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Norwich Public Utilities sees financial impact of struggling customers

Norwich — As some Norwich businesses have reopened and some residents returned to work, Norwich Public Utilities revenue losses have stabilized slightly, but utility officials still are projecting major losses through September due to the COVID-19 economic downturn.

NPU administrators provided their monthly COVID-19 impact report to the Board of Public Utilities Commissioners on Tuesday, showing overall revenue declines and cuts in expenses to try to absorb the losses. The projections relied on actual utility usage and revenue through June 30 to make projections for July 1 through Sept. 30.

NPU expects to continue to fall well below pre-COVID-19 budget projections, with overall anticipated revenues for the three months at $20.3 million, down by $2.7 million from the budget of $22.9 million. Total monthly revenue drops are projected at $884,000, as residents and businesses continue to struggle in the partially shut down economy.

Commercial and industrial utility use is down by 27% each, and power use by public entities is down by 23%. As people continue to work at home and remain home for vacations, residential power usage is up by 5%. But 3,381 of the city’s 18,000 residential customers have past-due bills one to four months overdue.

NPU General Manager Chris LaRose said the usage figures are “weather normalized,” using 12-month average usage not adjusted for increased air conditioner use during July.

During normal times, NPU has about 1,500 financial hardship customers enrolled in special payment plans. With the COVID-19 emergency, that number has ballooned to 2,300.

Of those 800 new hardship cases, “We have 650 special payment arrangements,” LaRose said. “And a month later, we’re seeing them have problems meeting it. And new people are coming on. We’re still working with people, and we continue to take applications. Our customers are struggling.”

While NPU has a policy not to discuss specific customers, LaRose said the September projections include the anticipated closure of Freeport-McMoRan Copper Products Co., which announced in June it would close the Norwich plant starting in August in COVID-19-related companywide cutbacks. Another top utility customer, Atlantic City Linen Supply, which services the region’s two casinos, remains closed as the casinos operate on a limited basis.

Revenue losses deemed “uncollectible” from NPU’s top 100 customers alone is projected at $136,000 per month. Monthly cash receipts are projected to be down by $643,900 across all four NPU services: electricity, natural gas, water and sewer.

In response, NPU has reduced expenses by $835,000 per month, a 14% cut, for the three-month period. The cuts include leaving vacant positions open, except for one IT manager position, continued savings from deferred raises per an agreement reached with the utility’s labor unions in May and an 86% drop in overtime costs. Seven employees have accepted an early retirement plan.

“Some of this is real savings,” LaRose said, “and some of this is deferred savings. Overtime is real savings. We’ve been able to manage with that. All the employees have been very cooperative. Some of it, such as capital improvements, are deferred. We’re saving money by not replacing a pole. We’re doing everything to minimize the costs.”

c.bessette@theday.com

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