California regulators wrestle with rising arrearages; pilots tested to limit disconnections
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Summary
California Public Utilities Commission staff outlined growing arrearages following the pandemic, ongoing rulemakings on disconnections and multiple pilots — including arrearage forgiveness and percent-of-income programs — aimed at limiting shutoffs while addressing utility balance-sheet concerns.
California Public Utilities Commission staff presented data and a policy update on affordability, arrearages and pilots to reduce disconnections.
"Year-end arrearages across the four major investor-owned utilities were around $2 billion as of December 2024," Paul Phillip, who oversees electric rate design in the CPUC Energy Division, said during the convening. He described rising arrearages and the tension regulators face between reducing disconnections and keeping utility balance sheets stable.
CPUC activity and pilots: the commission has pursued a multi-year rulemaking and launched several pilot programs. Of particular note: - AMP (Arrearage Management Program): a debt-forgiveness payment-plan pilot in which participating customers receive a portion of arrears forgiven after consistent on-time payments. CPUC staff described mixed results and historically high involuntary removals from AMP when customers miss consecutive payments. - Percent-of-income pilot (PIPP-style): a recent pilot caps a target household energy burden near 4% of income (roughly 3% for electricity, 1% for gas), with income-based monthly payment structures and debt relief components. CPUC staff said an independent evaluation is underway. - Community-based organization case management: pilots are testing use of CBOs to provide case management and outreach in high-need ZIP codes to increase participation and reduce involuntary removals.
Context and trade-offs: Phillip noted the state’s affordability landscape is uneven — large coastal wealth disparities coexist with regions (for example, the Central Valley and certain inland areas) where many customers are income-challenged. CARE (California Alternate Rates for Energy) covers a substantial eligible population and provides discounts (staff cited approximately 35% off electric bills and 20% off gas bills for eligible customers). The CPUC is balancing programs that reduce customer bills with the costs of socializing unpaid debt across the broader customer base.
Ending: CPUC staff said the commission will continue evaluating pilot results, weighing scaling options and refining outreach/case-management approaches to reduce disconnections while limiting rate impacts from rising uncollectibles.
