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COVID-19 Alberta Government Issues Direction for 90-day Deferred Payment of Utility Accounts

24-Mar-20

by the McLennan Ross Energy, Environmental & Regulatory Team

Last Wednesday, the Alberta Government directed that Alberta utility consumers suffering financial pressures arising from the COVID-19 pandemic be given the option to defer payment of their utility accounts for up to 90 days, with the potential for further extension. The Alberta Government website notes this “utility payment holiday” will allow residential, farm, and small commercial customers to defer payment of their utility bill for the next 90 days “to ensure no one will be cut off from these vital services during this time of crisis”. The Government further notes this utility payment deferral will cover electricity and natural gas, regardless of the utility service provider.

The Alberta Utilities Commission (AUC) has issued Bulletin 2020-08 in support of the Government’s position and indicated in a concurrent announcement that it will lead and coordinate the overall approach to the optional payment deferral program and related efforts required so that customers can be assured of equal treatment. The AUC regulates Alberta’s investor-owned natural gas, electric and water utilities, certain municipally owned electric utilities and regulated retailers of electricity and natural gas and is responsible for ensuring that customers receive safe and reliable service at just and reasonable rates.

The AUC has since held meetings with stakeholders, including utilities, rural electrification associations, gas co-operatives and energy retailers, to discuss the details on the regulatory treatment of the deferred account balances and carrying costs arising from the deferred collection of accounts. Following this meeting, the Government issued a letter to stakeholders recognizing that the utility payment deferral program may create challenges for Alberta’s utility providers, also impacted by the COVID-19 pandemic, and that it would work together with the AUC and utility companies to understand the potential impacts and how best to operationalize the utility payment deferral program.

It is expected that this process will require the AUC to clarify and possibly adjust the current regulatory framework to adapt to the program. Utility companies typically apply to the AUC for approvals to customer rates to permit the utility to provide safe and reliable service to customers and also recover their prudent forecast expenses and earn a reasonable return to their shareholders. It is currently unclear the extent to which this framework will be impacted by the payment deferral plan. There are also questions around whether utility companies will be provided with compensation for the loss of revenue suffered as a result of the deferral program. The Government has, however, indicated that consumers will still be required to pay back their deferred utilities within a reasonable time period, the details of which are still being worked out.

At this time, the Government has provided the following details on the deferral program:

  • The program is targeted to Albertans experiencing financial hardship as a direct result of COVID-19, which includes individuals who have lost their employment or had to leave work to take care of an ill family member;
  • Residential, farm, and small commercial customers, who are unable to pay their bill when due, will be provided the option to defer their utility bills for up to 90 days; during this time, service will not be terminated for non-payment;
  • Eligible customers should call their natural gas or electricity provider directly to arrange for a deferral;
  • The program is designed to provide temporary financial relief and consumers will still be responsible for paying for their deferred utility accounts within a reasonable time period following the expiry of the program; and
  • The utility payment deferral program came into effect on March 18, 2020 will run through June 18, 2020.

For utility customers that do not qualify for the deferral program, separate arrangements will have to be made with utility providers to deal with payment deferrals and revised payments terms.

As with other responses of governments and authorities to COVID-19, the deferred payment program, and its effects on stakeholders in the industry working to keep the lights on and the furnaces working, will remain dynamic and fluid.

Should you have any questions regarding the information in this article, please contact Doug Evanchuk.

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