Utility regulators urged to protect battered consumers
The nation’s utilities have made it through the ongoing COVID-19 pandemic relatively unscathed so far, but state regulators were warned that the economy remains in a state of flux and will not be back to business as usual in the near term.
Regulators and the industry will have to work together to develop myriad new strategies that will keep electricity and other vital services up and running at a time when many customers will be struggling and revenue streams won’t be as reliable as they were before the stubborn coronavirus came ashore earlier this year.
“The relationship with regulators at the state level really matters,” Karen Harbert, president and CEO of the American Gas Association, said during an online panel discussion at the National Association of Regulatory Utility Commissioners (NARUC) Summer Policy Summit, which was held virtually this year.
The annual summit was originally scheduled to be held in person in Boston, but the COVID curveball squelched those plans, just as it has struck out large segments of the economy, forcing massive job losses and closures of offices and entire businesses. The fallout includes relatively sharp drops in electricity demand; in its July 7 Short-Term Energy Outlook, the U.S. Energy Information Administration projected a 5 percent drop in power demand this year compared to 2019.
Fluctuations in fuel costs aside, utilities should not count on business and residential customers to make up the declines in their revenue streams by ponying up a rate increase. The cold fact of COVID is that many business customers have curtailed operations – or folded altogether – while laid-off workers are falling behind on their monthly bills.
“We have a lot of work to do and we have some very big challenges,” said David Springe, executive director of the National Association of State Utility Consumer Advocates. “There is a going to be a percentage of customers that are going to struggle and a percentage that aren’t going to be there anymore.”
A moratorium on account disconnections along with the assistance from the federal Low Income Home Energy Assistance Program (LIHEAP) has softened the blow; however, utilities and regulators were urged to form a united front and work together on developing payment plans and rate structures to enable as many customers as possible to remain current and online. Utilities must also keep a close eye on longer-term concerns including the expansion of renewable energy and other capital projects.
“Regulators need to be able to work with our utilities,” said Edison Electric Institute President Tom Kuhn, who added that the focus should be on “the customer, the customer, the customer.”
“When you are in a crisis, it is incredibly important to have those partnerships,” Kuhn said. “We were fortunate coming into this that we had a game plan, but we also have a lot of different rules and regulations to follow…. We have to look at these longer-term issues.”
A task force was formed by NARUC this summer to reevaluate the resiliency of the national power grid as it contends with COVID and, at the same time, the still-existing threats of cyberattacks and weather-related disasters. The task force holds its first formal online meeting this week during the Summer Policy Summit.
Convening the Task Force on Emergency Preparedness, Recovery and Resiliency filled the obvious need to update the current best practices for keeping utility employees healthy and on the job; it also keeps the industry at the forefront of the overall response to COVID rather than opening the door to executive orders and other fiats from Washington, which may or may not be constructive.
“The last thing we need,” said Rob Powelson, president & CEO of the National Association of Water Companies, “is for Congress to act like a national public utilities commission.”
Springe told the audience that the best approach would be for state regulators and the utilities they oversee to work together to convince the federal government to help support consumers and “minimize the acrimony that is surely in our future.”
