Dive Brief:

• The California Public Utilities Commission (CPUC) last week opened a new rulemaking to consider ways to deal with growing energy arrearages — the total amount of unpaid customer bills — in the state due to the COVID-19 pandemic, and extended a suite of utility customer protection measures through June 30.

• CPUC President Marybel Batjer highlighted the need for regulators to address the growing energy arrrearages that have accrued during the pandemic during a Thursday meeting. "This rulemaking provides us with an avenue to brainstorm, develop and implement measures that will help ensure that once the moratorium on customer disconnections … ends, we can provide relief to the customers," Batjer said during a meeting on Thursday.

• Residential arrearages for Pacific Gas & Electric, Southern California Edison, San Diego Gas & Electric and Southern California Gas shot up by more than $650 million between February 2020 and the end of the year, surpassing $1 billion in December. Customers enrolled in low-income programs accounted for $324 million of that increase.

Dive Insight:

Last March, when California Gov. Gavin Newsom declared a statewide emergency over the pandemic, the state had 53 known COVID-19 cases and one confirmed death. This January, those numbers had shot up to more than 3 million cases and over 37,000 deaths. 

The pandemic has also taken an economic toll — the statewide unemployment rate sat at 8.8% in January 2021, compared to 5.5% last March. During three quarters of the last year, the unemployment rate for households exceeding an annual income of $150,000 rose from 2.8% to an eventual 5.1%. For households earning less than $30,000 a year, however, unemployment rates increased from an average of 12.2% to a peak of 30.3%, before dropping to 25.8%.

The pandemic has also led to shifts in energy usage, with residential customers consuming more power as they work and study from home. And "despite the efforts to moderate customer energy use and bills during the pandemic, arrearages for residential customers have increased substantially," the CPUC's order instituting rulemaking notes — arrearages increased by 130% between February and December 2020. In 2019, by comparison, aggregate arrearages fell by more than $71 million. 

The CPUC rolled out a series of customer protections last spring, including a moratorium on disconnections for non-payment, suspending reconnection fees and suspending the practice of requiring deposits for new or reconnected service. A resolution passed last week would extend those measures through the summer. 

But the commission also needs to start preparing customers through what will be a very difficult transition period when those protections end, according to CPUC Commissioner Clifford Rechtschaffen.

"Those numbers are extraordinarily frightening," he said during the CPUC's meeting Thursday. 

The new rulemaking is an attempt to address this issue, and will focus on establishing special relief mechanisms for customers who have not been able to keep up with their bills during the pandemic. Given that the pandemic has persisted longer than expected, the large arrearages could present a financial threat to utilities, the commission noted; moreover, when the protections are phased out, customers will face large outstanding bills at a time when they still may be dealing with potential loss of life or livelihood because of the pandemic. 

The CPUC has presented two straw proposals to kick things off. The first would be to implement arrearage assistance programs — providing a one-time $200 bill forgiveness for residential and small business customers that have unpaid bills of more than $1,000, followed by a one-year payment plan option to pay off remaining amounts. Customers enrolled low-income programs or dependent on medical equipment could see their debts halved under this proposal. The second straw proposal would expand existing payment plans to help customers pay off their debts, and provide them with up to three monthly deferrals. 

The CPUC is hoping to pass a decision on the matter in late June. 

"This is obviously an ambitious timeline, so that we can be responsive in a timely way to the transition off the moratorium," Commissioner Martha Guzman Aceves said Thursday.