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Gov. Gavin Newsom announced May 10 that $2 billion in relief will be distributed among Californians having difficulty paying their electricity, gas, and water bills--an estimated 800,000 customers. A moratorium on utility disconnections for failure to pay is set to expire next month, but many residents continue to struggle financially largely because of the pandemic.

“This is huge,” Mad Stano, senior legal counsel for the economic advocacy group Greenlining said. “It’s been a really wild ride given the many needs” the governor and legislature have been confronting because of the pandemic, they added.

Earlier this year, Greenlining and other ratepayer advocates urged Newsom to help struggling households driven deeper into debt by Covid.

Even before the pandemic, an estimated 3.3 million households in California were living paycheck to paycheck, The Utility Reform Network Executive Director Mark Toney said. “Many of these households are in communities with a high percentage of essential workers—the frontline workers who have been most impacted by the pandemic over the last year.”

The $2 billion in utility bill assistance will be part of the governor’s May budget revision to be released by Friday. It then will be debated by the legislature.

Proponents are urging legislators to approve Newsom’s proposed relief.

“This proposal, along with vitally needed help for renters, will help keep struggling families afloat as our economy revives,” Carmelita Miller, Greenlining Senior Director of Climate Equity, said. Newsom also seeks $2.8 billion in rent assistance.

Last spring, Newsom and the California Public Utilities Commission ordered the pause on private utility disconnections. This past January as the pandemic surged again, it was extended to June 31.

CPUC pandemic relief proceeding

The CPUC is in the midst of an emergency ratemaking focused on tackling the significant debt owed to private utilities as a result of bills going unpaid during the pandemic.

“When disconnections for nonpayment resume, some households will still be contending with loss of life and livelihood and we do not intend for these customers to face their outstanding utility bill arrearages alone,” the CPUC rulemaking states. The commission is examining the need for debt relief arising from the pandemic “with consideration of appropriate parameters, cost estimates, and potential funding sources.”

Unpaid bills at the four investor-owned electric and gas utilities rose from $650 million in February 2020 to more than $1 billion by the end of last year, according to CPUC. Last December, more than 100,000 low-income jobs in the private sector were lost.

Source: CPUC

The amount of utility arrearages to date could be closer to $2 billion, Greenlining’s Stano said, even without taking into account unpaid bills a t the municipal utilities.

The Sacramento Municipal Utilities District, for example, has 100,000 customers in arrears, totaling about $65 million, SMUD spokesperson Lindsay VanLaningham said.

Not too much or too little

In comments filed to the CPUC in March, David Cheng, TURN staff attorney, warned the commission against “providing too much assistance in some areas and too little in other areas.”

The issue of “who deserves financial assistance during a pandemic is a moral, policy, and legal question,” a coalition of low income and environmental justice advocates said.

The low-income advocates and the CPUC’s Office of Ratepayer Advocates want the accumulated customer debt to be forgiven. They want federal COVID-19 relief money used rather than transferring the debt to other utility ratepayers.

Legislation passed last year allows the utilities to cover the income lost from health restrictions that have kept people at home using ratepayer-backed bonds. AB 913 by Assemblymember Ian Calderon (D-Whittier) authorizes utilities to issue securitized bonds to cover the arrearages and fall in revenue because of lower business and industrial power demand.

In June 2020, at the urging of TURN, the CPUC ordered the investor-owned utilities to cut in half by 2024 the number of shutoffs for non payments.

In addition to California, 38 other states are wrestling with how to cover gaping holes in revenue without driving struggling customers further into the red.