NPU unions defer raises as utility responds to COVID-19 revenue losses
Norwich — Norwich Public Utilities is losing more than $1 million per month in revenue due to COVID-19 business shutdowns and customers unable to pay monthly utility bills, NPU officials told the utilities commission Tuesday.
To assist with the utility’s immediate need to cut expenses, NPU also announced Tuesday that it has reached an agreement with the three labor bargaining units that cover all employees other than General Manager Chris LaRose, to defer negotiated raises for six months, from July 1 through Dec. 31.
NPU has been hard-hit by the COVID-19 shutdowns, with Norwich unemployment reported at 18% in April and many city businesses shut down since mid-March. NPU's largest water customer is the Mohegan Sun Casino, and another of its largest customers, Atlantic City Linen Supply Norwich, a commercial laundry serving the region’s two casinos, has been shuttered since the casinos closed March 17.
Laura Huren, NPU financial planning manager, told the commission NPU revenues are down by $1.05 million per month based on actual figures through April and projections through June 30. Utility sales revenue is down by $892,000 per month, and other revenues down by $159,000. NPU anticipated a loss of $279,000 per month in revenue from its top 100 customers.
With more people working from or just stuck at home, residential sales have increased by 5%, but commercial sales have dropped by 32%, industrial sales by 16.5% and public sales by 24.5%. NPU had 1,500 existing residential customers on hardship payment plans and normally expects to receive 50% of their payments. Now, the utility expects no payments from those customers, at a revenue loss of $206,000, while another 2,500 customers are unable to pay their bills, at an expected revenue loss of $680,000 per month.
NPU has expanded payment relief programs for customers and deferred interest on past-due bills. The city-owned utility also agreed to follow the state’s directive to investor-owned utilities not to shut off utilities to customers who fail to pay monthly bills at least through June 1.
NPU reported that 3,839 customers now have back-due bill payments totaling $2.1 million.
Jeff Brining, NPU customer service division manager, said the numbers of back-due bills and lost revenue is not as bad as NPU initially anticipated. He credited the utility’s customer service staff for proactive efforts to reach out to customers struggling to pay bills to work out payment plans, urging them to make partial payments as much as possible to avoid ballooning bills down the road.
Brining said NPU tries repeatedly to reach customers who are behind on bills, and the most frustrating part is when customers do not respond to the outreach. He said some will face service shutoffs once the state moratorium ends.
In response to the sharp revenue losses, LaRose said NPU has reduced expenses by $523,000 per month, including deferred capital projects and operational expense cuts. The three labor unions representing 147 employees previously had agreed to flexible working hours and limiting overtime, saving $100,000 per month. The three unions now have agreed to defer their negotiated contractual raises through Dec. 31. The agreement is expected to save $187,000 for the next six months.
LaRose said the expense cuts have not affected services to the public. NPU crews have responded with COVID-19 precautions to emergencies, including emergency power outages, water main breaks and sewer system issues, throughout the pandemic.
The Board of Public Utilities Commissioners on Tuesday also approved offering an early retirement incentive program. NPU officials identified 24 employees eligible to retire through June 30, 2021. Estimated savings would range from $432,000 to $1.48 million, depending on how many employees accept the program, with savings in anticipated lower salaries for new hires and delays in hiring new employees.
Union leaders issued statements Tuesday saying it was an easy decision to agree to the utility’s request for raise deferrals.
“Every one of our members understands the challenges that NPU and our community are facing in the months ahead,” said Rob Harris, president of the NPU AFSCME union. “Our membership is pleased to lend our support to NPU during these unprecedented times.”
Steve Lee, assistant business agent for the International Brotherhood of Electrical Workers, added said the union felt “it was the right thing to do” to approve the deferred raises and other modifications in the contract to adjust work schedules to foster social distancing and safe working conditions.
“The IBEW employees want what is best for our customers, our membership and NPU,” Lee said.
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