Unpaid SMUD bills skyrocketed during the pandemic. How California will help pay off debts
Heidi Wall can’t bear to even look at her unpaid energy bills.
The single mother from Citrus Heights lost her job at a private preschool at the start of the pandemic, and started sleeping on the couch to rent out bedrooms in her home to stay afloat. A cancer survivor who’s received two stem cell transplants and is immuno-compromised, Wall can’t go back to work with the virus still circulating. Unemployment benefits were helping, though she hasn’t received a check in two months.
The stress and anxiety of knowing she has a large debt, but being unable to pay it off, weighs heavily on Wall.
“My SMUD bill, I don’t know, I have not opened it,” said Wall, who stopped paying her utility bill in March 2020. “I would assume 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 the ability of residents to pay for basic necessities.
About 100,000 Sacramento Municipal Utility District residential customers are behind on paying either part or all of their electric bills, according to CFO Jennifer Davidson. That’s out of roughly 564,000 residential customers SMUD serves, or nearly 18%.
That amounts to about $60 to $65 million in debt stemming from unpaid residential bills since April 2020, though it fluctuates frequently. Typically, SMUD sees about $10 million worth of bills that go unpaid each year, though that number can peak to as high as $20 million over the course of the year before the utility helps customers through discounts and repayment plans.
Davidson said in a statement that the outstanding amounts “are not material enough to have negative effect on SMUD’s near or long-term financial strength.”
Still, it is a staggering number, in line with trends across California and the United States where unpaid bills have ballooned for hundreds of thousands of families, disproportionately impacting low-income neighborhoods and communities of color.
In February, the California Municipal Utilities Association estimated there are more than $300 million in unpaid bills to publicly owned electric utilities like SMUD. National Energy Assistance Directors’ Association executive director Mark Wolfe estimated last winter that up to $40 billion may be owed to utilities nationwide in unpaid bills by March 2021.
“Our new arrearage data shows that by then, individual unpaid bills may be as high as $1,500 to $2,000, which is as much as some customers pay for electricity in a year,” Wolfe told Utility Dive in December.
Since the pandemic began, SMUD has not shut off the power for residential or commercial customers because of unpaid bills, and has suspended late fees. It has also expanded its eligibility for discounts on rates — a family of two adults and two kids making less than $4,400 a month qualify, for example.
“Because of the impact that this pandemic is having on our community, we want to ensure that our most vulnerable customers have access to power during these times,” then-CEO and general manager Arlen Orchard said in a May statement last year extending the suspension through January 4.
The suspension on disconnecting power for non-payment has been extended through the end of this year, with the utility encouraging customers to make payment arrangements or ask about discount rates. For residents like Wall, having power particularly through the sweltering summer heat was a “lifesaver.”
In 2022, however, thousands will be faced with the prospect of paying past bills that they may not be able to afford. Even before the economic turmoil spurred by the pandemic, energy bills can often be a heavy burden on low-income homes, eating a large chunk of their income.
A May 2021 report from UCLA researchers on unpaid residential water and electric bills in Los Angeles found that utility debt is unevenly distributed, with Black, Latinx, and low-income neighborhoods facing the greatest utility debt burden.
To help reduce the debt burden, the state Legislature this year created a new financial assistance program with federal COVID-19 relief funds. The California Arrearage Payment Program includes nearly $1 billion in funding available to utility companies to apply for and cover unpaid energy debts owed by customers.
Designed to help people with debt incurred between March 2020 and June 2021, nearly $300 million will be available to publicly owned utilities like SMUD.
The California Department of Community Services and Development, which oversees the program, is still surveying utility companies to gauge how much to allocate to each utility. But SMUD has already submitted an initial application to the program, and expects to receive funding in the next few months to apply directly to customer bills.
Active residential customers who may have their power shutoff because of unpaid bills will be prioritized first, followed by active and inactive residential customers with delinquent balances, and commercial customers with unpaid bills. The program means potentially thousands of SMUD customers seeing their unpaid bill significantly reduced, if not all-together erased.
SMUD anticipates restarting its formal collections process in 2022 “after we have received and applied funds from the CAPP program and any other funding sources to our customers’ accounts,” Davidson said in a statement, while signing up residents for rate discounts and flexible longterm payment plans.
“We will also continue to monitor the pandemic and the related financial impacts and continue to act in the best interests of our customers and community,” she said in a statement.
This story was originally published September 13, 2021 at 10:15 AM.