By Andrea Jakubas

This post is the final part of a three-part series discussing three avenues for reducing the “uncollectible burden”–the inability of people to pay their utility bills during the COVID-19 pandemic. Part one examined government grants and policy; part two looked at incentivizing and changing consumer bill-paying behavior. Part three, below, discusses clean energy initiatives that promote efficiency, reduce consumption and use cleaner forms of energy.
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In pre-pandemic times, if utility customers did not or could not pay their bills, the company could generally disconnect their service. But in response to the COVID-19 emergency, many states have issued moratoria against such utility shutoffs for nonpayment,[1] recognizing both that utilities are vital to human health and well-being and that customers are facing daunting levels of unemployment and decreased ability to pay their bills.

These shutoff moratoria are necessary but raise an additional problem: how bills will ultimately be paid. Generally, uncollectible accounts are “socialized” across utilities customers. The rate paid covers not only the customer’s direct consumption but also administrative costs, including other customers’ nonpayment. As the pandemic—and orders against utility shutoffs—drag on, the mountain of “uncollectible” debt will continue to grow, and there are no clear answers on how (and by whom) bills will ultimately be paid.

Programs that reduce consumption, or that use non-carbon fuel sources are doubly advantageous: they can make bills more affordable for customers and increase the likelihood the bills will be paid, and can reduce carbon emissions.

Distributed solar

Energy generated in a dispersed manner or by customers, rather than at a central location (like a nuclear power plant), is “distributed generation.”[2] The most common distributed generation method is home solar panels. But many customers, especially those who are already struggling to pay their bills, will have trouble investing in panels—though some companies offer the option to lease panels.[3]

Fortunately, many states now offer programs that fund solar panel installation to low-income residents.[4] But because installation requires modification to the exterior, home solar installation is generally only available to single-family homeowners, not to those that live in a condominium building—unless they convinced their homeowners association to install them—or to renters.

Most utilities employ a system of “net metering,” where customers only pay for the net electricity they use–the total amount of electricity used (from all sources) minus the amount of electricity their home solar panels generated. [5] Depending on usage, customers will at least reduce their electricity bills or possibly even make  money by selling excess electricity back to the grid, if they generated more energy than they used in a billing cycle.

Other Efficiency and Use-Shifting Behavior

In addition to generating electricity, there are other measures that can help a home run more efficiently. Heat pumps, for example, transfer heat between the building and the outdoors to aid in cooling and heating. In response to the pandemic, a Vermont utility is offering higher rebates on heat pumps as a way to help customers save money.[6]

In addition to energy-saving technology, changing fee structures can shift consumer behavior by creating incentives to consume electricity differently. Traditionally, electricity demand is highest in the evening and in the summer. By charging more during these peak periods, consumers have an incentive to shift their use (when possible) to the lower-cost time period.

These time-varying rates can be general, where utilities simply charge more during historically high-use times, or can be accomplished through real-time pricing—where customers know exactly how much the rate is at time of use and can adjust accordingly.

But smart meters are required for real-time pricing systems to work in order to accurately reflect pricing. ComEd has developed a four-year time-of-day pricing pilot, which allows up to 1,900 customers to opt-in to a variable time-of-day rate rather than a fixed electricity rate.[7] As of September 2020, about 1,300 customers, including thirty-seven designated as low-income, have enrolled.[8]

As states shift to using more clean energy, policymakers must ensure that customers’ bills do not go up in the process. Bringing new generation online, even if it eventually costs less than fossil fuels, can be costly upfront.

In Illinois, for example, the Future Energy Jobs Act (FEJA) requires that by 2025, large utilities must source at least 25% of their energy from renewable sources.[9] To protect residential consumers, FEJA imposes a 25-cent monthly cost impact cap through 2030.[10]

The amount of utility-related debt owed is a major, but not insurmountable, problem. A combination of government funding, alternative payment arrangements, and energy efficient resources can reduce the uncollectible burden on both utilities and customers.

Energy efficiency is likely the most sustainable option long-term, but while green infrastructure and programs continue to grow and become more widespread, flexible payment arrangements and debt management systems must be encouraged or even mandated by state governments to ensure continued service and mitigate mounting customer debt.
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The author was a Legal & Policy Intern under Chairman Carrie Zalewski at the Illinois Commerce Commission in 2020. Thanks to Alex Bai & Tanya Rabczak, Legal & Policy Advisors to Chairman Zalewski, for their guidance in writing this series.

[1] Map of Disconnection Moratoria, Nat’l Ass’n of Reg. Util. Commissioners, https://www.naruc.org/compilation-of-covid-19-news-resources/map-of-disconnection-moratoria/ (last visited Oct. 16, 2020).

[2] Thomas Ackermann, Göran Andersson & Lennart Söder, Distributed Generation: A Definition, 57 Electric Power Sys. Res. (2001), https://doi.org/10.1016/S0378-7796(01)00101-8.

[3] Plans & Services, Sunrun, https://www.sunrun.com/solar-plans-and-services (last visited Oct. 16, 2020).

[4] See, e.g., Connecticut Green Bank Accelerates Adoption of Solar Energy in Communities of Color, https://ctgreenbank.com/sharing-solar-benefits-in-communities-of-color/; Hawaii Green Energy Money Saver, https://gems.hawaii.gov/participate-now/for-homeowners/; Illinois Solar for All, https://www.illinoissfa.com/.

[5] Net Metering, Solar Energy Indus. Ass’n, https://www.seia.org/initiatives/net-metering (last visited Nov. 18, 2020.

[6] Go, Save & Share Green with GMP Launches to Help Customers Save Money and Empower Them to Help Each Other, the Economy, and the Environment, Green Mountain Power, https://greenmountainpower.com/news/go-save-share-green-with-gmp-launches/ (last visited Oct. 16, 2020).

[7] Residential Time-of-Day Pricing Pilot Semi Annual Report at 1, (No. 18-1725), https://www.icc.illinois.gov/docket/P2018-1725/documents/304095.

[8] Id. at 33–34.

[9] 20 Ill. Comp. Stat. 3855/1-75(c)(1)(B).

[10] Future Energy Jobs Act, https://futureenergyjobsact.com/about (last visited Oct. 16, 2020).