State Regulators Halt Power and Gas Shut-offs Until April 2021

by Ben Adlin

Families and small businesses that owe money to some of the state's largest utility companies won't see electricity or heating shut-offs until next spring or later, state utilities regulators said Tuesday. An existing protection was set to expire next week.

A new order by the Washington Utilities and Transportation Commission (UTC) prevents the utilities from disconnecting customers for nonpayment until April 30, 2021. Late fees and deposits for new customers will be waived through Oct. 27, 2021.

The order will also expand payment-assistance programs and require companies to arrange long-term repayment plans aimed at giving customers more time to pay off debt — 18 months for residential accounts and at least 12 months for small businesses.

The order applies only to investor-owned utility (IOU) companies in the state, such as Puget Sound Energy, and only to electricity or natural gas services. Public utilities, such as Seattle City Light, aren't regulated by the UTC and won't be affected by the order.

The commission plans to revisit the issue again in February to discuss whether the moratorium on disconnections should be extended further.

"We don't know how deep this recession is going to go or how long it's going to last," said UTC Chairman David Danner. "Even when next April rolls around, we may not be out of the pandemic or the recession."

Commissioners approved the plan's basic framework during a hearing Tuesday evening after hours of public comment and discussion. They directed staff to put the final language of the plan into an order to be formally approved at a meeting on Oct. 15 — the same day the current moratorium, put in place by Gov. Jay Inslee in April, is set to expire.

Some elected officials, including state Attorney General Bob Ferguson and King County Executive Dow Constantine, issued statements before Tuesday's hearing in support of the extension.

The new order is the latest development in a process that's been unfolding for months and is aimed at ensuring that people experiencing financial hardship due to the pandemic don't lose essential services. At Tuesday's hearing, commissioners heard feedback on a plan put forward by UTC staff in September that sought to strike a compromise between two working groups: one representing the five investor-owned power and gas utilities in the state, the other made up of consumer advocacy groups.

"We do want to do what is right by people who are hurting and also ensure that our utilities can continue to provide important, critical services," Danner said.

While the reforms ordered Tuesday will put Washington ahead of most other states in terms of its moratorium on service disconnections, consumer advocates warned that the proposals as a whole fail to address the disproportionate burden that will continue to be placed on low-income communities and vulnerable populations, especially BIPOC (Black, Brown, Indigenous, and People of Color).

"We are existing in what we are all routinely referring to as unprecedented times," said Julian Aris, an associate attorney at the Sierra Club, one of the members of the advocates' working group. "It is fundamentally inappropriate to meet an extreme situation with a moderate response."

Equity advocates had asked the commission to consider a number of changes to the proposal, but perhaps the most significant was the request that investor-owned utilities help cover the costs of the new program. "We recommended executives take a 20% pay cut and shareholders pay another 20% of costs," said Doug Howell, another Sierra Club speaker. "The utility companies are recommending that customers pay for 100% of the costs."

Katrina Peterson, manager of the climate justice program at the Puget Sound Sage, which focuses on equity in public policy issues facing South King County, told commissioners that vulnerable communities need the UTC to use its regulatory power to demand that companies pay "their fair share" of the costs. "In total, the five utilities at the table today, or their holding companies, collectively paid their top executives at least $90 million in compensation in 2019 alone," she said, citing U.S. Securities and Exchange Commission Filings.

Puget Sound Energy, Peterson told the South Seattle Emerald in an interview, made $293 million in profits during 2019 and paid $165 million to its parent company. Of that, she said, $64 million was paid out to shareholders.

"We have a local example of a national, systemic problem," she said, "where corporate energy utilities are extracting profit from captive ratepayers during a pandemic."

Utilities companies balked at asking shareholders to take a hit. Etta Lockey, vice president of regulation for PacifiCorp, told commissioners that her company "is not aware of any state that has taken the extraordinary step of demanding what the advocates refer to as 'shared sacrifice,' requiring or demanding utilities shareholders bear the expense of the response to the global pandemic."

Commissioners seemed to acknowledge that costs would be passed on to customers but declined to take up the issue of utilities' profits. "This will fall on all ratepayers in some form," Commissioner Jay Balasbas said, adding that customers themselves already cover most of the cost to provide service to other customers who can't pay.

Advocates are also asking that permanent changes be made to companies' fee structures going forward, such as reducing late fees, eliminating disconnection fees, or doing away with payment plans that charge a percentage of a customer's income. While commissioners didn't commit to any of those changes Tuesday, they tentatively agreed to consider such limits.

"We need to look at this," urged Commissioner Ann Rendahl. "We need to examine where there are barriers in place or rules in place that might create more hardship for persons who are trying to address financial hardship. Adding fees on top of their arrears doesn't necessarily assist customers in getting out of debt."

According to Peterson at Puget Sound Sage, the pandemic isn't just putting more people at risk of financial hardship. The added hardships have disproportionately hit those who were already barely hanging on.

"People are cutting basic needs in order to pay high energy bills, and this was before the pandemic hit," she said. Outreach to some in the local community, done as part of an energy-focused research project last year, found that some residents were putting 20% to 30% of their incomes toward utilities.

Since last year, "the high-level trends we're seeing are that people are further behind on their utility bills and they're also deeper in debt," Peterson said.

Looking at Puget Sound Energy, for example, the number of people who are three or more months behind on their bills has grown 45% since last year (from about 30,000 people to 44,000 people), she said, while total debt among customers has more than doubled from $9.5 million to $20.3 million.

"The big picture is that executives are making millions and the shareholders are making hundreds of millions in the pandemic, and at the same time these IOUs are arguing they need to shut off utilities to customers who can't pay," Peterson said.

Puget Sound Energy, for its part, said its payment program has approved more than 13,000 applications for assistance and has already posted $7.6 million in relief to customer accounts. John Piliaris, director of regulatory affairs at PSE, said the program was "stood up by the utility in about a month and was implemented at low cost."

Piliaris and the other utility representatives nevertheless agreed that the UTC's order seemed reasonable despite requests for minor clarifications.

While members of the two working groups spent much of their testimony discussing details of the new plan, public comments were decidedly more personal, explaining what it would mean to have power or heating cut off.

Anna Zivarts, a program director at Disability Rights Washington, noted shut-offs could endanger people who use ventilators, CPAP machines, refrigerators for medicines, air filters, electric wheelchairs, or other necessary devices. "We're really concerned that the implications of this long term could really harm members of the disability community," Zivarts said at Tuesday's hearing.

Guadalupe Paredes, a single mother of three who spoke at the hearing via a Spanish-language interpreter, said she was considered an essential worker but has lost a lot of work due to the pandemic. "We are asking that you please limit the fees that we are being charged to help our community so that we're able to support our children," she said. "They are entitled to a dignified life and not to be hounded or afraid of all the bills that are going to be coming due."

Paredes said that with social distancing guidelines keeping her family at home, access to utilities is more important than ever. "Can you imagine the fact that we are currently unable to go anywhere? We're having to depend on our homes — our power, our gas, the internet, our phones — to be able to do school now because the children aren't able to go to school, and we aren't able to go out due to the pandemic."

Other commenters noted that while some help is available, it won't be enough to meet the unprecedented need created by COVID. Carol Weltz, the director of community action for the nonprofit Spokane Neighborhood Action Partners (SNAP), said that Spokane's regional utility, Avista, has been "an amazing partner" so far, but "we are seeing more and more people in need."

"The balances are growing larger and larger," Weltz said, noting that extending the disconnection moratorium won't address customers' outstanding debt. "We're in favor of the moratorium, but it really needs to be coupled with more funding to help."

Ben Adlin is a Seattle-based journalist.

Featured image is attributed to Sounder Bruce and is under a Creative Commons 2.0 license.