California Senate Bill 998, the Water Shutoff Protection Act, went into effect February 1, 2020, and forced changes to shut-off policies for many water agencies. However, the law still leaves many areas open for interpretation when it comes to compliance. It’s important to understand the current language in order to ease the administrative and operation burdens that may come with implementation.
Senate Bill 998 Explained
SB 998 lengthens the minimum water meter shut off period from 34 days to 60 days and requires every water system with over 200 connections to have a written policy on the discontinuation of water service for non-payment. This new law addresses shut offs for residential non-payment only, which means your shut off policies for meter tampering and commercial accounts do not need to change.
SB 998 also defines other requirements for shut-off policies regarding languages, waiting periods, customer payment options and fee structures.
This new law leaves many areas open for interpretation, so it is important that you consult with your legal counsel on implementing this bill. Many firms we have worked with are in agreement that where existing law is more stringent than SB 998, the water system should err on the side of the customer and adopt the more stringent rule to be safe from legal challenge.
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The shut-off policy must be available on the water supplier’s website or provided to customers upon request in five languages in addition to English, and in any other language spoken by at least 10% of the customers residing in the service area. The five defined foreign languages are Spanish, Chinese, Tagalog, Vietnamese and Korean. Most legal firms do not think Google translation will be adequate and that a professional translator must be retained.
A common question has been if agencies need to have all communications (such as a phone call or initial disconnect notice) in all five languages. Some counsel has advised that it’s OK to have a statement in the final door hanger in all six languages stating the customer can obtain the full policy in one of the languages by contacting the agency or reference the agency’s website. However, the English policy must still be attached to the final notice. Other legal firms are interpreting that the final door hanger must contain the shut-off notice and policy in all six languages.
60-Day Waiting Period
The policy must include a 60-day delinquent waiting period before service is discontinued, with seven business days’ notice before the shutoff. Notice can be given by telephone or in writing, and there must be an offer to provide the shut-off policy and discuss options to avoid shut-off, including alternative payment schedules, deferred payments, and amortization of the bill over a period of time. Some agencies are using Interactive Voice Response (IVR) to contact customers, but they are making adjustments to ensure an adult occupant listens to the full message. Contact your legal counsel to determine if this would work for your agency since some legal firms feel that this is not enough to satisfy the intent of SB 998.
If the water system is unable to contact an adult occupant, a door hanger with the policy and notices must be placed in a conspicuous spot at the residence. Concerns surrounding privacy issues and the posting of shut off notices have been noted, and there are no definitive answers. Some smaller agencies plan to use Fed Ex to deliver the shut-off notices, which will provide proof of delivery, and is less expensive than using their own labor.
Customer Payment Options
A customer may appeal the shut-off, and the water system cannot shut-off service while the appeal is pending. However, the appeals process is not defined in SB 998.
If all three of the following conditions are met, a water system cannot discontinue service:
There are additional restrictions on reconnection fees for low income residents, which cannot exceed $50 during working hours and $150 during non-operational hours. Additionally, interest must be waived for low income residents. A common misconception is that this bill permits you to raise your reconnection fees to SB 998 limits if your current fees are currently lower. However, Proposition 26 does not allow an agency to charge more than the actual cost of service for such reconnection services. Interestingly, SB 998 does not dictate limits on delinquent charges and shut-off charges for low-income customers. However, an agency still must take care to not charge beyond the cost of providing service to avoid a possible violation of Proposition 26.
What are water agencies doing in response to this new law that may lead to higher uncollectible account balances? Many agencies are increasing their up-front deposit or will start charging a deposit on new accounts.
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Options for Adopting a Policy
Agencies may consider adopting two different policies, one for low income and one for other residential customers. However, many disadvantaged communities have decided to have one policy that assumes all customers are low income. This avoids the need to verify low income status and treats everyone the same. Other larger agencies are also adopting one policy to avoid the burden of verifying income and monitoring two different policies.
Another common question is if agencies are required to accept an alternative payment arrangement. Some legal firms opine that an alternative payment plan request from a customer who is not low income can be rejected by the agency. Other firms have said it is wise to grant all “reasonable” requests, regardless of income.
Additional Considerations and Challenges
The bill did not consider the administrative or operational challenges of implementing the new law. For an agency that reads meters every other month, the customer could be getting a 60-day shut off notice and a new bill in the same week. In order for the customers to be granted an alternative payment arrangement and not be shut off, they must have all current charges paid. However, that current charge would have another 60 days before it is considered delinquent, resulting in a long lapse between when a customer is billed and when they can be shut off. In response, some agencies are switching to monthly billing partially to shorten the delinquent period.
Can your billing system accommodate payment plans? Some agencies’ systems cannot since the payment plan feature doesn’t properly exclude payment plans from shut offs. There are work-arounds though, such as setting up a new account for that customer to bill only the payment plan. Since the volume of payment plans is likely to increase with this bill, it is important to have accurate tracking methods in place.
Reach Out for Help
There is much more to this law than addressed here, such as master meters, Prop 26/218 issues, reporting rules, and potential fines and penalties. It is anticipated that there will be a clean-up bill at some point to address the areas of ambiguity in this bill, but in the meantime, it’s important to consult your legal counsel and business advisors on the proper way for your agency to implement SB 998.