Philadelphia Considers Income-Based Utility Bills
The city is in the midst of crafting a broader program that could offer income-based bills and debt forgiveness. Some worry that it will come at a cost: higher rates for the rest of Philadelphians.
By Tricia L. Nadolny
Keith Crawley hadn't decided that his water bill was less pressing than the others. The West Philadelphia man said he was just juggling, "robbing Peter to pay Paul," and fell behind.
"Then you end up robbing Peter to pay Paul and Mary," said the 60-year-old grandfather, who lives on a fixed income. "You get caught up on one, but you get behind on something else."
For Philadelphians such as Crawley who face potential shutoff due to mounting water bills, options are limited. The Philadelphia Water Department offers payment plans and some discounts. But in a city where 40 percent of payers are behind on their water bills, and delinquent payments total $259 million, many say it's not enough.
The city is in the midst of crafting a broader program that could offer income-based bills and debt forgiveness. Some worry that it will come at a cost: higher rates for the rest of Philadelphians. Advocates argue that fewer shutoffs can have stabilizing benefits in a community.
"The ratepayers have to understand this is about keeping people productive and paying," said City Councilwoman Maria Quiñones-Sánchez, who has led the push for income-based water billing.
As water rates have risen nationally, the pain has been acute in cities with high levels of poverty, such as Philadelphia. In 2013, the water department instituted a 17.5 percent hike over three years.
Of the Philadelphians behind on their water bills, more than half have been so for more than a year, according to the water department.
While the department ultimately collects upward of 95 percent of what it bills, the delinquency -- about $18 million in fiscal year 2015 -- adds up. Still, just 7,200 payers are enrolled in the department's program for low-income households. In comparison, more than 61,000 are enrolled in a similar program offered by the Philadelphia Gas Works.
Advocates say the low enrollment is due to high barriers to entry, such as paperwork that can be difficult to obtain. Robert Ballenger, a staff attorney at Community Legal Services, which is helping craft the new program, said the process can take months.
Once enrolled, participants can receive an annual grant -- often a few hundred dollars -- that is spread over their monthly bills. Others are put on debt payment plans.
Howard Neukrug, the water commissioner, said that only delinquent payers are eligible.
"What I'd really like to see is to provide an opportunity for even lowest-income customers to remain good customers and pay their bills on time," he said.
A group of stakeholders, including staff from the city's finance, revenue, and water departments, is currently crafting the new program, with plans to bring a proposal before Council by year's end. Quiñones-Sánchez said everyone shares the same goal, but the key disagreement is over debt forgiveness.
Under PECO and PGW's low-income assistance programs, debts are erased if households pay their new, lower bills for a set period -- 12 months for PECO and, on average, 36 months for PGW.
Who will be eligible for the new program and how much assistance will be given is still being decided. Officials from the finance, revenue, and water departments declined to say what terms they were seeking.
The current assistance program is open to households with an income of up to 250 percent of the federal poverty level, about $60,000 for a family of four. If the new program required payment of 2 percent to 3 percent of income (one option being discussed), that family would pay about $100 to $150 a month.
The payments could be substantially less for lower-income households. Quiñones-Sánchez and Ballenger have said that, in the long run, providing bills that payers can afford will lead to higher collections.
"If you deliver a bill to a family that is so beyond their possibility of paying, you're not delivering a signal to which they can really respond," Ballenger said. "When you deliver a bill that has an amount that's actually affordable, your chances of getting payment increase."
Neukrug isn't so sure and said the subsidies, plus the cost of starting a new program, will probably lead to higher rates. He still supports the move, though. "Water service in my, mind, there is a cost to it, certainly," he said. "But it's also a basic human right."
Crawley, who is retired, enrolled in the water program after falling behind on bills for the home he shares with his wife, daughter, and seven grandchildren. He declined to say how much he owes, but called it substantial.
He said his bills now cover monthly usage and debt and are about the same as before, around $200.
When he learned about the debt-forgiveness option being discussed, Crawley paused -- "That doesn't even sound like the city of Philadelphia," he said -- while contemplating what it would be like to lift that burden.
"It would mean maybe even putting a few dollars away to save," he said. "It would make a difference in saving money and not saving money."
(c)2015 The Philadelphia Inquirer