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City Council
Staff Report
From: City Manager
Report Type: CONSENT CALENDAR
Lead Department: Utilities
Meeting Date: November 10, 2025
Report #:2511-5402
TITLE
Adopt a Resolution Deferring CPAU Late Fees and Collection Actions for Certain Customers Affected by the Ongoing Federal Government Shutdown; CEQA Status – Not a Project.
RECOMMENDATION
Staff recommends Council adopt a Resolution that temporarily defers late fees and other collection actions for certain residential customers (Rate Assistance Program (RAP) participants and federal employees) who are anticipated to be in financial hardship due to the federal government shutdown.
EXECUTIVE SUMMARY
The current federal government shutdown has disrupted the income and benefits of many federal employees and low-income households nationwide. While exact figures of affected residents in Palo Alto are unavailable, we recognize the potential impact on our community and have proactively identified flexible utility billing measures such as partial payment or postponement of utility bill payments, term repayment arrangements, suspension of late fees, and expedited access to CPAU financial assistance programs that will support our affected RAP residential customers and federal employees during the current shutdown.
BACKGROUND
As of this writing, the federal government financial closure is now the longest continuous federal government lockdown in history. Federal government employees who have been furloughed or dismissed, essential workers who are legally required to work without paychecks, and rate assistance customers who may be impacted due to suspension of other federal benefits programs are facing the financial impacts beyond their control.
ANALYSIS
In order to help customers who are having difficulty paying their utility bills, CPAU currently administers bill repayment scheduling, as well as residential financial assistance on a routine basis through the RAP and ProjectPLEDGE, a community-funded utility bill grant program.
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However, due to the unique nature of the federal shutdown, staff believes that it would be helpful to create a special program that temporarily defers late charges and collection actions for customers who are likely to be impacted by the shutdown.
The attached Resolution would create a new, temporary deferral plan that would be available to (i) customers who are enrolled in the RAP and (ii) customers in households with a federal employee. The deferral plan would automatically apply to any RAP account. Federal employees would need to request inclusion.
For accounts on the plan, CPAU would not take any of the following actions with respect to utility charges incurred during the shutdown:
(i) apply late charges,
(ii) take collection actions such as referring an account to a collection agency or bringing civil action,
(iii) initiate termination or disconnection of services, (iv) lower the internal credit risk assessment for the accountholder or account, or (v) report non-payment to any external credit reporting agency.
These actions would be suspended during the shutdown and for one year following the end of the shutdown. If the utility charges incurred during the shutdown an account are still not fully paid by within a year of the end of the shutdown, CPAU would apply its usual late charges and collection efforts to the remaining balance. CPAU’s normal late charges and collection efforts would also apply to any service charges incurred after the end of the shutdown.
The resolution provides that CPAU may require installment payments during the year after the end of the shutdown for accounts that are on the plan. The Utility Administrator is authorized to create procedures and rules that implement the plan created by the resolution.
FISCAL/RESOURCE IMPACT
The financial impact to CPAU (primarily the loss of late fees), will be negligible. It is assumed that bill repayments will be completed as agreed. Any residential revenue losses requiring financial write-off are not projected to be significant.
The deferral of late fees and collection efforts is anticipated to l minimally affect cash flow; however, these are vital measures to support community welfare during this period. To the extent that funds are needed, the Utilities will utilize interest income as a non-rate revenue source.
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STAKEHOLDER ENGAGEMENT
These initiatives underscore the City's ongoing commitment to its residents and CPAU customers, ensuring that utility services remain accessible and affordable during federal disruptions. Further updates and assessments will be provided as the situation evolves.
ENVIRONMENTAL REVIEW
Council approval of financial relief options for some utilities customers impacted by the federal government shutdown is not a project under CEQA (Public Resource Code section 21065), as an administrative activity of government that will not result in any physical changes to the environment (14 CCR section 15378(b)(5)).
ATTACHMENT:
Attachment A: Resolution
APPROVED BY:
Alan Kurotori, Director of Utilities