The San Antonio Water System has seen a nearly 500 percent increase in the number of past-due accounts eligible for disconnection, a result of a local economy ravaged by the coronavirus pandemic.
From March 13 to Sept. 30, the number of SAWS accounts eligible for disconnection ballooned from 5,071 to 30,059, SAWS Chief Financial Officer Doug Evanson said. Evanson showed the figures during a presentation of SAWS 2021 budget at the utility’s October board meeting. Of those accounts, 28,674 are residential and 1,385 are commercial, with the total amount owed reaching nearly $20 million.
Those doesn’t include another roughly 50,000 past-due accounts with growing late balances that aren’t yet technically eligible for disconnection, SAWS Vice President Mary Bailey said.
“A number of these accounts, we don’t anticipate that they will physically get disconnected,” Evanson said. “But we need to work to somehow generate payment arrangements and likely … forgive a significant portion of these balances as well.”
Both SAWS and CPS Energy stopped disconnecting their customers for nonpayment in March, as the virus began to spread across Texas. SAWS officials said that while customers have received their regular bills showing past-due balances, the utility has not been actively asking for payment.
“We have not been reaching out and sending any disconnect notices or making outbound calls,” Evanson said. “In the midst of this pandemic, it’s just not something we want to be [doing].”
However, Evanson SAWS’ budget for next year assumes that it will need to begin shutting off service to delinquent accounts in mid-2021.
“The assumption is that we will begin communicating our plans to do so within the next several months, to be followed up with a reinstatement of late fees and disconnections to begin sometime in the second quarter of 2021,” he said.
SAWS is facing an overall decline in revenue from customers struggling to pay bills and lower than expected water and sewer use among commercial and industrial customers. The utility has revised its initial $929.2 million 2020 budget projection to $903.7 million, Evanson said.
Evanson called the utility’s 2021 budget projection of $909.4 million an “anomaly” because it’s lower than the previous year’s budget forecast.
“Generally speaking, you would see this amount grow, at least slightly, from year to year,” Evanson said. “But that’s not the case this year.”
The reduced revenue comes even as officials expect the utility to add another 7,881 water customers in 2021 for a total of 539,853 and another 6,752 sewer customers for a total of 473,606.
While Evanson described SAWS residential water and sewer revenue as “fairly strong relative to prior years,” use among commercial and industrial users plummeted as low as around 30 percent in April and May, compared to 2018 and 2019. SAWS expects those customers’ use to remain around 10 percent lower than previous years through the rest of 2020.
SAWS officials also say they will forego an annual rate increase for the first time in at least a decade, leaving water and sewer rates unchanged in 2021. In April, the utility suspended its Rate Advisory Committee charged with reviewing the structure of water and sewer rates over the next five years.
The pandemic has also led the utility’s board not to award a bonus to President and CEO Robert Puente earlier this year and for its executives to suspend any performance-based raises among the utility’s staff in 2021.
The utility is expecting an increase in its operations and maintenance budget “entirely attributable” to its Vista Ridge pipeline, Evanson said. The forecast of $454 million in 2021 compared to $416 million this year is a result of SAWS’s obligation to pay for an entire year’s worth of water from the privately-owned pipeline delivering groundwater from Burleson and Milam counties east of Austin. SAWS began paying for Vista Ridge water in mid-April.
At the meeting Tuesday, board members and SAWS officials seemed to agree that they did not want to see the utility begin shutting off service again in 2020.
“I don’t think we’re going to be in the clear before the end of the year, certainly,” said Mayor Ron Nirenberg, a SAWS board member in his official capacity.
In response to questions from Chair Jelynne LeBlanc Burley, who took over leadership of the SAWS board in September, Bailey said that the utility isn’t seeing much overlap between the accounts on the shut-off list and those customers already enrolled in SAWS’s Affordability Discount Program for low-income residents.
Instead, most of those eligible for disconnection are concentrated in “areas that are more middle-income,” Bailey said.
“Some of them may not qualify [for the discount program] based on income, because it’s based on last year’s income,” Bailey said. “But it’s this year they’ve lost their income.”
SAWS will make every effort to enroll customers in payment plans “offering very reasonable terms,” Bailey said.
“We’re offering anywhere from nine months to 18 months if that’s what it takes,” Bailey said. “We just want to be sure that we’ll be able to keep the water on for those customers and ultimately be able to convert that into revenue.”
The utility’s board will likely vote on the 2021 budget at SAWS’ November meeting.
