Credit & Collections - Regulatory Change and Affordability Pressures

Participants discussed the current credit and collections environment across multiple states, with a consistent focus on affordability pressures, expanded customer protections, and rising arrears.

Several members reported increased regulatory focus on affordability, including new or expanded winter and summer moratoriums, heat-index-based disconnect restrictions, and additional scrutiny around medical and critical care processes. At the same time, higher supply costs, rate increases, and colder weather have contributed to higher customer bills and growing balances. One participant cited a supply-related increase of approximately 20%, which corresponded with higher average bills and increases in 30+ and 90+ day receivables.

There was broad concern that extended protections, while well-intended, can allow balances to grow to levels that are significantly harder for customers to resolve. Members emphasized that customers at 90 days past due are more manageable than customers whose balances have accumulated for extended periods under moratorium conditions.

Medical and critical care protections were a major topic. Practices vary: in some jurisdictions, medical customers are not disconnected for arrears and represent a meaningful portion of receivables (one example cited approximately 26,000 customers and roughly $54 million in 30+ balances). In other areas, disconnection is permitted but requires additional outreach steps and longer timelines. One jurisdiction is considering extending medical certification holds from 30 days to 60–90 days. Most participants indicated they currently use standard deferred payment arrangements for medical customers rather than specialized programs, though several expressed interest in exploring alternative structures that encourage payment while protections are in place.

Legacy balances from COVID-era policies and major storm events remain present in some portfolios. One organization described placing customers on 60-month installment plans when disconnections resumed, noting that multi-year plans are reducing balances gradually, as expected. Assistance funding has declined from COVID-era levels in some areas, including reduced LIHEAP dollars, and changes to assistance eligibility have made customer re-engagement more difficult.

Operationally, participants shared efforts to improve segmentation, upgrade systems, and implement more proactive outreach. One approach described contacting customers on payment arrangements before a high bill becomes due and rolling the new charges into the existing plan to prevent installment spikes. Budget billing was described as one of the more successful tools overall, though current eligibility rules in some cases limit its use for customers already in arrears.

Key Takeaways

• Affordability is driving regulatory activity, including expanded moratoriums and medical protections, which directly affect collection timelines and field activity.

• Rising supply costs and weather volatility are increasing bills and receivables, contributing to growth in 30+ and 90+ day balances.

• Extended protections can result in larger arrears, making recovery more difficult once customers exit moratorium periods.

• Medical/critical care portfolios can represent material receivables exposure, with approaches varying significantly by jurisdiction.

• Most organizations use standard payment arrangements for protected customers, though there is interest in evaluating specialized structures or modified budget billing approaches.

• Long-term installment strategies are working as designed, but require aligned expectations given multi-year repayment timelines.

• Assistance funding reductions and eligibility changes are affecting collections outcomes and customer engagement.

• Improved segmentation and proactive outreach are key focus areas, including early intervention when bills spike.