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New Bills Address Utility Connection Charges, Service Disconnection for Non-Payment

Close up of a hand turning off a main water valve

Two bills with impacts to utilities passed during the 2023 legislative session: SHB 1326 now allows city and town utilities to waive connections fees for certain organizations, while ESHB 1329 prohibits utilities (and landlords) from terminating electricity or water service during high-temperature periods.

This blog provides an overview of these new laws, both of which are effective July 23, 2023.

SHB 1326 – Waiving Municipal Utility Connection Charges for Certain Properties

Under SHB 1326, cities and towns are now allowed to implement programs that waive connection fees for properties owned or developed by organizations that provide certain housing services. Eligible organizations include nonprofits, housing authorities, and other local organizations that provide eligible housing services, including emergency shelters, transitional housing, permanent supportive housing, or affordable housing.

Step 1: Determining which services qualify

Before waiving any fees, cities and towns will want to make sure an organization offers eligible housing services as defined in the law, so let’s take a look at each of the four housing services covered.

Affordable housing: As defined in RCW 36.70A.030, affordable housing is residential housing with monthly costs, including utilities other than telephone, that do not exceed 30% of the monthly income of a household, and do not exceed the following (depending on whether the house is rented or owned):

  • For rental housing, 60% of the median household income adjusted for household size for the county where the household is located, as reported by the United States Department of Housing and Urban Development (HUD).
  • For owner-occupied housing, 80% percent of the median household income adjusted for household size for the county where the household is located, as reported by HUD.

Emergency shelter: This is defined as providing temporary shelter to unhoused persons and not requiring a lease or occupancy agreement with the affected individuals.

Transitional housing: This is defined as providing housing and supportive services to unhoused persons or families for up to two years with the goal of moving these individuals and/or families into independent living situations.

Permanent supportive housing: This is defined as subsidized, leased housing with no limit on length of stay, which prioritizes unhoused people who need comprehensive support services to retain tenancy, and which utilizes admissions practices designed to use lower barriers to entry than would be typical for other subsidized or unsubsidized rental housing. Permanent supportive housing also offers on- or off-site voluntary services designed to support a person living with complex and disabling behavioral or physical health conditions.

Step 2: Establishing a waiver program

In order to waive connection charges for eligible organizations, cities and towns must first establish a waiver program through an ordinance, and such programs must indicate how waived connection charges will be funded. Cities and towns may fund these waived fees using general funds, grant funds, or another identified revenue stream.

ESHB 1329 – Preventing Utility Shutoffs for Nonpayment During Extreme Heat

Electric and water utilities are now prohibited from disconnecting water or electric service due to nonpayment from residential users during heat-related events under ESHB 1329. Additionally, residential users who have had their electric and/or water utility service disconnected for lack of payment now have the ability to request that the utility reconnect service during heat-related events.

A qualifying heat-related event is any specific day (or a period of days) for which the National Weather Service (NWS) has issued or has announced that it intends to issue a heat-related alert — including such examples as an excessive heat warning, a heat advisory, an excessive heat watch, or a similar alert — for the area in which the residential user's address is located. NWS outlines events that prompt a heat-related alert and maintains a webpage on Watches, Warnings or Advisories that covers all weather-related events for the state.

Customers must be notified of reconnection option

There is a new requirement related to disconnection notices. When a utility issues a notice of disconnection to a customer due to non-payment, this notice must also inform the customer of the ability to reconnect electric or water services during heat-related events.

The disconnection notice must contain clear and specific information about how a customer may make such a request, including instruction on how to contact the utility. Utilities may also include such information on their website or through their social media channels, but the statute specifically requires it be addressed in the notice of disconnection.

Service reconnection may be requested by residential customers

Under ESHB 1329, a utility “shall promptly make a reasonable attempt to reconnect service” to a dwelling at which electrical or water service was disconnected due to lack of payment but at which the residential customer has requested the utility reconnect service during a heat-related event. Note that under this law, a reconnection of service only need to be made by the utility if the disconnection was originally due to a customer's lack of payment and not as a result of other circumstances. 

The statute does not define “promptly” or what could be considered a “reasonable attempt,” so utilities should be prepared to implement their own policies and procedures that demonstrate compliance with this new law. It should also institute employee training to ensure staff follows these new policies and procedures during heat-related events.

Some utilities have already discussed whether to halt disconnections during months when there are normally heat-related events in their region. Such a practice could save staff time and make complying with the new law easier during months when there are normally heat-related events in the region. However, if a utility decides to follow this approach, it should also create policies for responding to unexpected heat-related events that occur outside of the dates/time one normally expects hot weather.

Repayment plans are optional

Utilities can require that customers requesting reconnection during heat-related alerts enter into a repayment plan with the utility before service is reconnected. Such payment plans must meet the following criteria:

  • It may not require monthly payments in excess of 6% of the customer’s monthly income.
  • It should be designed to pay the past due bill by the following May 15 or as soon as possible after May 15 to comply with the 6% limit requirement.

The statute does allow customers to agree to make payments in excess of 6% of their monthly income. However, be aware that in such cases the customer would not be considered in default if they later fail to comply with the payment plan.

If a customer receives assistance payments subsequent to implementing a repayment plan, the customer should contact the utility to reformulate their payment plan.

Reporting data to the state

ESHB 1329 includes certain reporting requirements for utilities depending on the number of customers they serve.

Utilities with more than 25,000 retail electric customers or 2,500 water customers in Washington must submit an annual report to the Washington State Department of Commerce (Commerce) that includes the total number of disconnections that occurred on each day for which the NWS issued, or announced that it intended to issue, a heat-related alert. This is in addition to other data to be determined by Commerce, which is currently developing the form, manner, and timeline for these reports.

Those utilities with fewer than 25,000 retail electric customers or 2,500 water customers in Washington must provide similar information to Commerce upon request.

The Washington State Attorney General's Office recently issued a memo that covers several questions the office has received about ESHB 1329.

MRSC is a private nonprofit organization serving local governments in Washington State. Eligible government agencies in Washington State may use our free, one-on-one Ask MRSC service to get answers to legal, policy, or financial questions.

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About Eric Lowell

Eric Lowell joined MRSC in December 2020 as a Finance Consultant. He has been involved in local government finance for over 13 years, including working in city government as well as for a special purpose district.

Eric received a B.A. in Secondary Education from Arizona State University and a B.S. in Accounting from Central Washington University.