By Andrew Winslow | Thu, September 24, 20
September is here and, with it, possibly the strangest first day of school in recent history. Remote learning, work from home schedules, not to mention the hundreds of thousands of unemployed, mean many live, work, and play in a full house and rely on energy to connect to the outside world. Soon, heating systems across the country will be switched on for the winter. Consistent and uninterrupted energy to power our lives has never been so important. Unfortunately for many, the pandemic brought economic hardship. With a skyrocketing unemployment rate, families are making tough decisions about where their money goes. Low and middle income customers, who don’t have savings to rely on, are getting hit the hardest. To help with the crisis, the federal government added more money to the Low Income Home Energy Assistance Program (LIHEAP) than ever before. In March, the CARES Act set aside $900 million in additional funding and in July, The Coronavirus Response Additional Supplemental Appropriation Act funneled in another $1.5 billion. At the state level, many passed moratoriums on utility service shut-offs and increased incentive levels for energy efficiency. However, these moratoriums cannot last forever and eventually the accrued customer debt will need to be paid off.
In the Northeast, nearly every state passed legislation to put in effect a moratorium on utility shut-offs. However, unless new legislation is passed they will begin to expire in October starting with Vermont, Connecticut, and Delaware. By the end of November, all but three states and Washington D.C. will have expired moratoriums. New York, New Jersey, Maine, and DC all extended their moratoriums until various lengths of time on or after the end of their respective state of emergencies. Refer to Table 1 below for a full list of moratorium end dates provided by the National Energy Assistance Directors Association. While some believe delaying the expiration is the right course of action to allow ratepayers to get back on their feet before beginning to pay off their arrearages, others worry that the accrued debt will be insurmountable and should start to be paid off now. Regardless of the “correct” answer, utilities are about to be flooded with defaulted payments resulting in shut-offs.
Thankfully, state regulators and utilities have not been sitting idle. On May 11 the Massachusetts Department of Public Utilities (DPU) established the Customer Assistance and Ratemaking working group to give advice on policies and practices in response to the COVID-19 pandemic. One of the first things to come out of the working group was the Customer Assistance Plan which provides extended arrearage payment plans and extended arrearage management plans for low income residential customers.
Earlier this month, the DPU approved the working group’s recommendation for a small commercial arrearage forgiveness program (AFP). They targeted this sector because “small businesses face substantial loss of revenue and/or permanent closure, and employees of small businesses risk unemployment.” The AFP is intended to encourage small commercial customers to enroll and successfully complete a 12-month payment plan. The goal is to reduce the accrued arrearage of this sector. Service will be protected from disconnection and late fees will not be assessed as long as the customer makes the required monthly AFP payments. The program provides two arrearage forgiveness credits equal to the customers April and May 2020 utility bill (excluding taxes and fees) regardless of whether the bill was paid. This aid should help these customers stabilize and retain their employees. As of September 17, all Massachusetts Investor-owned utilities submitted their AFP compliance filings and did not stray from the original order. To see these, and other COVID-19 related filings visit Massachusetts Docket 20-58.
Down in the Mid- Atlantic, Maryland’s Public Service Commission released a request for arrearage program proposals on September 4 in anticipation of the November 15 moratorium expiration. The Commission recognizes the need for further assistance and the possibility that current payment plans and payment assistance programs might not be enough to keep service terminations at bay. The September 4 request asks for cost-neutral arrearage forgiveness proposals and/or arrearage management programs to address the potential uncollectible debts caused by the pandemic and reduce service shut offs. Proposals are due by October 7. More COVID-19 related filings can be found in Maryland’s Docket PC53.
Energy efficiency is a direct tool to alleviate some of the financial hardship during this time and into the future. By reducing the total energy consumption of a building, energy efficiency lowers customer bills to make them more manageable. Many utilities are exploring new ways to connect with customers through energy efficiency tips, easy-to-install measures, and virtual audits. Others have increased incentive levels for big ticket items like heat pumps and water heaters. Energy efficiency is a pathway forward to manage arrearages and engage the workforce. In New Hampshire, incentive caps were also raised for programs to encourage participation and support contractors as they re-enter the market.
Every month offers new challenges related to the COVID-19 pandemic. For more on how states are coping with the fallout, check out NEEP’s COVID Resource Page. It is a collection of resources including state regulatory filings, tools, solutions, and blogs all in one place.