This article has been updated.
At the onset of the coronavirus pandemic in March 2020, CPS Energy stopped disconnecting customers behind on their bills. In an effort to balance its books, officials announced Monday that the utility will resume cutting service to delinquent households starting in October.
The decision to resume disconnections was part of a discussion over the utility’s budget, which was delayed this year because of the coronavirus pandemic and the February winter storm. While no action was taken to formally approve a rate increase on Monday, budget projections for the next year and a half included a provisional rate increase. In May, CPS Energy said customers could see their monthly bills go up between 6.5% and 9.5% as soon as this fall.
Trustees voted 4-1 Monday to approve a $2.7 billion budget for fiscal year 2022; Trustee Janie Gonzalez was the lone dissenting vote. CPS Energy’s unusual fiscal year runs from Feb. 1 to Jan. 31, with the board typically approving the utility’s budget sometime before the end of the fiscal year.
Over the past year, CPS Energy has seen a growing gap between its incoming revenue and its operations, Vice President of Accounting Shannon Albert said. As a business that runs on a cost-recovery model, meaning it must recover the costs of its expenses, CPS Energy faces challenges drawing up a budget this year, she said.
Since suspending disconnections, CPS Energy has had to increasingly fund its operations with debt, she said; according to the approved budget for this fiscal year, CPS Energy expects to fund operations using almost 65% debt rather than its usual 50%, Albert said. The utility has projected a net loss of $34.4 million this year. Albert added that the utility will be able to have a better estimate of its bottom line once disconnections are resumed.
“We won’t be able to determine if we have a larger problem or if we have been overly conservative in estimating what our bad debt is until we start lifting those disconnects,” Albert said.
CPS Energy will continue to try to work with customers to help them avoid getting disconnected, CEO Paula Gold-Williams said. The utility is actively working with partners at the city and county to identify federal funds that can help customers in need, said Vice President of Customer Service DeAnna Hardwick. So far, CPS Energy officials have identified almost $30 million in assistance funding, she said.
Today, CPS Energy has more than 150,000 residential customers and 13,000 commercial customers whose accounts are past due or eligible for disconnection, Hardwick said. Of the residential customers, about 83,000 are more than 30 days past due, and about 70,000 are currently eligible for disconnection, she said. In total, residential customers owe the utility more than $92.5 million, and commercial customers owe more than $18.3 million, according to Hardwick’s presentation.
The average customer with a past-due balance owes $600, Hardwick said, which CPS Energy knows is a substantial amount for many local families, she added.
“Really our main focus is on the assistance options and programs that are available [that we want] to connect our customers with, whether it be our programs, or programs with the city or the county, or identifying the right federal funding,” Hardwick said.
Customers who have reached out to CPS Energy about their outstanding bills won’t face the possibility of disconnection until Nov. 1, and customers who are enrolled in an assistance plan won’t face the possibility until the New Year, Hardwick said.
That timeline looks a little different for CPS Energy’s commercial customers. Large commercial customers that are heavy electricity users have until Sept. 1 before disconnections resume, and small or midsize businesses have until Oct. 1, she said.
“We really just want customers to know that their account does not have to be disconnected,” Hardwick said. “All they have to do is find a way to connect with us.”
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