Electric, water and other utilities will be unable to shut off services on people who are not paying their bills until Oct. 5, and some of the cost to these companies ultimately will fall on ratepayers who are paying their bills or taxpayers as a whole.
Although the moratorium on utility shutoffs, which began more than six months ago, was supposed to expire in mid-September, the State Corporation Commission extended it at the request of Gov. Ralph Northam. The governor made the request to give the General Assembly more time to address legislation regarding unpaid utilities, which includes debt forgiveness proposals and repayment plans for customers.
Past due balances owed Dominion Energy, the largest energy utility in the state, have surpassed $100 million, and many of the smaller utilities also have reported past due balances in the millions of dollars. If lawmakers approve a debt forgiveness plan, taxpayers would foot the bill. If lawmakers do not approve a bailout, then any uncollected balances will be pushed onto paying customers, Ken Schrad, a spokesperson for the SCC confirmed with The Center Square.
The most-recent extension will be the last extension from the SCC because the commission said it’s becoming unsustainable.
“Since we first imposed the moratorium on March 16, 2020, we have warned repeatedly that this moratorium is not sustainable indefinitely,” the SCC said in a statement. “The mounting costs of unpaid bills must eventually be paid, either by the customers in arrears or by other customers who themselves may be struggling to pay their bills. Unless the General Assembly explicitly directs that a utility’s own shareholders must bear the cost of unpaid bills, those costs will almost certainly be shifted to other paying customers.”
Larger utilities, such as Dominion, have supported the moratorium and each extension. The utility also supports debt forgiveness.
“We support the SCC’s decision to grant Gov. Northam’s request for an extension to the disconnect moratorium,” Rayhan Daudani, a spokesperson for Dominion, told The Center Square. “We also believe policy makers should provide options to give customers behind on their bills a clean slate going forward. We are monitoring the discussions in the General Assembly on both topics.”
Some smaller companies that do not have as much money in cash reserves, however, are going to be in more trouble than Dominion, said Stephen Haner, a senior fellow for state and local tax policy at the Thomas Jefferson Institute for Public Policy.
Haner said the state could have used COVID-19 relief funds to offset some of the costs, but it looks like lawmakers will shift the burden to the ratepayers.
“The state has the ability to use the federal funds related to COVID to help with this,” Haner told The Center Square. “But the political decision has been made to take the money from other ratepayers instead. This was a conscious choice, and it left hundreds of millions free for other spending. In the real estate industry, the landlords are ultimately on the hook for unpaid bills. But in the utility arena, the legislature had the power to confiscate the money from other customers, and will do so. The utilities themselves, their profits and dividends, will likely be held harmless. This is wrong.”
The Virginia General Assembly is in the midst of a special session convened last month to address COVID-19-related issues and policing reform. With disagreements between the two chambers on a whole host of bills, the session likely will continue for at least a couple more weeks.