Here in the UK it's illegal to cut off power and water. For those customers who get in arrears the utilities will install a pay as you go meter.
It is illegal to cut off water. However, flow restrictors are widely used and very effective. They are easily installed in minutes in place of the shut-off valve at the road.
It is not illegal to cut off other utilities, and disconnecting electricity and natural gas is done regularly.
In practice, the utilities don't like to disconnect, they prefer to install pre-payment meters (these must be pre-loaded with credit, like a prepay cell phone, and when the credit is depleted, the meter shuts off the power/gas). With prepayment meters, the meter can be set to recover any debt over a preset period. However, if the customer refuses a prepayment meter, or a prepayment meter is inappropriate (e.g. in an apartment block, where the meters are stored in a locked machine room and the residents can't access the meters), then they will disconnect.
The other issue is that if a utility actually disconnects the power/gas to a building, they are legally obliged to remove or disconnect any piping or wires that will fall into disuse (they cannot leave a live wire or live gas pipe which goes nowhere - the pipe or cable must be disconnected at both ends or removed completely within 6 weeks of one end being disconnected). This can be very expensive as this usually requires digging up roads (for gas pipes), and if the customer has defaulted on a bill already, then it's unlikely that they will ever pay the disconnection or reconnection fees, which can run into several $k.
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