Bacon's Rebellion

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Meters Keep Spinning On Unpaid Utility Bills

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by

Steve Haner
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Amounts various Virginia utilities are owed by customers as of June 30, four months after the State Corporation Commission prohibited utility disconnections. Source: SCC

By Steve Haner

During the first four months of the COVID-19 pandemic, Virginians piled up $184 million or more in unpaid bills with several Virginia utilities, and that was before the worst of the heat arrived in July.

The figure comes from a short letter from the State Corporation Commission to General Assembly leaders dated today, listing the totals in arrears as of June 30.  The SCC issued an order in March, renewed in June, which prohibited the disconnection of regulated utility customers for unpaid bills during the recession. The order was extended after legislators claimed they would be addressing the problem at the August special session.

The SCC’s order suspending disconnections expires on August 31. That legislative session is now just four days away and no suggestions for a solution have surfaced publicly. No bill on the topic is filed. This issue is not mentioned in a story in today’s Richmond Times-Dispatch listing some of the budget actions Governor Ralph Northam will propose next week. 

UPDATE:  However, there is this in the Governor’s summary of his proposals:  “The Governor’s package includes a moratorium on utility disconnections for electric, water and natural gas utilities until 60 days after the current state of emergency ends.”  That could easily be spring of 2021, meaning the moratorium will have lasted a year.

The unpaid bill total reported in the SCC letter is not complete. Some companies apparently asked the SCC not to share their numbers.The reported total covers the investor-owned electric utilities (Dominion Energy Virginia, Appalachian Power Company and Kentucky Utilities), four gas distributors and only five of the 13 rural cooperatives. None of the regulated water companies are included in the total amounts due. (See list above.)

Plenty of households will have electric, gas and water bills in arrears.

Nine of the electric cooperatives sought and received SCC permission to seek federal Paycheck Protection Plan loans, which convert into grants if the companies met the conditions. Given the non-profit structure of customer-owned coops, those funds could reduce the impact of unpaid bills.

With the high air-conditioning demand over the past six weeks, the total owed to those listed companies is likely to approach $300 million or more by the end of this month. Then there is the amount owed to the companies not sharing their data. More attention is being paid to suspension of evictions, but in terms of number of households this has to be a more widespread problem.

Legislators said back on June 5 they had this in hand. Who pays? If it is going to be the rest of us — through taxes or increases in our own utility costs — it is time to let us know.

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33 responses to “Meters Keep Spinning On Unpaid Utility Bills”

  1. LarrytheG Avatar
    LarrytheG

    If the SCC can do this on their own unilaterally, then what role will legislators play?

    Here we have all this uproar over evictions and who actually has the legitimate right to deny compensation to property owners…

    and here we have a bunch of bureaucrats making that decision for the power and gas companies…. gee willikers…

    Just imagine if Virginia had an SCC for housing and they made the eviction decisions…

    😉

    Oh – and thank you much for not calling the SCC “woke”! 😉

    1. Dick Hall-Sizemore Avatar
      Dick Hall-Sizemore

      The SCC is hardly a bunch of bureaucrats. They have the status of judges, elected by the General Assembly.

  2. Top-GUN Avatar
    Top-GUN

    BUREAUCRATS once again picking Winners and Losers…
    And Taxpayers are going to be the Losers… while the irresponsible who smoke, drink, buy lottery tickets, consume Starbucks coffee, dine at McDonald’s, etc. get off again…

  3. djrippert Avatar
    djrippert

    Let’s see … state unemployment benefits + up to $600 per week in federal benefits + $1,200 check + no need to pay the rent + no need to pay the electric bill.

    And there was rioting in the streets as recently as last Sunday in Chicago (note: even Lori Lightfoot couldn’t force herself to call last Sunday’s activity “protests”).

    What happens when all these benefits run out?

    1. Steve Haner Avatar
      Steve Haner

      Uh, they did, two weeks ago. Competing with this call on state funds is the difficult choice Va faces on continuing expanded UI benefits. It will take $45 million a week to provide the state’s $100 share of the $400 supplement. I’d rather the state did that and not try to pay individual rent or power bills.

      1. djrippert Avatar
        djrippert

        I thought the evil, horrible, rotten Orange Man signed an executive order on Aug 8 continuing the federal benefits at $300 per week with a request (but not requirement) that states add another $100 per week. That doesn’t seem like the benefits have run out. Maybe the original benefits ran out but it’s not to zero, is it?

        What happens when there are no more benefits? Or do you believe the feds and state will keep “finding money” to provide benefits until we get back to 3% unemployment.

        I agree that the state should not pay electricity bills or rent. But $45m per week will deplete the various rainy day funds sooner rather than later.

        Any recent word from Money Train Layne regarding his predictions for this fiscal year and, perhaps, next?

        If the state needs more money then the General assembly ought to raise taxes in the upcoming session rather than play any more off-the-books games like the electricity subsidy built into the electrical rates.

        1. Dick Hall-Sizemore Avatar
          Dick Hall-Sizemore

          As set out in the RTD story Steve linked to, the administration is projecting a revenue shortfall of $1.3 billion in the first year and $1.4 billion in the second. As a result, most of the new spending in the budget passed in the 2020 regular session will not happen.

          1. Steve Haner Avatar
            Steve Haner

            And another three-quarters of a billion shortfall in just the transportation fund, only one of many non-general funds in the total budget. So we’re up to about $3.5 billion short and counting.

          2. James Wyatt Whitehead V Avatar
            James Wyatt Whitehead V

            This spending shortfall is a clear path to limited government. Maybe a bright side?

  4. djrippert Avatar
    djrippert

    As for your question, “Who pays?” … is that rhetorical? Can you honestly imagine our bought and paid for General Assembly demanding that the electrical companies just absorb the costs as an increased bad debt expense without recovering the money through higher rates? I guess it could be paid for by federal funds but that money is fungible. Use it to pay for this but then what about that? It seems to me that Virginia’s taxpayers are going to pay for this one way or another.

    1. Steve Haner Avatar
      Steve Haner

      I agree. As to this new UI supplemental benefit, I need to do some research on what the state must do. I assumed we’d hear some plan from the Governor’s Office. Not so far…..

    2. Eric the Half a Troll Avatar
      Eric the Half a Troll

      An argument for nationalization.

  5. djrippert Avatar
    djrippert

    Several points on this ….

    1. Hard to see how civil unrest declines given the level of unemployment and reduction / elimination of unemployment benefits

    2. Chase the links in the article. Interesting perspective on the disconnect between the stock market and the economy. May have long term implications for overall employment.

    https://theweek.com/articles/931090/are-bread-riots-coming-america

  6. Fritz Avatar
    Fritz

    I’m an officer in small water co-op in Maryland, and our governor has also declared that we cannot cut off water for nonpayment during the WuFlu pandemic. Our level of delinquency has increased considerably as a result, but we’re not yet in danger of running out of funds.

    1. TBill Avatar
      TBill

      Brings up the question of MD vs. Va. economic impact. A few weeks ago Gov Hogan was saying MD economy was 95% and unemployment was not too bad under the circumstances (maybe 8% he said was better than most).

  7. Nancy_Naive Avatar
    Nancy_Naive

    COV2 v. WuFlu? Hmmm, one shift and 4 keystrokes or two shifts and 5 keystrokes? A lot of people go through a lot of work to show a racist tendency, and it’s not even a influenza virus.

    1. Steve Haner Avatar
      Steve Haner

      I don’t refer to it as the Wuhan Flu or China Flu, but I also think the effort to mark that “racism” is a deep stretch, and another example of why that label has lost its punch. Everything and everybody and thus a meaningless throwaway…. Unless you are claiming a bias against the influenza virus, because indeed that part is inaccurate!

      1. Nancy_Naive Avatar
        Nancy_Naive

        No, you don’t. Dammit, misthreaded response. Has it lost it’s punch? If it had, Trump wouldn’t use it. If it hasn’t, I’d have to ask Asian-Americans to confirm. Some, even here, refer to racism being “in the eye of the beholder”. It’s not. In in the face of the victim.

        I am really looking forward to how the economy rebounds, if. But, still buying financials.

        1. LarrytheG Avatar
          LarrytheG

          yah – this is similar to asking a bunch of white folks if there is systemic racism and they all say “the heck you say”.

  8. Steve Haner Avatar
    Steve Haner

    “An argument for nationalization.” That from Troll Eric. YES, thank you for your honesty! This crisis is being used by some to convert the United States of America to full-blown socialism, with all citizens expecting the government to meet all their needs. From each according to his means, to each according to his needs….until those with means are bled dry. THAT is what is going on here. Let’s just have the government own the energy companies and decide how many kWh each household gets…..

    Now, perhaps the American people have been so completely cowed and terrified by the fear campaign they will go for it.

    1. TBill Avatar
      TBill

      Good year to do some IRA withdrawal or Roth conversion at lower tax rates.

    2. LarrytheG Avatar
      LarrytheG

      re: full-blown socialism. So let’s get this calibrated.

      Do the folks who say this – also believe that other developed countries in Europe and Asia are already “full blown” socialism and they consider only the US as the only real non-socialist country?

      I’ve heard the full-blown-socialism idea being put forth on Universal Health care also.

      so what’s the answer? Is the US the only country left that is not full-blown socialist?

      1. Steve Haner Avatar
        Steve Haner

        The Troll just advocated nationalizing the utilities. That is classic socialism. Government ownership of the means of production.

        1. LarrytheG Avatar
          LarrytheG

          We might get a little bound up over “nationalization”.

          Our roads are essentially “nationalized”.

          As is the Post Office

          The ADA – OSHA, EPA, Army Corps.. etc.. they have the effect
          of making all business do something that as unfettered private sector they likely would not.

          and quite a bit of our health care including
          Medicare, Medicaid and the VA…

          and of course public education

          Amtrak is and most transit…

          I’m not advocating it but at the same time – for some things, it’s clear the private sector won’t meet what we consider to be, our needs.

          Take a look at rural internet – the private sector is not going to do it – and the private sector would not do it for electricity nor phones either…

          If the Government had not take a national approach to rural electricity – we’d likely still not have it like we don’t have internet.

          1. Matt Hurt Avatar
            Matt Hurt

            Elon Musk is working on the rural internet thing, and his private enterprise option seems to have a lot of promise. We’ll see if it pans out.

    3. Nancy_Naive Avatar
      Nancy_Naive

      Wow! So da spousal unit insisted that I clean my office. Joy of joys, I torn into the bookcases and found my copy of The Communist Manifesto. Might as well starting boning up.

      Brush up your Shakespeare.
      Start quoting him now…

  9. TooManyTaxes Avatar
    TooManyTaxes

    Virginia, like the rest of the nation, recognizes the “filed rate” doctrine that holds a regulated utility can charge only the rates set forth in its tariff and cannot charge different rates to different customers. Hopewell Cogeneration Ltd. Partnership v. State Corp. Com’n, 453 S.E.2d 277, 282 (Va. 1995). So a utility cannot charge Steve the tariff rate per kwh, while giving DJR a discount on that rate. This was also a common law doctrine.

    Interestingly, the VSCC (and all regulatory bodies) cannot make reasonable classifications, such as setting different rates for commercial and residential customers so “long as the classifications are not based on race, gender, religion, or other ‘suspect’ criteria, they ‘will be upheld if they bear some rational relationship to a legitimate interest or purpose.’” Id., at 283, quoting Old Dominion Power Co., Inc. v. State Corp. Comm’n, 323 S.E.2d 123, 126-27 (1984). I wonder how Northam will ignore that one.

    Many decisions have construed the filed rate doctrine to cover not only discounts from the tariff rate, but also uncollected charges, subject to a reasonable collection effort. Under the law, the affected utilities need to make reasonable collection efforts to recover their unpaid bills. This would permit reasonable compromises on repayment.

    1. LarrytheG Avatar
      LarrytheG

      am confused about what you said TMT. Obviously they DO charge different rates…. no?

      but even beyond – what is the point?

      The “no-cut-off” rule actually began before the pandemic – that’s when we had (apparently) some non-paying folks dying during extreme heat or cold and at least some states stepped in to restrict it.

    2. TooManyTaxes Avatar
      TooManyTaxes

      A utility cannot lawfully charge one residential customer a different rate than it charges other residential customers. And the law generally requires a utility to make reasonable collection efforts before it writes off debt. So utilities must try to collect at least some of the unpaid debt from those who aren’t paying.

      1. LarrytheG Avatar
        LarrytheG

        Which is basically a mandated subsidy for rural service areas. Right?

        OTOH – cable and cellular does not seem to do that. If you live in rural – it may well cost you more – so much more than the cable company cannot or will not provide the service and cell towers will be fewer and have less bandwidth.

        So, the rural electrification program basically legitimized the idea that some folks were deserving of a subsidy – to be paid for by others – and it’s based on cost – the much higher cost of extending electricity to much less dense rural areas – that those folks – could not afford if they had to pay the true cost.

        Rural roads were done on a similar basis. In some states those raods are called “Farm-to-market”, in Virginia “secondary” roads. In both cases, built by the state and subsidized by others because there would be no way the gas tax for rural would pay for those roads.

        So far, cable, and cellular do not extend service to rural areas unless it is cost-effective – they will not have existing users subsidize services to rural customers.

        Some folks call this “socialism” – sometimes selectively for some things but then ignoring it for other things.

        But it’s pretty clear that most of rural would not be wired for electricity nor have roads if it were not for de-facto subsidies.

        Rural folks could not afford electricity if they would have to pay the full cost of getting it to them. Correct?

        1. TooManyTaxes Avatar
          TooManyTaxes

          Your comments have nothing to do with the doctrine of treating one customer within a classification the same as other customers in the same classification. Nothing I wrote has anything to do with setting up a particular classification or averaging rates within a classification.

          The point is: The law generally requires a utility to make reasonable collection efforts against customers who don’t pay their bills in order to prevent discrimination among customers. Larry pays his bills. Neighbor A doesn’t. The power company must attempt to collect A’s overdue account or it’s discriminating against all the Larrys who pay their bills. At some point, when the non-paying customer has made no effort to make payment arrangements, the utility must shut off service to that customer.

          In this case, the affected utilities have to try to collect overdue bills, most especially if they hope to includes the bad debt as “negative revenue” and argue that should be recognized for ratemaking purposes. Will they collect every dime? Of course not. But they must try.

          1. LarrytheG Avatar
            LarrytheG

            bigger picture TMT. Yes, they charge the same rate and try to collect but they also subsidize those who can’t afford it – and they do it in a number of ways – some are direct subsidies, others are indirect but both actually do result in not everyone paying the same.

            Even cable and wireless have subsidies such that in reality, not everyone pays the same.

            We have a concept of “basic service” which is provided for less than regular service, sometimes a LOT less…

            here is an example even for cable:

            https://www.internetessentials.com/-/media/InternetEssentials/Home/AffordableInternet/640x624_All-Content-Static_mobile.jpg

            And this clearly a subsidized service.

            Dominion does something similar.. and it too is subsidized.

            I’m not disputing your original premise – only that if you look at the bigger picture -there are subsidies – so that not everyone is paying the same.

          2. TooManyTaxes Avatar
            TooManyTaxes

            If people lawfully pay different rates, they are in a different rate classification that is set forth in the tariff. Absent that, there is rate discrimination in violation of statutes and the filed rate doctrine. Once again, I point out that I am not discussing different classifications of customers. I’m talking about discrimination within a single class of customers. That’s what’s facing Virginia’s utilities.

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