HB 272 aims to charge ratepayers more, lessen executive power

Throughout this pandemic, Kentuckians have looked out for each other. Now we need our elected leaders to look out for Kentuckians who are still hurting.

Today House Bill 272 passed out of the House Local Government Committee (see how committee members voted). This bill aims to bypass the regulatory power of the Public Service Commission – proposing to make blanket allowances for water utilities to charge late fees up to 10% at their discretion, with no state oversight and no justification. 

In December 2020, the PSC lifted its moratorium on utility disconnections (which had been instituted to protect customers during COVID-19). At the same time, the PSC presented the results of a study they'd done showing that charging late fees does not incentivize customers to pay their bills. Instead, the fees only add to the overall amount a struggling customer owes, putting extra strain both on families and low-income bill assistance funds.

This bill, HB 272, was created in response to the PSC announcing it would discourage late fees. It attempts to carve out special protections for water utilities to charge 10% late fees without oversight from the body generally responsible for regulating these things.

KFTC member Nina McCoy raised the point of how this unfairly impacts people who are already struggling, 

"The addition of 10 percent penalty for those who don't have the money to pay a bill on time is cruel, especially since the late fee is assessed often within a 2-week window of receiving a bill, while they often get paid monthly ... the most vulnerable and powerless are expected to pay even more, while having less."

This bill is unnecessary, especially in light of federal COVID relief. There is relief coming, and the utilities are guaranteed to get paid. The $900 billion COVID-19 relief package that Congress passed in December included $638 million specifically for water bill assistance for poor households. 

Why is this bill bad? 

1. We recognize that many water districts and associations need additional revenue, but late fees are a regressive means of getting that revenue.
2. Late fees do not incentivize on-time payments, instead they merely punish people who fall behind on their payments at a time when many customers are already struggling due to the economic impacts of COVID. 
3. Late fees increase the amount past due. That disproportionately impacts poor families and makes it even harder for them to catch up on past due bills. 
4. Late fees also increases the overall amounts past due in the aggregate, which puts a greater burden on the utility customer assistance programs that are being provided during COVID, and that are likely to continue as more federal funding for customer assistance is expected.
5. Federal funding has already been allocated to provide customer assistance. Instead of passing this bill that will punish low-income customers, Kentucky should be focused on how to fairly and efficiently distribute that assistance. That money will help both customers and the water districts/associations. 
6. What has been made clear is that they are passing legislation based on anecdotal testimony from a very small number of water districts that will, of course, affect water districts across the entire state. These issues are supposed to be brought to the Public Service Commission for consideration, but the bill sponsor and GOP colleagues seem to think that they should make sweeping changes in favor of protecting revenues. 

What can you do?

The bill will next move to the House floor.

Call the Legislative Message Line at 800-372-7181 and leave a message for your representative: 

Please vote "No" on House Bill 272. This bill is unnecessary and will harm families struggling to make ends meet. 

You can find information on the bill and its cosponsors here. 

An additional infuriating note: the bill's sponsor, Rep. Josh Bray, is a newly elected state representative from Mount Vernon, where he also serves as the city administrator. In his campaign for state representative, he apparently took donations (KSF files ethics complaint against Josh Bray) for his campaign from a PAC chaired by the president of American Water, a company in the business of privatizing water supplies and utilities (Are Your State Officials in Cahoots with Big Water Corporations?).