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May 03

DCA Issues Local Finance Notice to Provides Guidance on Utility Relief Measures

Posted on May 3, 2022 at 3:11 PM by Legislative Staff

On April 29, the Division of Local Government Services (DLGS) issued Local Finance Notice 2022-11regarding the treatment of Residential Water, Sewer, & Electric Arrearages and Residential Ratepayer Assistance. While the moratorium of shutoffs for, or enforcement of liens on, unpaid water, sewer, and electric charges for residential customers expired on March 15, P.L. 2022, c. 4 extends the moratorium for those residents who applied for a state utility assistance program prior to June 15, 2022.  Local Finance Notice 2022-11 supersedes and repeals LFN 2021-22 and LFN 2022-09. 

Unpaid Charges and Utility Assistance

Prior to shutting off, or enforcing a lien against, a residential customer for any unpaid water, sewer and/or electric charges, municipalities are required to place their actions on hold for up to 60 days if, prior to June 15, the customer submits an application for a State-administered utility assistance program. If the customer applied for and completes the New Jersey utility assistance program application, the municipality must postpone any enforcement action until it has been approved or rejected by the State agency. The Division recommends that no enforcement action be taken against residential customers until after the deadline of June 15, 2022. 

P.L. 2022, c. 4 requires any direct communications with residential customers regarding unpaid delinquent charges to include links to reference information on State-administered utility assistance programs. Appendix B of LFN 2022-11 provides a model ratepayer notice on COVID-19 Relief Measures. 

Since funds cannot be paid directly to eligible households, the Department of Community Affairs (DCA) is required to establish Low Income Household Water Assistance Program (LIHWAP) vendor agreements with water and wastewater providers. A municipality or municipal utilities authority, sewerage authority, or other local unit that directly bills customers must execute a vendor agreement with DCA so payments can be made on behalf of residential customers. The local unit must provide, monthly, a customer list to DCA that includes names, addresses, account numbers, current balances of all customers in arrears, and must supply current balances for customers who have applied and been found eligible for LIHWAP assistance.

In municipalities that provide electric service, residential customers in arrears can apply for DCA’s American Rescue Plan (ARP) Utility Debt Relief Program or Low-Income Household Energy Assistance Program (LIHEAP). Within seven (7) business days of approving or rejecting a residential customer’s application for a utility assistance program, the State agency that administers the program shall provide a notice of determination to each local government or utility. However, if a residential customer has appealed a state agency’s denial of a utility assistance program application, a municipality or local authority shall further delay enforcing a lien for the unpaid balance of water, sewer, or electric charges, as applicable, pending conclusion of administrative review by the state agency. 

A local government or utility shall not be deemed to violate the law for shutting off service or enforcing a lien if the state agency failed to provide notice that a residential customer had an application pending and the customer has not notified the local government or utility of the submitted application; or if it is determined, in good faith, that a potential danger to life, health, or property requires the discontinuance or interruption of service.

Interest on Unpaid Charges, Late Fees, and Penalties

Local units cannot collect any interest, fee, or charge for late, or otherwise untimely, payment of unpaid, open water, sewer, and electric balances that accrued between March 9, 2020, and March 15, 2022. This prohibition includes the year-end penalty, however, municipalities can include the per-parcel fee allowed under N.J.S.A. 54:5-38 for offsetting the cost of holding the tax sale. 

A local unit is authorized to waive interest, late fees, and penalties for residential customers to the extent necessary for compliance with utility assistance program requirements. 

P.L. 2021, c. 317 requires local units to offer residential ratepayers the opportunity to enter into an installment plan to satisfy the unpaid balances of charges accruing prior to March 15, 2022. The plan must have a minimum 12-month duration, unless the customer requests a shorter payback period, and cannot require the customer to pay a down payment, deposit, reconnection costs, interest, or penalties on unpaid balances. However, interest accruing between March 15, 2022 and the first day of the month beginning the payment plan needs to be included in the calculation of the payment plan. In addition, residential customers can be offered an installment plan greater than 12 months but no longer than 5 years or a combination of installment and payment forgiveness plan that may be less than 12 months in duration if it includes forgiveness of at least 50% of the outstanding arrearages 

The local unit must send each residential ratepayer with such arrearages written notification of the installment plan opportunity, which needs to be accompanied by the specific amount owed and the monthly payment. If a residential ratepayer has applied for utility assistance from a State-administered program, the installment plan must also include the unpaid balance of charges accrued between March 15, 2022, and the termination of the protections against service shutoff and lien enforcement. Delinquent sewer charges accruing between March 9, 2020, and December 31, 2021, that had been sold at tax sale by January 1, 2022, or accrued to a lien that was struck off to a municipality prior to January 1, 2022, or a subsequent accrued to a lien sold prior to January 1, 2022, were not affected by P.L. 2021, c. 317. Ratepayer Notice Updates
 LFN 2022-11 provides an update on the ratepayer notice requirements of P.L. 2021, c. 97 and notes that the with the enactment of P.L. 2021, c .317 and P.L. 2022, c. 4 municipalities and direct customer-billing local units operating water systems, wastewater treatment systems, and/or electric utilities must update their ratepayer's notice and post the notice prominently on their websites. This remains effective until 18 months after the termination of Executive Order 103. 

The League recommends reviewing LFN 2022-11 with your administrator and legal counsel for the impact on your municipality. 

Contact: Andrew LaFevre, Legislative Analyst,, 609-695-3481, ext. 116