PWP Lays Out Potential Actions to Help Recover $7.7 Million in Back Utility Payments

The Pasadena Water and Power Department could soon begin taking action to recover a portion of the $7.7 million late payments owed to the utility.

On Wednesday, PWP staff asked the City Council’s Finance Committee for direction on possible actions, including using account deposits, to recover payments on some of the outstanding amount.

“We have some customers who did not have credit before or had a bad paying record so when they open an account we ask them to provide a deposit. Some of those accounts, not all are delinquent,” said PWP General Manager Gurcharan Bawa.

Using the deposits would recover about $1 million.

The $7.7 million does not include late fees, which are currently not being collected. 

“At some point in time, we will have to resume the utility shutoffs for non-payments,” Bawa said. “We remain committed to the service of our customers. They are the reason we exist, but an increasing amount of non-payments has a fiscal impact and would limit our ability to operate. It is not sustainable. We are carefully evaluating the impact of different actions.”

Mayor Victor Gordo, a member of the Finance Committee called the situation sobering. 

Although the utility’s system continues to apply late fees, customers are currently not paying them.

The $7.7 million reflects accounts that have an unpaid balance for more than 60 days. The amount continues to grow as other unpaid accounts pass the 60-day mark.  

According to a city report, there has been an 816% increase in accounts delinquent for 61 days or more for an amount totaling $7.7 million, up from $841,179 in January 2020. 

All told, 16,708 residential customers and 3,544 commercial customers are delinquent on their accounts. 

“With some businesses closing and residential customers moving out of Pasadena, PWP will likely experience considerably higher bad debt expense,” according to the staff report. “While PWP is continuing to incur expenses to provide water and power to all customers irrespective of their payment status, the increasing amount of unpaid bills is making this arrangement fiscally unsustainable.”

Other possible actions include amending the fiscal year 2021 operating budgets for the Water, Light and Power, and Refuse and Sewer funds to increase the bad debt expense in each fund for the anticipated growth in uncollectible accounts receivable, and pursuing liens for outstanding payments.

The City Council will provide more guidance at a future meeting.

So far, 6,400 reminder-to-pay letters have been sent to delinquent customers.

Last year, the City Council took several actions to help customers impacted by the pandemic, including refunding two years of Utility Underground Surtax. 

The City Council also voted to suspend the Utility Underground Surtax collection for six months, suspend late fees until further action by the council, and suspend utility shut-offs due to nonpayment until further action by the council

“While the suspension of late fees and utility shut-offs provides a temporary measure of relief, it does not relieve customers of their obligation to pay utility bills,” the staff report reads. 

“PWP recognizes that customers are being impacted by the pandemic and that is why we continue to suspend disconnects and late fees,” said PWP spokesperson Margie Otto. “However, customers should continue to pay their balance to keep it manageable and PWP is here to help and offers payment plans to both residential and commercial customers.”