing, or initiate installment payments. Activation of these deferred arrangements has been ongoing as residents experience financial hardship during the pandemic.”
“As a result of the COVID-19 pandemic, the city is not shutting customers off or installing low-flow devices for delinquent accounts,” it adds.
The philosophy behind the city’s approach to the mounting pile of unpaid water bills is also explained in the report.
“Delinquency recovery is a component of the Water Services Department’s integrated equity and affordability planning,” it says. “It is one element of a multi-faceted strategy to balance water affordability for residents and the need for stable revenues to assure funding for water quality and system reliability, the foundation of public health and economic vitality.”
It also notes that the deferred payment arrangements “have resulted in some accounts accumulating a high balance” and that “these customers may have difficulty paying the monthly installment financial obligation and monthly bill.” The most any single account owes is $6,871.
To make matters worse, the report admits, “there has been misuse of the program” as some customers simply closed the accounts and left, leaving it up to city-contracted collection agencies to chase the deadbeats.
And help from the federal government appears not to have persuaded all city water customers to pay their debt.
While noting “some customers were delinquent and months behind on their bill but have been making payments after receiving funding so that their account does not fall behind again,” the report admits that “some customers have not made a payment toward subsequent bills following receipt of assistance” and “many customers have not made any payments in more than 12 months.”
The report also details a 12-point plan that the Water Services Department has initiated “to maintain and enhance affordability and equity for Phoenix residents.”
One strategy was a pilot of the low-flow devices which curtails water pressure but doesn’t cut off the customer completely” while others included the millions in federal relied aid devoted to utility assistance.
Three strategies still to be implemented included “expand customer outreach to inform and guide customer behavior (for) enhanced conservation programs,” “improve consumption awareness and leak mitigation” and partnering “with a third-party payment plan web portal to assist customers with managing their City Services bill payment plans.”
The Water Services Department also is exploring the replacement of the deferred payment arrangement program with its previous “payment arrangement policy” that requires a payment on their delinquency along with full payment of their current bill. That program, the report says, “provides relief to customers without continuing to build a large outstanding balance.”
Of 17 Arizona cities surveyed by the Phoenix City Manager’s office, only Phoenix, Tempe and El Mirage have not resumed cut-offs in service for delinquent customers.
While Phoenix may return to installing low-flow devices on delinquent customers’ homes and businesses, when that will happens is unclear. The report notes:
“At no time would a low-flow device be installed when the National Weather Service issues an extreme heat advisory.” ′