The General Assembly is moving toward a second method of transferring money from electricity customers who can pay their bills to those who cannot. A Senate bill up today will allow Dominion Energy Virginia and Appalachian Power to simply add yet another “rider” to everybody’s monthly bill for their uncollected accounts receivable.
It is still possible the Assembly will reach into assumed excess profits on the part of Dominion and use $320 million of that to cover payments which have been allowed to lapse during the COVID-19 pandemic. As reported here a while back, that idea is being proposed as an amendment to the state budget, still being written behind closed doors.
But only Dominion has such a pot of cash hanging out there to raid, not the other utilities with hundreds of millions of unpaid electricity, gas, and water bills. And that approach may indeed not appear in the budget after all, leaving Senate Bill 5118 as the main path forward. The link is to the substitute, to which the following was added by a Senate Committee last week:
The Commission shall (emphasis added) allow for the timely recovery of bad debt obligations, reasonable late payment fees suspended, and prudently incurred implementation costs resulting from an (Emergency Debt Retirement Plan) for jurisdictional utilities, including through a rate adjustment clause or through base rates. The Commission may apply any applicable earnings test in the Commission rules governing utility rate applications and annual informational filings when assessing the recovery of such costs.
“Shall” is the key word, of course. If asked, the State Corporation Commission must say yes. And the provision allowing collection “through base rates” in effect does the same thing as the proposed budget language, allowing the SCC to apply any cash the utility has lying around during a rate case. It also could lead to an increase in base rates to cover the unpaid bills.
When the bill was discussed in the Senate Finance and Appropriations Committee last week, the patron, Senator (and candidate for Governor) Jennifer McClellan, D-Richmond, said “I am not aware of any opposition.” That means the utilities, advocates for the poor, and others who got involved have all signed off. Did anybody speak up for other consumers? Don’t count on it.
The bill cleared that most-powerful committee with only one Republican voting no and two Democrats abstaining. One of those latter was Senator Chap Petersen of Fairfax, who asked a couple of fairly mild questions of McClellan. “Don’t we need to give some guidance to the Commission,” he asked?
McClellan explained that this bill does not make or extend the bill moratorium, first imposed by the State Corporation Commission months ago. The Commission could extend that on its own, but more likely there will be a provision in the budget bill to do that. Governor Ralph Northam asked to prevent disconnections until his emergency order ends.
If and when the moratorium ends, this bill creates a long-term payment plan, up to 12 months with no requirement for pre-payment, interest, or penalties. An earlier version of the bill had some tight limits on the amount of back payment per month, but they disappeared in the substitute.
Even without those tight constraints, thousand and perhaps tens of thousands of households will not be able to pay these back bills, not in 12 months or 24. Unless a pile of money appears out of thin air (which is where Washington finds its dough), at the end of the repayment period substantial sums will still be owed. And that is where the new language creating the possible rate adjustment clause will come into play.
Don’t forget, if you are a paying customer and not low income, your bill will have one new charge on it in January for the new Percentage of Income Payment Plan (PIPP), as previously discussed. So now, perhaps a year later, a second special assessment will appear, and its size will depend on how long the SCC gives you to pay off the other customers’ debts. How many years you are charged will be at the Commission’s discretion, at least until the General Assembly decides to do something else.
And it isn’t just for this moratorium on disconnections due to this particular pandemic. Oh no. This cost-shifting process is to be in place for any “subsequent state of emergency order.”
“Subsequent state of emergency order” means a future state of emergency issued by the Governor pursuant to § 44-146.17 of the Code of Virginia in response to a communicable disease of public health threat as defined in § 44-146.16 of the Code of Virginia that is unrelated to the COVID-19 pandemic.
This does not apply to municipal electric, gas, or water systems. In fact, the amendment removed a requirement they report on their uncollectable bills, unless the General Assembly asks. Cities in the utility business are on their own, again, until the General Assembly decides to do something else. Which it does as regularly as the sun rises.