State Treasurer Dale Folwell is calling for Gov. Roy Cooper and state Attorney General Josh Stein to grant waivers to municipalities operating citizen-owned utilities in North Carolina amid a no-cutoff of services ordered by Cooper in response to the coronavirus pandemic.
Folwell said in a press release earlier this week he believes without such financial relief at city halls and town halls, some of the public utilities could potentially end up going bankrupt.
“City councils, especially across eastern North Carolina, either have to comply with the governor’s order or violate the original debt covenants that were used to finance these utilities,” Folwell said. “The best path to avoid insolvency for these cities is for the governor and attorney general to grant the waivers.
“We’re in uncharted territory now with the inability of cities to collect not only electric fees, but sanitation, sewer and water fees as well,” Folwell said.
Folwell issued the press release Tuesday and also said he is asking the state Local Government Commission to create a working group, which would include Cooper, to find out how big the problem is and what can be done about keeping public utilities from going bankrupt.
“We don’t have the capacity or desire to take over and run all of these utilities,” Folwell said.
The Local Government Commission is part of the Office of State Treasurer and provides guidance and oversight to local governments in North Carolina about a variety of financial topics.
The Telegram emailed Cooper spokesman Ford Porter on Wednesday seeking comment about Folwell’s press release but did not receive a response by press time on Thursday.
Stein spokeswoman Laura Brewer, in an email on Wednesday, told the Telegram, “Our office is giving this careful consideration. I’ll let you know when there is an update.”
Cooper on March 31 signed a 60-day order prohibiting utilities statewide from cutting off services and on May 30 signed an order extending the first order by another 60 days.
The City of Rocky Mount, which provides electric, natural gas, sanitation, sewer and water services, has had a no-cutoff order in place since a vote on March 19 by the City Council.
And that vote came after much discussion and debate, with Councilman Andre Knight advocating for the local order and Councilman Lige Daughtridge saying he believed putting in some kind of criteria would be prudent.
Although the City of Rocky Mount put a no-cutoff order in place approximately 12 days prior to Cooper’s statewide no-cutoff order, the Telegram on Wednesday sought comment about Folwell’s press release with emailed questions to the municipality’s communications, marketing and public relations department.
No response was received as of press time on Thursday.
Meantime, Folwell’s press release on Tuesday noted that in Elizabeth City in the Albemarle region, the City Council there voted to ask Stein to grant that municipality a waiver.
Folwell’s press release provided a link to reporting on June 11 by the Telegram’s sister newspaper, The (Elizabeth City) Daily Advance.
The Daily Advance quoted Elizabeth City City Manager Rich Olson as telling the council there that, without the threat of disconnection, numerous Elizabeth City utility customers are not paying their monthly bills.
And Olson told of the municipality experiencing quite a cash flow problem.
“I’m afraid by the end of July, first part of August, we will reach insolvency,” Olson said. “At the rate we are bleeding (revenue), we won’t be able to pay July’s bill, which we will receive on August the 10th. That is how dire it is right now.’’
More specifically, The Daily Advance on Wednesday reported that Elizabeth City’s electric customers could see as much as a $48 increase in their monthly electric bill if the municipality there is not granted a waiver.
The newspaper reported Elizabeth City Mayor Bettie Parker on Monday sent a letter seeking a waiver, with the letter saying 2,730 of Elizabeth City’s 12,500 electric customers have not paid their bills since Cooper’s first no-cutoff order.
Folwell’s press release on Tuesday also noted the Inner Banks town of LaGrange filed a lawsuit against Cooper in Lenoir County Superior Court.
According to Folwell’s press release, the town argues Cooper is violating an agreement by the state not to interfere with a municipality’s right to collect fees or weaken the rights of bondholders.
And according to Folwell’s press release, the town has seen a 311 percent increase in customers with an outstanding balance, a 511 percent increase in customers eligible for disconnection and a loss of more than $41,000 in April.
LaGrange Town Manager John Craft was quoted by The Free Press in Kinston on June 11 as saying, “This case is not about disconnecting customers.
“It’s about preserving the town’s ability and discretion to operate its electric system in a manner that balances the needs of customers undergoing financial difficulties with the town’s obligation to maintain the fiscal health of its system and meet its debt service obligations,” Craft said.