Unpaid CA Utility Bills Approaching $2 Billion

CALIFORNIA — If there’s any measure of additional pain inflicted upon Californians by the coronavirus pandemic beyond unemployment and untimely deaths, it can be partially reflected in the number of unpaid utility bills.

As the pandemic intensified so did the number of customers unable to pay for electric, gas, water and services provided by the state’s investor-owned, publicly-owned and private utility companies.

A moratorium imposed last year by the California Public Utilities Commission (CPUC), which regulates many electric and gas utilities, has prohibited the companies from pulling the plug or shutting off gas to customers unable to pay – both residential and commercial.

But beginning July 1, disconnections for nonpayment could begin unless the ban is extended – something that’s uncertain. The overdue amounts owed by millions of individual customers will give ‘sticker shock’ new meaning.

Nowhere is this better illustrated than in the number of delinquent bills reported by the state’s four largest Investor-Owned Utilities (IOU) – Pacific Gas & Electric, Southern California Edison, San Diego Gas & Electric and Southern California Gas, which serve some 17 million customers.

According to regulatory reports, in April nearly 25% of these utilities’ residential customers had overdue bills with 1.3 million of them four or more months in arrears.

Collectively these residential customers owed the utilities almost $1.4 billion. An additional 133,837 small business customers owed another $125.9 million.

Municipal Utilities Impacted

When municipal and privately-owned electric and gas utilities are included, it’s believed thousands of their customers also have unpaid bills. Although California’s two largest municipal utilities — the Sacramento Municipal Utilities District and the Los Angeles Department of Water and Power — have not reported the precise number of delinquent customers and what they owe, the amounts are believed to be substantial.

Data compiled by the CPUC from just five of the state’s smaller electric and gas utilities shows more than 25,000 residential customers have accumulated in excess of $8.4 million in overdue bills and some 4,243 small business customers collectively owe $2.6 million.

One utility, Bear Valley Electric Company which serves the rural area surrounding Big Bear Lake in the San Bernardino Mountains, reported the highest of all delinquency rates among small investor-owned utilities with 88% of its low income customers, 68% of its other customers and all of its small business customers behind on their bills.

California water agencies are in the same boat. A survey of community water systems conducted late last year by the California Water Resources Control Board found more than 1.12 million residential customers were behind on their payments. Of 579 systems surveyed, the 537 who responded reported some 459,000 – or 41% of their delinquent customers owed between $300 to more than $1,000.

Matt Williams, a spokesman for the California Municipal Utilities Association (CMUA) that represents 72 utilities providing either electric and water service, or both, told Patch although publicly-owned utilities are not subject to the CPUC-imposed moratorium on disconnections for non-payment of bills, all of the organization’s members voluntarily stopped disconnections in the spring of 2020.

These utilities currently have in excess of $300 million in unpaid electric bills, Williams said.

Repayment Plans

Now, with the economy perking up and California expected to be fully open for business June 15 the state’s utilities want their money.

Last month a CPUC administrative law judge, after considering input from utilities and other interested parties, issued a Proposed Decision outlining possible repayment plans for delinquent customers that could be considered and voted upon by the full Commission as early as June 24 following a 30-day public comment period.

Since February, when it began examining the magnitude of overdue utility bills and ordered utilities to submit plans for resolving delinquent accounts, the CPUC has received repayment “transition” plans from the state’s four largest utility companies, along with extensive comments from smaller utilities, consumer groups and the Commission’s own Public Advocates Office addressing how delinquent accounts should be handled when utilities are allowed to resume disconnections for nonpayment.

Much of the debate has centered on crafting an equitable relief program, recognizing the structure of utility rate plans where low-income residential and special customers fall into three categories:

  • The California Alternate Rates for Energy (CARE) where customers on many public assistance programs such as Medi-Cal, the School Free Lunch Program and Food Stamps receive discounts of up to 35% on electric and 20% on natural gas bills;
  • The Family Electric Rate Assistance Program (FERA) where household income is slightly above that of the CARE qualifications who receive 18% discounts on electric bills;
  • The Medical Baseline Program (MBL) requiring utilities to provide increased amounts of electricity at baseline rates for residential customers with qualifying special medical needs or life-support equipment.

The ability of these customers to repay overdue bills will vary depending upon the rate categories. Proposed solutions have ranged from total forgiveness of unpaid bills incurred by low income households, to partial forgiveness for all customers to various subsidies, some of which would be provided by the utilities themselves.

One of the state’s leading consumer advocacy groups, The Utility Reform Network (TURN), told the Commission it needed to recognize the pandemic has had a disproportionate impact on different segments of the population and the central focus in crafting any response should be “to provide customers with a way to afford future utility services without being at risk of disconnection caused by debt incurred during the pandemic.”

Arguing the pandemic is a crisis affecting all members of the community, TURN said utility company stockholders should also have to make a financial contribution to the delinquency relief efforts.

“It would be unreasonable for shareholder profits to be shielded from the crisis,” TURN said, suggesting the utilities might later have their contributions repaid with federal or other funds.

The CPUC’s own Public Advocates Office said it believed the Commission should forgive all residential arrearages, and if not, at least half of the amounts should be written off. At the very least, the PAO argued, amounts should be reduced to $500 which customers could repay over a one-year period.

When other bills such as past due rent are considered, “many customers will not be able to pay arrearages in addition to paying their current energy bills, placing them at risk for service disconnections,” the PAO said.

All four of the large utilities opposed mandatory stockholder contributions toward customer delinquency relief, with several suggesting federal and state funding sources should be used instead.

However, in issuing her preliminary decision last month CPUC Administrative Law Judge Camille Watts-Zagha, rejected transition plans that didn’t contain automatic repayment programs saying they failed to “offer meaningful gradual steps for customers to begin to address accumulated debt,” while noting that SoCal Gas already has automatically enrolled customers in a payment plan and provided them with a means of opting-in to extending the disconnection moratorium.

Utilities objecting to mandatory automatic payment plans said they preferred to customize terms of repayment based on negotiations with individual customers.

Watts-Zagha discounted this approach saying “from the utility’s perspective, this may be a reasonable approach, but it is unclear that this approach is reasonable for customers.”

Instead, Watts-Zagha’s proposed decision would require the utilities to automatically enroll every residential customer with bills more than 60 days past due in a 24-month payment plan, subject to some conditions applicable to specific utilities, with customers missing more than two payments removed from the plan.

Small businesses, who have been particularly hard hit by the pandemic, will also receive relief if they have unpaid utility bills at least 60 days overdue and meet other conditions depending upon the communities in which the business is located. These customers will be able to repay outstanding debt over time and if they’re enrolled in a payment plan cannot have their service disconnected if their payments are current.

Possible State Aid

Williams, the CUMA spokesman, said his members “continue to work with the Newsom Administration and regulatory agencies on repayment methods as well as funding sources to help customers pay their water and electric bills” pointing out state budget proposals currently being studied by the legislature would provide $1 billion to help municipal electric utility and public water agency customers pay their bills, with a separate proposal by the Governor allocating $2 billion in relief split evenly between overdue water and electric bills.

Several utilities contacted by Patch said they were reviewing the preliminary decision and would await final action by the Commission before commenting.

What impact any form of stockholder contributions to customer debt relief would have on the profits of the four major publicly-traded utilities is unknown.

Although PG&E suspended dividend payments nearly four years ago due to huge wildfire liabilities and subsequent bankruptcy proceedings, the others have been conducting business as usual.

According to reports filed with the US Securities & Exchange Commission, during the past year stockholder dividends have continued to flow unabated. Since the beginning of the lockdown in March of last year, Southern California Edison has paid $1.7 billion in dividends to Edison International — its parent company — which in turn paid $1.2 billion of that to its shareholders. Southern California Gas and San Diego Gas & Electric, both subsidiaries of Sempra Energy, paid $325 million in dividends to the parent company.