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California Energy Markets / Bottom Lines

[April 7, 2017 / No. 1431]

Legislators Home In on Volatile Utility Bills, Rising Disconnections

California lawmakers are tackling utility disconnections and high energy bills -- two thorny issues for customers, utilities and regulators trying to balance ratepayer protections with the need for new programs to meet California's ambitious climate policies.

Late Thursday, Sen. Jerry Hill (D-San Mateo) announced legislation "to help curb the wild fluctuations in energy bills in winter months," and to require utilities to give consumers information that will help them anticipate what their bills will be so they can take steps to lower costs. And a measure that seeks to reduce electric and gas utility disconnections by 50 percent by 2021 sailed through the Senate Energy, Utilities and Communications Committee this week, highlighting the depth of the problem, especially for low-income Californians.

Utility disconnections soared to 817,000 last year, a 49 percent increase compared with 547,000 in 2010, despite efforts at the CPUC in recent years to reduce them.

SB 598, sponsored by Sen. Ben Hueso (D-Chula Vista), chair of the Senate energy committee, seeks to address what he called a growing problem in California. The bill would require the commission to adopt residential utility disconnections for nonpayment as a metric, and would require the commission to assess the impact of proposed rate increases on those disconnections.

"For decades the Legislature has recognized that light and heat are basic rights," Hueso said at an April 4 committee hearing. Vital information on how rate increases impact disconnections is not currently provided by the CPUC when a rate increase is considered, Hueso said.

"This bill seeks to remedy that," he said.

In many cases, high bills and disconnections are connected.

As Gabriela Sandoval, research director with The Utility Reform Network, explained to me, the rising cost of living in California is one of the drivers of utility disconnections, as families living paycheck to paycheck may be faced with not having enough money to pay the rent or mortgage if they first pay utility bills.

Utility rate increases are often a death by a thousand cuts, with a few dollars here and there adding up to big increases over time.

Putting off paying utility bills leads to a vicious cycle, one that is often exacerbated by rising rates and high bills.

"Oftentimes when [rate] increases are proposed there is no actual analysis of how this increase will affect disconnections," Sandoval said.

"People's wages aren't increasing as fast as the cost of living," she added.

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One Southern California Edison customer sought TURN's help after getting a shutoff notice and then agreeing to a payment plan for arrears that had ballooned to nearly $1,500. Edison had asked for an immediate payment of $600 and another of $450 two weeks later, followed by another $400 payment two weeks after that, by which time the customer would also have another monthly bill to pay, according to Sandoval.

The customer was able to make the first payment, but could not afford the others; TURN is negotiating with Edison for a 12-month plan, Sandoval said.

Utility customers facing a 48-hour notice have been able to get federal help under the $3.4 billion Low-Income Home Energy Assistance Program, but that program could be cut under President Donald Trump's proposed federal budget proposal.

Statewide, utility disconnections hit a low point in the fourth quarter of 2009 of about 0.4 percent, according to the CPUC; were stable from 2009 to 2013; and have been rising since then, to a rate of about 0.64 percent for PG&E and 0.68 percent for Edison. A CPUC analysis showed that in the third quarter of 2015, 70 percent of disconnections in PG&E territory happened in 20 percent of zip codes, and 78 percent of Edison disconnections happened in 20 percent of zip codes.

TURN is working with utilities to try and get more historical data by geographic unit to help identify trends.

"We can't solve the problems if we don't know where the problem is," Sandoval said.

Volatility is also a factor -- when bills rise unexpectedly, as they did in PG&E territory this winter, people have a hard time coming up with the extra money to pay.

That is what Sen. Hill is trying to address with his bill, SB 711.

"Ratepayers shouldn't have to live in fear of what their next bill will be," Hill said in a news release on the measure.

One PG&E customer who spoke at the CPUC's April 6 meeting in Santa Rosa told commissioners her winter PG&E bill was typically around $160 a month. This year, it went up to $350. She challenged it, she said, to no avail. After that she got a bill for $857.

"I walk around in a down jacket, use very little electricity, no TV, no appliances, oven on maybe once a week," she said. "I can't handle this. Something has to change."

Maybe with these bills, something will. -Mavis Scanlon


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