Starting in December, Burbank Water and Power could once again shut off power or issue late fees to medium and large businesses that are behind on their bills from the utility.
BWP representatives told City Council members on Tuesday that residential and small commercial customers would continue to have late fees and shutoffs suspended. But having those options reinstated for other entities, representatives added, will help the BWP negotiate repayment schedules with such customers.
According to a BWP official, the agency will begin notifying substantial commercial customers of the revised policy on Dec. 1. If a customer does not agree to a payment plan, the utility could cut off power less than four weeks later.
“By no means are we planning on December 1st, on day one, to shut off these customers that have outstanding debt,” Daniel Tunnicliff, BWP assistant general manager, told the council. “We are looking for authorization to use the leverage of disconnections and late fees to encourage customers to enter into payment arrangements.”
The council voted unanimously to approve the resumption of disconnections and late fees. The BWP board had previously voted 6-1 to approve the move and bring it to the panel.
On April 21, the council authorized suspending disconnections and late fees to ease the financial burden of utility payments on a populace grappling with the COVID-19 pandemic, though the policy still requires customers to eventually pay their bills. BWP also recently launched a $2 million program to provide bill credits to unemployed residents.
However, Tunnicliff pointed out, there was a total of $4.9 million in utility payments more than 30 days past due in October, compared to less than $1 million in the beginning of March. About $2 million in past-due payments are attributable to commercial customers designated under the revised policy.
For every $1 million in “uncollectable” debt, such as is created when a business declares bankruptcy, BWP makes a one-time 0.65% electricity rate increase to make up for the lost revenue, according to Tunnicliff.
He explained that the reinstatement of shutoffs and late fees would affect commercial customers in three categories: “medium,” such as large restaurants and banks; “large,” including grocery stores and large office buildings; and “extra large,” involving hospitals and large campus studios. Only 3% of BWP’s customers are in these categories, but they produce about 64% of electricity-use revenue.
In early October, Tunnicliff added, eight “extra large” customers were responsible for almost $1 million in uncollected revenue, though BWP was able to round up the money through outreach. But Tunnicliff warned that only one commercial customer has entered into a payment arrangement since the start of the pandemic.
“We believe that without disconnection and late fees in place, BWP will not have the leverage necessary to engage with customers to establish payment arrangements if they have difficulty paying their bills,” he said.
The City Council quickly approved the revised policy, with members Jess Talamantes and Emily Gabel-Luddy leading the brief discussion that preceded the vote. Gabel-Luddy also expressed concern that some customers are refusing to pay utility charges when they have the ability to.
“For folks that are having a hard time, we want to work with them,” Gabel-Luddy said. “But for folks who are basically taking advantage of the circumstances, we need to have tools so that there’s an equitable approach to the use of power in the city.”