Federal Mandate on Debt Collection Will Not Help Struggling Consumers | Citizens Against Government Waste

Federal Mandate on Debt Collection Will Not Help Struggling Consumers

The WasteWatcher

Following enactment of the $2 trillion Coronavirus Aid, Relief, and Economic Security Act, and long before all the money has been spent, the House of Representatives passed a $3 trillion spending package, the Health and Economic Recovery Omnibus Solutions (HEROES) Act, on May 15, 2020.  Among the hundreds of billions of dollars in unrelated spending and new programs in the bill, one little-discussed provision could have a major impact on utility companies’ response to the COVID-19 crisis and the ability for consumers to pay their utility bills.

This provision would create a federal moratorium on consumer debt collection for the duration of President Trump’s National Emergency Declaration from March 13, 2020.  As there are no defined parameters for when a national emergency must end under the Stafford Act,  there is no clarity on how long the proposed moratorium could last.

Like many other examples of government overreach, this one-size-fits-all decree is attempting to solve a problem that is already being addressed at the state and local levels.  In response to the severe economic impact of the coronavirus outbreak on consumers and small businesses, public utility commissions in every state have established debt collection moratoria and provided flexible collection services for customers.  This includes payment plans for those who cannot pay back their utility bills in full.

The federal mandate does not take into account state-by-state differences. The issues utility customers may be facing in rural Nebraska are not the same as those in New York City.  Forcing state and local utility services to follow the federal approach prevents them from addressing the unique problems facing their particular customers.  Adding these pressures to an already tenuous economic situation will undoubtedly require passing on higher electricity costs to consumers and hinder the general reliability of services.

While the HEROES Act has little chance of being brought to the floor in the Senate, any future coronavirus relief packages must not include a federal “fix” for utilities’ debt collection.  Doing so will only add to the intense economic pain with which customers and their families are already coping.


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