Budget includes $120 million in additional utility assistance

Another round of utility assistance is poised to be directed toward Virginia residents who have struggled to keep their lights on and water running during the COVID-19 pandemic even as the end of a statewide moratorium on disconnections nears. 

On late Friday, lawmakers in the House of Delegates and Senate reached a deal after a week of debate in Richmond on how to spend $4.3 billion in federal American Rescue Plan Act funds. But despite disagreements between Republicans and Democrats, as well as the House and Senate, over a handful of matters like law enforcement pay, utility assistance has proved a point of agreement. Both chambers approved the budget bill Monday.

Following a budget proposal from Gov. Ralph Northam and Democratic leadership, legislators agreed to put $120 million toward residential utility bills that are more than 60 days overdue. An alternative plan from House Republicans last week, swiftly rejected, also left the provision intact, as did a slate of budget amendments put forward by senators on both sides of the aisle. 

The assistance follows on the heels of $100 million in federal aid allocated by the General Assembly for the same purpose this fall, although the newest round excludes Dominion Energy, the state’s largest electric utility, from receiving any of the funds. 

“This means there is more federal funding for the rest of utility customers, specifically customers in smaller utility jurisdictions,” said Northam spokesperson Alena Yarmosky in an email. “The administration has also previously supported Dominion using its significant overearnings to forgive residents’ electric bills.”

This fall, the General Assembly ordered Dominion to forgive all unpaid balances that were more than 30 days overdue as of Sept. 30, 2020. The legislature later extended that relief by an additional three months and allowed Dominion to use those costs in its 2021 rate review to offset its earnings, reducing the revenues regulators could identify as excess profits. 

In filings with the State Corporation Commission, Dominion has identified about $206 million in bills it has forgiven in response to the pandemic. In an email, Dominion spokesperson Rayhan Daudani said the amount was “among the most of any utility in America.”

“We support continued efforts in the General Assembly to help customers, especially those who are experiencing financial hardship due to the pandemic,” he said. 

While investor-owned utilities like Dominion have had more flexibility to weather the pandemic, municipal utilities and nonprofit electric cooperatives with thinner margins and fewer financial tools at their disposal have had a rocky 16 months. 

One report ordered by the General Assembly found that as of Dec. 15, 2020, municipal utilities were facing more than $88 million in unpaid bills. Roughly a quarter of those arrearages were recorded by Richmond’s Department of Public Utilities. 

While many of the “munis” were eager to tap into federal funds, federal requirements that they obtain attestations from customers that their arrearages were due to COVID-19-related hardship stymied some utilities with limited staff and resources from taking advantage of the available money.

“Our localities are very concerned about the effects of the last year,” said Mitchell Smiley of the Virginia Municipal League, which has closely monitored the municipal utilities’ situation during the pandemic. The cities, he added, “welcome any relief.” 

The electric cooperatives are also taking a “hard look” at the state’s proposed assistance, said Steve Johnson, a spokesperson for the Virginia, Maryland and Delaware Association of Electric Co-ops.

Johnson estimated that Virginia’s 13 electric co-ops are facing unpaid bills totaling $35 to $40 million, although their situations vary widely depending on their size and territory. 

“Things have stabilized better than we expected,” he said, although he cautioned that current projections don’t take into account record July heat or the typically active portion of the hurricane season, both of which can strain the nonprofit co-ops’ bottom line. 

“We’re still not out of the woods with the costs they’re going to accrue,” he said. 

If current utility assistance language remains intact in the budget which is being hashed out by a conference committee of the House and Senate, the State Corporation Commission and the Virginia Department of Housing and Community Development will launch two surveys to collect information on outstanding arrearages between March 12, 2020, and Aug. 31, 2021, as well as the amount of utility assistance funds left over from the last round of federal relief. Reports on the findings will be due to the House and Senate money committees by Nov. 1.

Disconnection bans

Dominion is also singled out in a budget proposal that would prohibit the utility from disconnecting service from customers who have received federal, state, nonprofit or utility assistance until March 1, 2022. 

In November, following a narrower ban by the State Corporation Commission, the state forbade utilities statewide from cutting off service to customers because of an inability to pay their bills during the pandemic. 

Budget language specified that the moratorium would stay in place until 60 days after the end of Gov. Ralph Northam’s state of emergency or until “economic and public health conditions have improved such that the prohibition does not need to be in place.” 

Northam lifted the state of emergency June 30, setting a countdown for the moratorium to expire Aug. 29. Some utilities, such as Danville Utilities, have already announced they plan to resume disconnections once the ban is no longer in effect.