The town of La Grange filed a declaratory judgment action in Lenoir County Superior Court, asking the Court to review Governor Roy Cooper’s Executive Order No. 124 (EO 124). The filing also asks the court to enter a declaration that Section 1 of the order unlawfully interferes with the ability of utility service providers to exercise their own discretion and judgment in collecting charges for utility services provided to their customers.

“This case is not about disconnecting customers,” said Town Manager John Craft, “it’s about preserving the Town’s ability and discretion to operate its electric system in a manner that balances the needs of customers undergoing financial difficulties with the Town’s obligation to maintain the fiscal health of its system and meet its debt service obligations.”

Per the release, La Grange is asking the court to find that EO 124 violates the State of North Carolina’s covenant—as set forth in North Carolina General Statute § 159B-22—not to limit or alter the Town’s right to collect fees for electric service, in order that the Town can secure payment on its bonded debt.

“Small cities and towns in rural North Carolina that provide utility services, such as electricity and water/sewer, cannot survive extended government overreach enacted by Executive Order 124,” said Representative Chris Humphrey.

In a letter to Governor Cooper, the North Carolina Utilities Commission reported that beginning April 1, 2020 and ending April 30, 2020, 425,454 residential customer accounts became eligible for disconnection due to non-payment but were not disconnected. The Utility Service Providers report that 14,638 extended repayment plans were established for residential customers during the Reporting Period. Additionally, 1,003 residential customers were reconnected during the Reporting Period. Finally, $10,709,687 in late fees and penalties were not charged to residential customers during the Reporting Period. 

“This “one size fits all” approach is simply not appropriate. EO 124 has no requirement that a customer’s non-payment be COVID related or even that it be based on an inability to pay. The resulting financial impacts to our Town are substantial.” Craft said. 

Cooper extended Section 1 of Executive Order No. 124 to remain in effect until July 29, 2020. Prior to Governor Cooper’s initial order most of the major electric, natural gas, and water and wastewater utilities regulated by the Commission had notified the Commission that they are suspending disconnection of utility services for non-payment in recognition of the above restrictions and to avoid creating additional hardships for their customers. 

“Such an extension will place a substantial financial burden on the Town of La Grange, who has incurred bonded debt. Delinquent utility bills will be passed on to citizens in the form of higher taxes and utility rates,” said Humphrey.

The Town Council chose to pursue judicial relief after efforts to obtain an exemption from EO 124 from the Attorney General’s Office proved unsuccessful. At an initial hearing, the Court declined to grant temporary emergency relief meaning that that the case will have to run its normal course. The Town has requested that a hearing be scheduled in the case as soon as possible.

“A temporary relief order made sense at the time, but to continue unnecessary orders that keep businesses closed, only contributes to the losses that the state and communities are struggling to overcome,” said Humphrey.

Governmental Utility Service Providers report an aggregate of $64,745,771 in customer arrears as of April 30. Member-owned Utility Service Providers report an aggregate of $810,932 in customer arrears as of April 30.

“Though no doubt well-intentioned, the Governor’s Order impermissibly breached that covenant,” said Craft.