As lawmakers on Capitol Hill craft a fourth bill that will address the COVID-19 pandemic, the American Public Power Association is voicing concerns that the longer the pandemic goes on and customers can’t pay their electricity bills, along with declining load, there could be negative effects on cash flows for utilities, said Desmarie Waterhouse, APPA’s Vice President, Government Relations & Counsel, said on April 3.
“We are trying to gather information right now that would be helpful for us to make the case for some sort of additional funding that would be available to public power utilities,” Waterhouse said during an APPA webinar detailing legislation addressing the pandemic and issues of importance to public power.
The additional funding would help public power utilities “weather the financial crunch that we are anticipating is going to occur from this combination of non-payments by customers, as well as the loss of load,” Waterhouse said.
She noted that APPA will be reaching out to member utilities asking for related information. Among the things that APPA would like to hear from members about is whether they are seeing declines in load and at what point in their billing cycle they are noticing an uptick in the number of customers who can’t pay their bills.
APPA expects COVID-19 legislation in the House of Representatives to include language that would tie receipt of any money in the bill to the suspension of power shutoffs, “whether the utility gets that money directly or the local government that the public power utility is tied to, if that were the case, then that would be in effect,” she said. If a state receives funding, “it would also have to mandate the suspension of power shutoffs.”
The power shutoff language would be included as part of a broader legislative contribution from the House Energy and Commerce Committee.
A large number of public power utilities have already proactively suspended customer disconnects in the wake of the pandemic in recognition of the financial hardships faced by many customers.
APPA focused on input on House bill
APPA is focused on providing input on a COVID-19 House bill. Waterhouse noted that House Speaker Nancy Pelosi, D-Calif., “has made it clear that she believes the House should be driving the fourth bill” in terms of its direction.
Pelosi on April 3 said that House Democrats will not include infrastructure priorities in the fourth coronavirus relief bill and instead plan to advance legislation that builds on the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which was signed into law in late March by President Trump.
House Democrats had hoped to include infrastructure priorities from the House Committees on Energy and Commerce, Transportation and Infrastructure, and Ways and Means in a fourth package.
A narrowly crafted fourth coronavirus response bill could see action on the Hill this week. With demand for small business loans being unexpectedly high, Treasury Secretary Steven Mnuchin has requested another $250 billion for the program.
Senate Majority Leader Mitch McConnell (R-KY) said he hopes the Senate on Thursday will pass by voice vote legislation providing the additional funding.
In an April 8 Pelosi and Senate Minority Leader Charles Schumer (D-NY) agreed to the need for additional funding for the program, but said they would also like to see an additional $150 billion in direct aid to states as part of the plan.
Tax issues
On the tax legislative front, APPA continues to press for a reinstatement of tax-exempt advance refunding bonds to give public power utilities more flexibility in refinancing existing debt at the lowest possible rate.
In addition, the Association is asking for an expansion of the small issuer exception from $10 million to $30 million to allow smaller utilities to borrow directly from banks with tax-exempt debt.
APPA is also working with the Government Finance Officers Association on the implementation of a provision of the CARES Act requiring the Treasury Department to “endeavor to seek” to create a facility at the Federal Reserve to provide liquidity to the financial system that supports lending to states and municipalities. One concern for the Fed has been the scope of such a facility.
The House Financial Services Committee had proposed requiring the Federal Reserve to create such a facility with the stated purpose of purchasing longer-dated municipal bonds and new debt issuances in the primary market, as well as prioritizing jurisdictions that have higher levels of poverty.
LIHEAP
APPA is also discussing the need to provide further assistance to individuals and small businesses through the Low Income Home Energy Assistance Program (LIHEAP) and Small Business Administration, respectively, to help them pay their utility bills.
As Congress moves to respond to the COVID-19 pandemic, additional funding for LIHEAP has been a key priority for APPA.
The National Energy Assistance Directors Association (NEADA) on April 6 said that state LIHEAP directors are calling for Congress to provide an additional funding of $4.3 billion for the LIHEAP program in response to the COVID-19 pandemic.
The CARES Act includes $900 million for LIHEAP to help low-income households pay their utility bills during the crisis.
“Due to the depth of the crisis, this funding only scratches the surface of what families will need to stay afloat,” NEADA said.
NEADA said its estimate of need assumes an average grant of $325 to cover home energy costs for four months, plus $300 to provide window or room air conditioners for elderly and medically vulnerable households to ensure their houses stay a safe temperature while they are sheltering in place.
“States have reported to us that they are ready to move funds quickly. Despite the challenges of switching from in-person applications to telephone or mail, the states are making the necessary changes to keep their programs open and continue providing service to families in need,” NEADA said.
The initial $900 million will bridge the gap, “giving states the ability to keep programs running, staff employed, and customers served while a more comprehensive solution is being developed but it is not sufficient to meet the rapidly growing need for assistance.”
