Vol. 8: Issue 4 | April 2020
As the economic toll from the national coronavirus response comes into focus, states and utilities are working to ensure that no one loses access to essential energy and water services due to financial hardship. So far, unemployment figures have risen into the tens of millions, and states are trying to figure out how to soften the blow. One area of focus has been to help people who are suddenly struggling to pay monthly bills. Of the 22 state legislatures to pass coronavirus-related supplemental spending bills, at least four—Florida, Georgia, Kansas and Massachusetts—specifically set aside funding to help low-income families cover energy bills. States have also been working to ensure no one loses vital services due to the pandemic. More than 40 states and the District of Columbia have moved to suspend utility service disconnections for nonpayment during the coronavirus response—either through legislation, executive order or at the direction of the state utility commission. At least 10 states and the District of Columbia have introduced legislation to this effect, with Alaska, Maine and D.C. successfully passing measures. In most cases, these would temporarily limit or prohibit utility disconnections for nonpayment, restrict late payment fees or require customers to negotiate a repayment plan with the utility. Alaska S.B. 241 (enacted) requires customers to provide the utility with a signed statement of financial hardship and to negotiate a deferred payment plan. In the event that a customer is unable to fully repay their bills, the new law establishes a legislative backstop that allows the recovery of costs through rate increases. It’s unclear how substantial the losses due to nonpayment will ultimately be for utilities, but this will certainly be an issue for states to address as the country emerges from the crisis.
According to the National Governors Association, nearly every U.S. state and territory has prohibited “non-essential” businesses or services from operating during the COVID-19 national response, with the vast majority of these actions carried out through executive order. However, what constitutes an “essential” service can vary depending on which state you’re in. As of mid-April, only 26 states and the U.S. Virgin Islands explicitly include the energy sector in their list of essential businesses, while even fewer include essential business supply chains. While at least 16 states incorporated the U.S. Department of Homeland Security’s guidelines defining essential infrastructure workers, the lack of cohesion has caused some concern within the energy sector. Electric and natural gas utilities rely on freedom of movement between communities—either to address service issues or to respond quickly to emergencies—and these varying definitions could slow down necessary responses. In response, trade associations and their government partners have called for states to list the energy sector as essential—and to offer critical workers priority testing and access to protective equipment. So far, only Minnesota has addressed the “essential worker” issue through legislation. H.B. 4531 is a comprehensive coronavirus response package that includes supplemental appropriations and leniency in state and local spending. The bill also defines “critical infrastructure” and “essential worker” to include electricity, petroleum, and natural and propane gas and establishes incentives for childcare facilities that prioritize service for the families of essential workers.
The past several years in South Carolina politics have been dominated by the fallout from a failed project building two new nuclear reactors at the state’s V.C. Summer power plant. The project failed to meet cost projections and timelines, leaving the two utilities invested in the buildout and their customers on the hook for billions of dollars. Complicating matters, one of those utilities, Santee Cooper, is state-owned and as the year began, the legislature was considering whether to sell or reform the utility—a decision that was never made due to the coronavirus. Now Santee Cooper has proven to be an obstacle in the state’s coronavirus response plan. The House approved $200 million in emergency spending to combat the coronavirus, along with a section that would have prevented Santee Cooper from entering into contracts longer than a year. However, the Senate didn’t like those restrictions, fearing they would have hamstrung the utility in a way that could compromise service. By the time the Senate voted down the bill, House members had already left the Capitol. The state is now operating without a budget and a shutdown looming on July 1, means that one of the chambers will have to return before the end of June to pass a bill that allows the state to continue operating without a budget.
While some utilities have instituted work-from-home policies to protect its workers where possible, many utility employees still need to be present to operate and maintain the energy system, which could expose them to the coronavirus. To protect this critical workforce, utilities have tried a number of approaches, including temperature screening, personal sanitizing and social distancing practices. One utility, ConEd, has also paused the rollout of smart meter programs to limit the amount of interaction between its employees and the public. PG&E has also taken a variety of steps to keep the Diablo Canyon nuclear power plant staffed and operating safely during the pandemic. New York has gone further than most to protect the grid and its workers, with the NY-ISO asking over 36 critical workers to live full-time at the two control centers that operate the state’s power grid. In the event that both control rooms were to become infected at the same time, local utilities could step in to operate the grid—an action that is unprecedented.
As states move to prevent utility shutoffs and other measures that affect utility operations during COVID-19, regulators are increasingly focused on how such measures will impact utilities financially. Regulators in a handful of states including Texas, Illinois, Connecticut and Wisconsin are looking into how COVID will affect utility costs. In Wisconsin, the Public Service Commission (PSC) is investigating the costs incurred from COVID-19 action taken in response to a state executive order that authorizes utilities to waive late fees and refrain from power shutoffs. A major question before regulators is whether utilities may recover costs associated with suspending shutoffs and waiving fees. The PSC is looking to utilities to demonstrate what costs they've already incurred as a result of implementing these measures as well as projected costs and how the utilities could potentially be reimbursed.
Groups representing distributed energy resources (DERs) in Hawaii are pushing to have the Public Utilities Commission (PUC) streamline the interconnection process to bolster economic recovery during COVID-19. Some workers in Hawaii’s rooftop solar industry have been furloughed or laid off due as COVID-related social distancing and stay-at-home orders have caused installations to drop off. In addition to creating jobs, streamlining the interconnection process would improve resilience and allow customers to achieve energy savings sooner as demand shifts toward residential use.
Rate cases in several states are on pause as utilities begin to grapple with the potential economic impacts of COVID-19. South Carolina’s Dominion Energy has requested to delay its rate increases with utility regulators in a number of other states, including New York, postponing rate cases. A potential motivating factor for some utilities in delaying rate cases is the potential heightened scrutiny over cost increases during the pandemic. While analysts are projecting utilities will take a financial hit in the short term, the extent remains unknown. Several New York utilities have also delayed their bidding process for procuring energy storage resources. Storage project approvals for at least four New York utilities (National Grid, NYSEG, RG&E and Central Hudson) will be delayed by a month until May 15. Utilities had initially planned to give notice to project bidders by April 15.
Congress passed the Coronavirus Aid, Relief and Economic Security (CARES) Act in March to provide around $2 trillion in stimulus funding to counter the harmful effects of the national COVID-19 response. The package sets aside $150 billion for state, local, territorial and tribal governments. The Coronavirus Relief Fund will be distributed based on population, with 45% of a state’s funds set aside for local governments and no state receiving less than $1.25 billion. Another pot of $45 billion will be used for the immediate needs of states, tribal, territorial and local governments. (You can read NCSL’s detailed analysis here.) In terms of the energy sector, the bill provides $900 million for the Low-Income Home Energy Assistance Program, which helps manage the energy needs of low-income families. Meanwhile, the U.S. Department of Energy will receive $28 million and the U.S. Nuclear Regulatory Commission will receive $3.3 million to respond to the crisis. Nearly $100 million has been allocated for the DOE’s Office of Science and its national laboratories to support research into therapies and vaccines related to the fight against COVID-19. DOE is offering priority access to its supercomputing capabilities through its COVID-19 High-Performance Computing Consortium.
Much as the energy sector has shifted operations to protect its workforce and ensure service continuity, federal regulators have eased up on compliance requirements in a number of ways. Most of the regulatory response has been to suspend certain operator certification or training requirements that might inhibit full staffing and jeopardize system operations. The Federal Energy Regulatory Commission (FERC) and North American Electric Reliability Corp. (NERC), which together regulate bulk power system reliability, eased personnel certification requirements, certain reliability standard requirements and all on-site audits through July. Additionally, FERC recently granted a request from NERC to postpone implementing cybersecurity and reliability standards due to COVID-19.
The Nuclear Regulatory Commission also granted plants leniency in deferring plant maintenance, repairs and inspections as worker availability is limited, and has allowed greater flexibility in the hours employees can work. The U.S. Environmental Protection Agency (EPA) relaxed some inspections and enforcement, in addition to establishing compliance flexibility for power plants and other regulated entities. The EPA has also relaxed some emissions regulations, saying that companies unable to get outside contractors during the pandemic to verify the accuracy of air quality monitoring would be granted delays in certain emissions testing, while also granting lower emissions standards to four coal-fired power plants in Pennsylvania and West Virginia in a separate ruling. The U.S. Department of Transportation (DOT) has also been proactive to keep vital services moving. The DOT’s Pipelines and Hazardous Materials Safety Administration eased training and qualification requirements to help pipelines continue operating with reduced staff, while its Federal Motor Carrier Safety Administration issued a national transportation emergency declaration that offers hours-of-service waivers to commercial vehicle drivers participating directly in COVID-19 relief efforts.
In addition to the enforcement relaxation described above, the U.S. EPA is extending the deadline for facilities to report their greenhouse gas emissions to May 1. The previous reporting deadline was March 31 but was extended in response to COVID-19. Over 8,000 facilities are required to report their emissions to EPA and the data is critical to the agency’s efforts to publish its annual inventory of greenhouse gas emissions and sinks. Some are concerned that delayed or omitted 2019 GHG data reporting could impact future inventories and the United States’ ability to meet its reporting obligations under the United Nations Framework Convention on Climate Change. The agency recently released its final 2020 report covering emissions from 1990-2018. The report shows that 2018 greenhouse gas emissions levels were 2.9% higher than they were in 2017 and that transportation is still the leading source of U.S. climate pollution, followed by the power and industrial sectors.
NCSL hosted a webinar on April 7 that examined the energy sector’s preparedness and response to COVID-19. View the recording and slides from the webinar that discusses how the energy sector is responding to the coronavirus, the biggest challenges remaining, and the role that states play in preparing for and facilitating this vital work. To view other state activity related to COVID-19, check out NCSL’s coronavirus resources for states webpage.
As we all navigate the impacts of COVID-19 during this unprecedented time, NCSL’s Energy Program has put together several energy-related resources developed in response to the current public health crisis.
See the resources below for ways in which the energy sector is responding to COVID-19: