1 STAFF REPORT
DATE: August 23, 2022
TO: Justin Hess, City Manager
FROM: Dawn Roth Lindell, General Manager, Burbank Water and Power BY: Arineh Sarkissian, Manager Customer Service Operations SUBJECT: Approval to Re-Establish Power Disconnections for Small Commercial Customers Effective September 1, 2022
RECOMMENDATION
Approve Burbank Water and Power (BWP) to resume power shut-offs and late fees for city utilities for small commercial customers effective September 1, 2022.
BACKGROUND
The COVID-19 Pandemic (Pandemic) has significantly impacted the local economy.
Since the initial shelter-in-place order was issued, staff has been proactively assisting customers during these unprecedented times, including:
• Suspending late fees and disconnections for delinquent accounts. • Distributing information about available resources and services from various federal, state, and local agencies during the Pandemic. • $468,781.39 applied to commercial customers from the California Arrearage Payment Program (CAPP) for electric arrears for the period of March 4, 2020, to June 15, 2021.
• $42,338 applied to commercial customers from the California Water and Wastewater Arrearage Payment Program (CWWAPP) for potable water arrears for the period of March 4, 2020, to June 15, 2021.
• $30,923 applied to commercial customers from CWWAPP for sewer arrears for the period of March 4, 2020, to June 15, 2021.
• $29,617 applied to small commercial customers from the Community Development Department’s Small Business Assistance Program. • Providing payment arrangements and efficiency services to help customers manage costs.
2 The City of Burbank has assisted commercial customers by applying a total of $571,659in financial credits. In addition, electric and water rate increases were suspended in FY2020-21 in response to the Pandemic. BWP has been monitoring the trends of delinquent accounts tracked in the accounts receivables. Delinquent accounts are those accounts that are more than 61 days past due. As of July 18, 2022, the total amount owed by these small commercial customers is approximately $743,508 and continues to grow. The following table provides the current estimate of all delinquent accounts over 61 days past due: As of July 18, 2022, small commercial accounts with over 61 days past due represent about 83% of all commercial accounts and 8% of total arrears. If not recovered through payments or the establishment of payment arrangements, this financial burden will fall upon all other customers who have been paying their bills. DISCUSSIONWhen BWP restarted disconnections of medium, large, and extra-large commercial customers on December 1, 2020, we saw a reduction in total arrears of approximately $2.8 million through payments or establishing payment arrangements. Ultimately, only six of these customers were shut off; one customer made a payment and entered a payment arrangement to reconnect service, two customers had their balance transferred to new accounts, and three customers closed their accounts. When CAPP was announced, disconnections for all customers eligible to receive funds were required to be discontinued until mid-May 2022. Once the 90-day protection was lifted in May, we returned to our normal operations for outstanding arrears for medium, large, and extra-large customers on July 6, 2022. Between July 6, 2022, through July 12, 2022, twelve commercial customers were subject to disconnection. Out of the twelve, two were disconnected, five paid, and the remaining five enrolled in a payment arrangement, resulting in a reduction of arrears by $32,597.Based on the continued impact of the Pandemic, the state’s investor-owned utilities, publicly owned utilities, and community choice aggregators worked as part of a coalition, including Southern California Public Power Authority (SCPPA), to propose a CAPP 2.0. In late June, the state legislature and Governor Newsom approved a new round of funding for unpaid electric bills resulting from the Pandemic for arrears incurred between June 16, 2021through December 31, 2021. There is $239.4 million available for publicly owned utility accounts for this new program, known informally as CAPP 2.0. It will operate in a similar fashion as CAPP 1.0 with a few key differences, including only benefiting residential accounts. Small commercial customers will not have a protection period like CAPP 1.0 and will be eligible for disconnection. Prior to restarting shut-offs for these Total Arrears By Customer Type(as of 7/18/22)# of customers %cust 31-60 61-90 91+ Total Arrears* Average Arrears %$Residential 6,304 91% 890,555$ 544,760$ 3,014,175$ 4,449,490$ 706 69%Single-Family 1,765 427,069$ 247,870$ 1,263,254$ 1,938,192$ 1,098 Multi-Family 4,539 463,487$ 296,890$ 1,750,921$ 2,511,298$ 553 Non Residential 657 9% 1,202,878$ 181,531$ 646,745$ 2,031,154$ 3,092 31%Small Business 543 169,655$ 98,661$ 475,193$ 743,508$ 1,369 Other Commercial 97 882,558$ 43,082$ 96,767$ 1,022,408$ 10,540 Fiber-Optic 17 150,665$ 39,788$ 74,785$ 265,238$ 15,602 Grand Total 6,961 2,093,434$ 726,290$ 3,660,921$ 6,480,644$ 100% 3 customers on September 1, 2022, staff will work on a communication plan to notify customers and encourage payment arrangements to avoid disconnection. Staff will continue to monitor opportunities to provide assistance and identify resources to develop a plan that helps customers transition to a more sustainable method of managing their municipal services obligations. On August 4, 2022, the BWP Board voted 7-0 to recommend that the City Council re-establish power shut-offs and late fees for small commercial customers effective September 1, 2022. FISCAL IMPACTRe-establishing power disconnections for small commercial customers will reduce financial exposure to losses and cost-shifting to all customers. CONCLUSIONStaff recommends that the City Council modify the action suspending power shut-offs and late fees for city utilities, and re-establish late fees and power shut-offs for small commercial customers effective September 1, 2022. ATTACHMENTSNone.