Maine’s electric and natural gas distribution companies are worried about being swamped by unpaid bills and reduced commercial energy use in the wake of the coronavirus pandemic, according to new filings at the state Public Utilities Commission, raising questions about whether customers may be asked to pay higher rates in the future to help recover the costs.

How much more customers might pay and when, and to what degree utility investors could share the burden, is impossible to know yet. The PUC just last week received a first, early snapshot of the damage, which is expected to worsen in the months ahead.

Eric Stinneford, a Central Maine Power Co. vice president, noted that the company waits 120 days as it tries to collect the money it is owed before writing off bad debt. So it could be midsummer, at least, before CMP gives up pursuing payment for bills issued in early April to customers who lost their jobs, for instance, or businesses that closed and never reopened.

“We’re certainly going to experience a higher level of write-offs,” Stinneford said.

In late April, the PUC opened an inquiry and ordered utilities to begin sending monthly data to help show how their accounts receivable and customer energy consumption compare to previous periods. Among other details, the data include accounts receivable totals for the previous 13 months that show current balances, plus money due 30, 60 and 90 days out. The information is broken down for both distribution and supply charges, as well as residential and business customers.

Maine’s inquiry mirrors similar efforts in several other states. Regulators are trying to chart the fallout from the immediate and stunning drop in energy use that began in March as stores, offices, schools and restaurants abruptly shut down – and the parallel spike in residential consumption – as people were ordered to stay at home and many began working remotely.

“We’re in uncharted territory, so we’re learning as we go,” said Phil Bartlett, the PUC’s chairman.

On March 16, the PUC ordered a ban on utility disconnections until further notice. Bartlett said the moratorium will stay in effect at least until Gov. Janet Mills lifts the current state of emergency, which was recently extended to June 11.

Utilities are looking beyond that, however. They’re well aware of the record number of people out of work and the thousands of businesses still shut down or barely open.

That sense of foreboding was conveyed in a summary statement filed by Northern Utilities, which provides natural gas service from York County to Lewiston.

“Northern anticipates a material increase in future write-off activity as the moratorium on collection activities remains in effect,” the company said, “but there will be a lag period before the impact becomes apparent.”

LOWER USE, HIGHER COSTS

Making things worse is an unprecedented pattern of power use, which is being seen throughout the region.

ISO-New England, the regional electrical grid operator, has recorded a 3 to 5 percent overall drop in consumer demand and has begun posting weekly updates for comparison to normal patterns.

More significant is the shift in demand from commercial to residential usage.

CMP has seen residential electricity demand move higher than in 2019, up by 7.5 percent in the week ending May 5. That was driven by people working remotely and complying with the state’s stay-at-home order.

At the same time, commercial loads dipped by 11 percent over the two weeks ending May 5. The loss of business consumption drove overall electric sales down by roughly 35,000 megawatt hours in early May, compared with a year earlier. That’s only a small fraction of the 9 million megawatt hours CMP typically sells in a year, but it’s a troubling benchmark.

On top of that, CMP has seen its operating costs rise. It has been renting extra vehicles to keep line workers from riding in the same truck, for instance. It has been buying personal protective equipment and cleaning supplies, as well as laptop computers, so employees can work from home.

“We’re seeing a significant erosion in our cash flow and a significant increase in our operating costs,” Stinneford said. “That’s a bad combination.”

In normal times, utilities calculate the revenue they need to operate and serve their customers, plus an approved rate of return on investment. Regulators scrutinize those numbers and make adjustments. That’s how rates are established.

But in its new filing, CMP is asking the PUC to issue an accounting order. That’s a mechanism that would let Maine utilities separate out the ongoing expenses of dealing with the pandemic, minus any savings for, say, less employee travel. Then they could seek to recover the unanticipated costs in a future rate case.

Asked if that means CMP will seek a rate hike, Stinneford said now wasn’t an appropriate time to talk about recovering costs. A big unknown, he noted, is how fast and fully the economy might rebound, and whether that will translate into electric sales returning to normal levels – or to a permanent erosion and resulting loss of  revenue.

WHO WILL PAY THE DIFFERENCE?

CMP is part of Avangrid, a Connecticut-based energy company. Another Avangrid utility, Maine Natural Gas, filed comments at the PUC indicating that it wants to be able to fold bad debt into a pending June rate change.

“Given the moratorium on service disconnections and the ongoing economic fallout from the COVID-19 pandemic,” the company wrote, “MNG believes that the commission should act now on authorizing uncollectible expense reconciliation to help MNG face the rapidly evolving situation.”

A former PUC commissioner who served from 2010 to 2015, immediately after the Great Recession, said regulators will face a challenge in balancing customer and utility distress.

“It puts the commission in a hard spot,” said David Littell, an energy and environmental lawyer in Portland. “You don’t want to seem unsympathetic to people who lost jobs and can’t pay their bills. But you don’t want to send a signal that, if you don’t pay your bills, it will just go into uncollectibles.”

Write-offs typically run in the 1 percent range of billed revenue, Littell said, but they doubled and even tripled during the last recession. As long as they acted prudently, companies are generally allowed to recover the bad debt in future rates, meaning the recovery cost is distributed among home, commercial and industrial customers.

“The question now and in any recession,” Littell said, “is should a utility get 100 percent recovery from ratepayers, or should shareholders pitch in for some of it?”

Bartlett, the current PUC chairman, said that’s something the commission needs to consider as part of the ongoing inquiry. Because reduced energy use and an increase in unpaid bills are nationwide phenomena, regulators in other states are wrestling with the same issues, and Bartlett hopes to learn from their experiences.

He said there’s no deadline on when the inquiry will wrap up, but he wants to have a plan in place for tracking utility expenses and dealing with them as the state’s emergency order eases.

“We’re in a unique situation,” he said. “We’re going to be very careful about how we go forward.”


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