Local Government Water, Sewer, and Electric Service Shutoff Moratorium Extended

Gov. Phil Murphy recently signed legislation into law extending the shutoff moratorium for residential customers of local government water, sewer, and electric services. The moratorium, as well as the grace period for water and municipal electric charges, will now last until March 15, 2022.

Extension of Grade Period for Water, Sewer, and Electric Service Shutoff

Senate Bill 4081, which was signed into law on December 21, 2021, provides that prior to discontinuing service to a residential customer, or placing, selling, or, in certain circumstances, enforcing a lien on real property owned by a residential customer, for the unpaid balance of certain electric, gas, sewer, or water charges accrued between the declaration of a public health emergency in Executive Order No. 103 of 2020 on March 20, 2020, and March 15, 2022, a local authority, municipal utility, rural electric cooperative, or public utility is required to offer to the residential customer a bill payment plan for the unpaid balance of certain utility charges accrued during certain periods prior to March 15, 2022. Delinquent sewer charges accruing between March 9, 2020 and December 31, 2021 that had been sold at tax sale by January 1, 2022 are not affected.

The installment plan must have a minimum 12-month duration unless the residential customer requests a shorter payback period, and can’t require the residential customer to pay a down payment, deposit, or reconnection costs. The maximum duration of an installment plan remains five (5) years pursuant to N.J.S.A. 54:5-19. Additionally,  the installment plan cannot require the payment of interest or penalties on the unpaid balance. 

Notwithstanding N.J.S.A. 54:5-19, an installment plan must be offered even if one already exists on the property for property taxes, assessments or other municipal charges. If a residential customer does not agree to an installment plan within 30 days of being offered a plan by the municipality or local authority, appropriate enforcement action can be taken after March 15, 2022, including bringing to tax sale the unpaid balance accruing between March 9, 2020 and December 31, 2021. However, interest and penalties, including the year-end penalty, can’t be enforced on the unpaid balance.

After March 15, 2022, delinquent water, sewer, and electric charges that had accrued prior to March 9, 2020 and after March 15, 2022 can be enforced pursuant to law including interest and penalties. A municipality or local authority is not obligated to offer an installment plan for such accrued charges. 

Winter Termination Program

Senate Bill 4081 also directs the Department of Community Affairs (DCA) to establish a Winter Termination Program (DCA WTP), which would prohibit a local authority, municipal utility, or rural electric cooperative providing electric, sewer, or water service from discontinuing service during the period from November 15 through March 15, for residential customers. The DCA WTP must reflect the provisions of the Winter Termination Program (WTP) for residential electric and gas public utility service, established by the Board of Public Utilities (BPU), as appropriate for electric, sewer, and water service offered by local governments.

The Division of Local Government Services (DLGS) plans to issue a Local Finance Notice with more detailed guidance on the new law, so please stay tuned for updates.

For more information about the new law or the legal issues involved, we encourage you to contact a member of Scarinci Hollenbeck’s Public Law Group at 201-896-4100.

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