Michael Perlstein, Special Projects Manager
Moratorium Extension and
Collections Process Restart
September 13, 2022
Affordability and Access
• External Affairs
• Environmental Justice
• Strategic Initiatives
• Communications
• Regulatory and Legislative Affairs
• Business Services
• Financial Services
• Customer Services
• IT Services
• Enterprises
• Customer Programs (Hetch Hetchy Power, CleanPowerSF)
• AGMs
2 Overview
• Extend Moratorium on Shutoffs & Liens to July 1, 2023 for residential water, wastewater, Hetch Hetchy, and
CleanPowerSF customers
• Commercial water/wastewater customers restarted on July 1, 2022 • Commercial power customers will resume this fall
• Allows GM discretion for collections on multifamily
accounts with >$25,000, 90+ days past due
• 40% of residential arrears
3 Key Reasons
• Additional state debt relief opportunities
• California Arrearage Payment Program 2.0 (Power)
• Low Income Household Water Assistance Program
• Allow time to develop and implement shutoff and
lien avoidance policies
• Allows time to design and launch a robust
communications and outreach campaign
4 Residential Water / Wastewater Arrears
• Water / Wastewater arrears >90 days
Excluding large multi-family accounts ($4.3M)
• Current, July 2022: $6.3M
• includes $16.6M state relief
• Estimated by July 2023, with consistent growth: $10.9M • External arrearage relief
• Low Income Household Water Arrearage Program (LIHWAP) • $2,115,000 currently allocated to SF – might grow due to recent state budget allocation
5 Proposed Policy Areas
Before the moratorium expires, we will bring to this
Commission proposed policies in three areas:
1. Avoidance of shutoffs and liens for lower income
households
2. Affordability programming and assistance to slow
arrearage growth
3. Assessment of collections processes and customer
communications and engagement
6 Proposed Timeline:
Moratorium Expiration
7 July 1, 2023
Residential
Moratorium expires
9 months
Sept. 13, 2022
Moratorium
Extension
Commission item
Develop and implement shutoff
and lien avoidance strategies
for residential customers
8 THANK YOU
Questions?
AGENDA ITEM
Public Utilities Commission
City and County of San Francisco
DEPARTMENT Financial Services AGENDA NO. 10
MEETING DATE September 13, 2022
APPROVAL:
COMMISSION
SECRETARY Donna Hood
Extend Shutoff, Liens, and Fines Moratorium for COVID-19 Relief: Regular Calendar Project Manager: Michael Perlstein
Summary of
Proposed
Commission
Action:
Authorize the General Manager to take the following actions for COVID- 19 relief : extend for a fourth time, through June 30, 2023: (1 ) the temporary suspension of the discontinuation or shutoff of water service for residential retail customers for non -payment of wat er and/or sewer bills, (2) the temporary suspension of discontinuation or shutoff of power service for residential Hetch Hetchy Power Customers in San Francisco for non-payment of power bills, and ( 3) the temporary suspension of the return of delinquent residential
CleanPowerSF customers to PG&E
generation service for failure to pay CleanPowerSF charges; and grant discretion to the G eneral Manager to approve collections and liens to multifamily account holders with unpaid bills exceed ing $25,000 which are 90 days or more past due.
Background: The health and economic toll of the COVID -19 pandemic over the last two and a half years has been severe. Unfortunately, its presence continues to be felt, including new variants causing business and health uncertainty, continued health concerns, and lasting economic impacts - particularly on low -income and otherwise vulnerable households. The San Francisco Safer Return Together Health Order (which replaced previous health orders including the Stay Safe at Home Public Health Order, originally put in place in March 2020) and the City’s emergency declaration arising from th e pandemic continue to be updated to reflect ongoing changes. The economic fallout of the pandemic continues to be felt via historic levels of inflation , putting further pressure on the San Francisco Public Utilities Commission’s (SFPUC) low -income customers.
Although many households, particularly those with lower incomes, may still be recovering from the economic impacts of the pandemic and shelter-in-place orders, the health and economic status of San Francisco has in many ways improved due to vaccinations and loosening of COVID- related restrictions. The SFPUC has made strides to address arrearages accrued during the shutoff and lien moratorium of the last few years : the SFPUC applied for and received $ 20.2 million in federal relief funds Approve Extension for Shutoff, Liens, and Fines Moratoria Commission Meeting Date: February 22, 2022
distributed by California state agencies to apply to customer water, wastewater, and power accounts which accrued arrearages during the COVID emergency period , has resumed shutoff and liens collections activities for non -residential water and wastewater customers as of July 1, 2022, will resume collections processes for non- residential Hetch Hetchy Power customers in October 2022, and will resume returning non- residential CleanPowerSF customers in arrears to PG&E in October 2022.
Residential arrearages for Water, Wastewater, Hetch Hetchy Power (HHP), and CleanPowerSF (CPSF) customers remain significantly high , meaning the resumption of shutoff and liens on residential customers with arrearages would result in historic levels of collection action. T o protect our low -income and vulnerable customers, t he SFPUC is pursuing opportunities to access additional relief funding, and is developing shutoff avoidance and affordability programs beyond the existing payment plans, such as expansion of SFPUC’s existing Customer Assistance Program (CAP) to better serve those in need . Because the residential moratorium is scheduled to end before these addi tional measures are in place, including the determin ation of the amount of potential addi tional relief funding we may be able to obtain from state funds, an extension of the shutoff and lien moratorium is needed to minimize collection action on customers who should receive material help from the additional financial assistance and policy changes expected. In addition, the time is needed to engage in a robust communication with our customers to allow those who can pay to get on track to pay before the shutoffs and liens begin, and to assist qualifying customers who cannot pay into available programs.
Throughout the COVID emergency, the Commission prioritized assisting customers by putting in place several emergency programs designed to support customers impacted by the public health and resulting economic crisis who were struggling to afford normal monthly expenditures. These included: (1) the Temporary Emergency Customer Assistance Program for COVID-19 Relief for single-family residential customers providing a discount of 15% on water, 35% on sewer, and 30% on Hetch Hetchy Power bills (see Resolution Nos. 20- 0099, 20- 0185, 20- 0238, and 21- 0063); (2) the Smal l Business and Nonprofit Customer Assistance Program for COVID -19 Relief providing a 20% discount on water and sewer bills (see Resolution Nos. 20-0150, 20-0238, and 21-0063); and (3) a moratorium temporarily suspending the following rules related to shutoffs, liens, and fines: (a) the discontinuation or shutoff of water service for City retail customers for non -payment of water and/or sewer bills, (b) the imposition of late payment penalties or fees for delinquent water and/or sewer bills, (c) the disconti
nuation or shutoff of power
service for SFPUC Hetch Hetchy Power Customers in San Francisco for non-payment of power bills, (d) the imposition of late payment penalties or fees for delinquent Hetch Hetchy Power Customer accounts, and (e) Approve Extension for Shutoff, Liens, and Fines Moratoria Commission Meeting Date: February 22, 2022
the return of deli nquent CleanPowerSF Customers to PG&E generation service for failure to pay CleanPowerSF charges (see Resolution Nos. 20- 0162, 20-0238, 21-0063, and 22-0043). The SFPUC also took advantage of federal funds distributed through California state agencies to address the increased arrearages accrued during the pandemic . The SFPUC applied for and received $20.2M from the California Water and Wastewater Arrearage Payment Program and the California Arrearage Payment Program to provide water, wastewater, and energy debt relief to customer accounts for balances accrued during the period of March 4, 2020 to June 15, 2021.
Extension Proposal
This proposal would extend the m oratorium on the following actions through June 30, 2023:
• The discontinuation or shutoff of water service or property lien for City residential customers for non-payment of water and/or sewer bills;
• The discontinuation or shutoff of power service or property lien for SFPUC residential Hetch Hetchy Power Customers in San Francisco for non-payment of power bills; and
• The return of delinquent residential CleanPowerSF Customers to PG&E generation service for failure to pay CleanPowerSF charges.
This proposal would also grant discretion to the General Manager to approve severance and liens processes for multifamily residential accounts with unpaid bills greater than $25,000 which are at least 90 days past due.
As approved by this Commission on February 22, 2022, by Resolution No. 22- 0043, the shutoff and lien moratori a for residential water, wastewater, Hetch Hetchy Power, and CleanPowerSF customers were scheduled to end on July 31, 2022 for those not enrolled in the Customer Assistance Program (CAP) discounts, and August 31, 2022 for those who were enrolled in CAP. However, due to delayed outside funding timelines and additional state debt relief opportunities, as well as staffing shortfalls to effectively manage customer arrears, efforts to develop and implement shutoff and lien avoidance strategies are still in process.
The extension of the residential shutoff and lien moratorium through June 30, 2023 for water and w astewater, Hetch Hetchy Power , and CleanPowerSF customers will allow customers more time to recover from the financial impacts of COVID -19 by giving them additional time to catch up on their bills . It will also provide sufficient time for SFPUC to implement assistance programs and strategies. Since this Commission’s Approve Extension for Shutoff, Liens, and Fines Moratoria Commission Meeting Date: February 22, 2022
last extension of this moratorium, the SFPUC has received findings from a consultant study of Water and Wastewater Enterprise bills and their impacts on different customer groups , assistance program best practices research, and other analysis of SFPUC’s customers. The Agency also completed a debt forgiveness pilot program , which found that offering large discounts and the incentive of debt forgiveness in exchange for on- time payments led to increased revenue collection and payment frequency, reengagement of non- paying customers, and did not lead to increased water consumption. These new findings and resources will be used to develop assistance programs for customers. SFPUC staff will propose sustainable intervention strategies to the Commission by April 1, 2023.
Importantly, the extension also provides the SFPUC additional time to advocate and apply for any further rounds of state or federal debt relief funds which might become available . The SFPUC is continuing to advocate at the state level for additional water and wastewater relief to be allocated to utilities.
The California Arrearage Payment Program, which provided energy debt relief to customers for balances accrued during the period of March 4, 2020 to June 15, 2021, has been expanded to provide additional funds .
This second round of funding is referred to as CAPP 2.0. While details regarding the amount of funding and a timeline for distribution are still in development, the SFPUC expects to have received and dispersed funds by the end of Fiscal Year 2022-23. This funding source is only for active residential accounts, and requires recipients are not disconnected from service for a period of 90 days following credits being applied to accounts.
Hetch Hetchy Power and CleanPowerSF anticipate that extending the moratorium through July 1, 2023 will provide enough time for CAPP 2.0 funding to be distributed and applied to accounts in accordance with all legal requirements.
CleanPowerSF’s unique ope rating situation means that its collections process has been and will continue to be slightly different than the other business lines. The CPUC is the regulatory authority for billing and disconnections for PG&E and CleanPowerSF customers. Under state law, SFPUC cannot disconnect CleanPowerSF c
ustomers to address a
customer’s non- payment. Instead, the only recourse i s to return the customer to PG&E for generation supply. To prevent a potentially significant number of customer returns due to non -payment during the COVID-19 emergency, the SFPUC suspended the return of
CleanPowerSF customers to PG&E for non- payment of their generation charges.
Approve Extension for Shutoff, Liens, and Fines Moratoria Commission Meeting Date: February 22, 2022
Though the exact financial impact of extending the moratorium is unknown, it is important to acknowledge the likely significant increase in residential customer arrearages that the SFPUC will incur by June 30, 2023. Total residential arrearages over 90 days past due, as of July 2022, were $10.6M; a 1,580% increase compared to $631,000 in March 2020.
The outstanding arrears includes a small number of multifamily accounts holding a disproportionate share of the current value: as of July 2022, 11 accounts hold 42% of residential arrearages 90 days or more past due. To enable collection of large balances without creating financial hardship for customers, this extension of the shutoff and lien moratorium will include discretion for the General Manager to approve severance and liens for multifamily residential accounts with unpaid bills greater than $25,000 which are 90 days or more past due.
If arrearages continue to increase at the current growth rate, and additional relief funding does not become available, the SFPUC could potentially reach $15.2M in residential arrears by July 2023 (a $4.5M increase over the duration of this extension). It is also likely a portion of this increased delinquent revenue will become uncollectable.
In addition, the extension is needed in order to allow time to engage in a robust communication with our customers to allow those who can pay to get on track to pay before the shutoffs and liens begin, and to assist qualifying customers who cannot pay entry into available programs.
Staff commits to returning to this Commission by April 1, 2023 with proposals for a customer arrearage management program to avoid necessitating further extensions beyond June 30, 2023.
Public Hearing Notice
Pursuant to Charter Section 4.104, a Notice of Public Hearing w as published in the San Francisco Examiner , and notice was p osted on the SFPUC website on August 16, 2022.
Fiscal Impact: The shutoff, liens, and fines moratorium to June 30, 2023, for residential customers could result in up to an additional $4.5M in delinquent revenue.
A portion of the delinquent revenue will likely be uncollectible, but the exact amount is unknown at this time.
Results of
Inaction:
A delay or denial in approving this age nda item would mean that the SFPUC would resume implementation of its rules regarding shutoffs and liens on September 14, 2022, and return of customers to PG&E for residential customers on September 14 , 202 2. This may result in Approve Extension for Shutoff, Liens, and Fines Moratoria Commission Meeting Date: February 22, 2022
prematurely disconnecting or liening property of some customers who would be eligible for future state relief funding.
Recommendation: SFPUC staff recommends that the Commission adopt the attached resolution.
PUBLIC UTILITIES COMMISSION
City and County of San Francisco
RESOLUTION NO.:
WHEREAS, On February 25, 2020, the Mayor issued a Proclamation (the Proclamation) declaring a local emergency to exist in connection with the imminent spread within the City of a novel (new) coronavirus (COVID-19); and
WHEREAS, On March 3, 2020, the Board of Supervisors concurred in the Proclamat ion and in the actions taken by the Mayor to meet the emergency; and WHEREAS, On March 4, 2020, Governor Gavin Newsom proclaimed a state of emergency to exist within the State due to the threat posed by COVID-19; and WHEREAS, On March 13, 2020, the Mayor issued a second supplement to the Proclamation, suspending shutoffs of water and power service by the San Francisco Public Utilities Commission (SFPUC) for delinquent water, power, and/or sewer bills, and prohibiting the imposition of late penalties and fees for non-payment of utility bills; and WHEREAS, On March 16, 2020, the City’s Health Officer issued a stay safe at home order, Health Officer Order No. C19-07 (the Stay Safe At Home Order), requiring most people to remain in their homes subject to certain exceptions including obtaining essential goods such as food and necessary supplies, and requiring the closure of nonessential businesses; the Health Officer has extended the Stay Safe At Home Order until further notice; and WHEREAS, On April 2, 2020, Governor Gavin Newsom signed Executive Order N-42-20 suspending utilities’ authority to discontinue water and wastewater services; and WHEREAS, On July 28, 2020, by Resolution No. 20- 0162, this Commission authorized the General Manager to temporarily suspend through January 15, 2021 the rules governing (1) the discontinuation or shutoff of water service for City retail customers for non-payment of water and/or sewer bills, (2) imposition of late payment penalties or fees for delinquent water and/or sewer bills, (3) discontinuation or shut off of power service for SFPUC Hetch Hetchy Power Customers in San Francisco for non-payment of power bills, (4) imposition of late payment penalties or fees for delinquent Hetch Hetchy Power Customer accounts, and (5) the return of delinquent CleanPowerSF Customers to PG&E generation service for failure to pay CleanPowerSF charges; and
WHEREAS, On December 8, 2020, by Resolution No. 20-0238, this Commission authorized a first extension of the Shutoffs, Liens, and Fines Moratorium through June 30, 2021; and
WHEREAS, On April 27, 2021, by Resolution No. 21-0063, this Commission authorized a second extension of the Shutoffs, Liens, and Fines Moratorium through March 31, 2022; and WHEREAS, On February 22, 2022, by Resolution No. 22- 0043, this Commission authorized a third extension of the Shutoffs, Liens, and Fines Moratorium through June 30, July 31, or August 31, 2022, for varying customer groups; and WHEREAS, COVID-19 has caused and is expected to continue to cause serious negative impacts to the local economy and financial impacts to residents, including the substantial loss of income due to loss of compensable work hours or wages, layoffs, and business closures; and WHEREAS, Loss of income as a result of the global COVID -19 pandemic continues to inhibit San Francisco residents and businesses from fulfilling their financial obligations including public utility payments such as water, sewer, and Hetch Hetchy power charges; and WHEREAS, A small number of multi -family residential accounts are responsible for a disproportionately high percentage of total residential arrearages, providing an opportunity to collect a large portion of unpaid bills without causing financial harm to low-income or vulnerable customers, subject to the General Manager’s discretion; and WHEREAS, Ensuring that all people in San Francisco continue to have access to running water during this public health crisis to enable people to regularly wash their hands and maintain access to clean drinking water will help to prevent the spread of COVID-19 and prevent or alleviate illness or death due to the virus; and
WHEREAS, Ensuring that all customers in San Francisco that receive power services from the SFPUC continue to have access to electricity so they are able to receive important COVID-19 information, keep critical medical equipment functioning, and utilize power as needed will help to prevent the spread of COVID-19 and prevent or alleviate illness or death due to the virus; and WHEREAS, Section D, Rules 4 and 5 of the Rules and Regulations Governing Water Service To Customers, established by Resolution No. 19-786, passed December 15, 1959, and last amended December 10, 2019, detail the rules for the discontinuation or shut off of water service for residents and businesses in the City for non-payment of water and sewer bills; and WHEREAS, The CleanPowerSF Delinquent Accounts, Bad Debt and Collections Policy, authorized by the General Manager on January 17, 2017, details the process for Delinquent Accounts, and dictates that the SFPUC return delinquent CleanPowerSF Customers to PG&E for failure to pay CleanPowerSF charges; and
WHEREAS, Additional relief funding for Hetch Hetchy Power and CleanPowerSF customers will be distributed through the California Arrearage Payment Program in 2023, requiring that recipients not be disconnected from service for 90 days, and prematurely disconnecting those customers from service will make them ineligible to participate in the relief; and
WHEREAS, The SFPUC continues to advocate for additional water and wastewater arrearage relief funding for residential customers to help alleviate bills accumulated through the emergency period; and
WHEREAS, A robust customer service arrearage management program wi ll include expanded customer service support and options for bill and payment assistance, which are currently being developed through a series of staff working groups; and WHEREAS, The SFPUC staff requires additional time through June 30, 2023 to develop and implement an effective customer service arrearage management program for residential customers; and
WHEREAS, Pursuant to Charter Section 4.104, a notice of public hearing was posted on the SFPUC website, as required, on August 16, 2022; now, therefore, be it RESOLVED, That this Commission hereby extends through June 30, 2023 the temporary suspension of the following for residential customers, including residential customers enrolled in Customer Assistance Program (CAP) discounts and residential customers not enrolled in CAP discounts: the provisions in Section D, Rules 4 and 5 of the Rules and Regulations Governing Water Service To Customers governing the discontinuation or shut off of water service for residents and businesses in the City for non-payment of water and sewer bills; and be it FURTHER RESOLVED, That this Commission hereby extends through June 30, 2023 of the temporary suspension of the following for residential customers , including residential customers enrolled in Customer Assistance Program (CAP) discounts and residential customers not enrolled in CAP discounts : (a) Rule X of the Rules and Regulations Governing Electric Service, Effective May 9, 2017, regarding the Discontinuance and Restoration of Hetch Hetchy Power Service for SFPUC Hetch Hetchy Power Customers in San Francisco for non -payment of power bills, and ( b) the provisions in the CleanPowerSF Delinquent Accounts, Bad Debt and Collections Policy governing the return of delinquent residential CleanPowerSF C ustomers to PG&E generation service for failure to pay CleanPowerSF charges; and be it FURTHER RESOLVED, That this Commission hereby grants the General Manager discretion to restart severance and liens processes for multifamily residential accounts carrying balances greater than $25,000 which are 90 days or more past due; and be it
FURTHER RESOLVED, That this Commission will reintroduce the aforementioned previously suspended rules for residential customers on July 1, 2023.
I hereby certify that the foregoing was adopted by the Public Utilities Commission at its meeting of September 13, 2022.
_______________________________________
Secretary, Public Utilities Commission