Unpaid utility bills soar in Sacramento, California during pandemic

Heidi Wall can’t even bear to look at her unpaid energy bills.

The Citrus Heights single mom lost her job at a private preschool when the pandemic started and began sleeping on the couch to rent rooms in her house to stay afloat. A cancer survivor who received two stem cell transplants and is immunocompromised, Wall cannot return to work with the virus still circulating. Unemployment benefits were helping her, even though she had not received a check for two months.

The stress and anxiety of knowing that she has a large debt, but is unable to pay it off, weighs heavily on Wall.

“My SMUD bill, I don’t know, I didn’t open it,” said Wall, who stopped paying his utility bill in March 2020. “I guess it’s around $ 3,000.”

Unpaid utility bills in Sacramento have skyrocketed during the pandemic, reflecting another facet of the widespread financial impact of COVID-19 on residents’ ability to pay for basic necessities.

According to CFO Jennifer Davidson, approximately 100,000 residential customers in the Sacramento Municipal Utility District are late in paying some or all of their utility bills. SMUD serves approximately 564,000 residential customers, or nearly 18%.

This is roughly $ 60-65 million in debt resulting from unpaid residential bills since April 2020, although it fluctuates frequently. Typically, SMUD sees around $ 10 million in unpaid bills each year, although that number can grow to $ 20 million in the year before the utility helps customers with discounts and plans. reimbursement.

Davidson said in a statement that the unpaid amounts “are not large enough to have a negative effect on the short or long term financial strength of SMUD.”

Yet that’s a staggering number, in line with trends in California and the United States where unpaid bills have exploded for hundreds of thousands of families, disproportionately affecting low-income neighborhoods and communities of color.

In February, the California Municipal Utilities Association estimated there were more than $ 300 million in unpaid bills from electric utilities like SMUD. National Energy Assistance Directors’ Association executive director Mark Wolfe estimated last winter that up to $ 40 billion could be owed to the country’s utilities in unpaid bills by March 2021.

“Our new data on arrears shows that by then, individual unpaid bills can reach $ 1,500 to $ 2,000, which is equivalent to what some customers are paying for electricity in a year,” Wolfe told Utility Dive in December.

Since the start of the pandemic, SMUD has not cut power to residential or commercial customers due to unpaid bills and suspended late fees. It also expanded its eligibility for rate discounts – a family of two adults and two children earning less than $ 4,400 per month qualifies, for example.

“Because of the impact this pandemic is having on our community, we want to make sure our most vulnerable customers have access to electricity during these times,” then CEO Arlen Orchard said in a statement. last May press release extending the suspension. until January 4.

The suspension of disconnecting electricity for non-payment has been extended until the end of this year, with the utility encouraging customers to make payment arrangements or inquire about discount rates. For residents like Wall, having electricity, especially in the sweltering summer heat, was a “lifeline”.

In 2022, however, thousands of people will face the prospect of paying past bills that they may not be able to afford. Even before the economic turmoil caused by the pandemic, energy bills can often be a heavy burden on low-income households, consuming a large portion of their income.

A May 2021 report by UCLA researchers on unpaid residential water and electricity bills in Los Angeles found that utility debt is unevenly distributed, with black, Latinx and low-income neighborhoods facing the heavier debt burden on utilities.

To help reduce the debt burden, the state legislature this year created a new financial aid program with federal funds for COVID-19 relief. California’s arrears payment program includes nearly $ 1 billion in funding available to utility companies to claim and cover unpaid energy debts owed by customers.

Designed to help those in debt between March 2020 and June 2021, nearly $ 300 million will be available for utilities such as SMUD.

The California Department of Community Services and Development, which oversees the program, always surveys utility companies to assess how much to allocate to each utility. But SMUD has already submitted a first application to the program and expects to receive funding in the coming months to apply directly to customer invoices.

Active residential customers who may have their power cut due to unpaid bills will be prioritized, followed by active and inactive residential customers with overdue balances, and commercial customers with unpaid bills. The program potentially means that thousands of SMUD customers see their unpaid bills drastically reduced, if not totally wiped out.

SMUD plans to restart its formal fundraising process in 2022 “after receiving and applying funds from the CAPP program and any other source of funding to our clients’ accounts,” Davidson said in a statement, while registering residents to rate reductions and long-term flexible payment. plans.

“We will also continue to monitor the pandemic and related financial impacts and will continue to act in the best interest of our customers and the community,” she said in a statement.