Gulf Gets Go-Ahead on Pandemic Costs

Posted By: Garnie Holmes Legislative/Regulatory,

Gulf PowerBy Jim Saunders

State regulators Tuesday approved a proposal that could lead to Gulf Power Co. passing along coronavirus-related costs to customers, despite arguments that the Northwest Florida utility should be responsible for its expenses in trying to prevent the spread of the disease.
The decision by the Florida Public Service Commission was an initial step that allows Gulf to start an accounting process for costs of safety-related measures and bad debt from customers not paying bills during the pandemic. Gulf in the future could return to the commission to seek approval to recoup the costs from customers.

In supporting the proposal, commissioners Julie Brown and Donald Polmann pointed to the unique situation with the pandemic, which has caused businesses to close, residents to lose jobs and Gulf to have to take steps to protect its workers from the virus. Polmann said commissioners should take a “broad view,” with the utility able to present what it sees as pandemic-related costs.

“With the pandemic’s uncertainty, Gulf anticipates its COVID-19 expenses will continue to increase due to higher write-offs for uncollectible accounts --- the same scenario many utilities are facing --- as well as safety-related costs,” commission Chairman Gary Clark said in a statement after the decision. “All these costs will now be thoroughly tracked, including Gulf’s efforts to minimize costs, for commission review before any potential future recovery is authorized.”

But Commissioner Art Graham argued that the process should be limited to the utility’s bad-debt costs. Graham objected to Gulf using the process for safety-related costs, which he said many employers --- including the Public Service Commission --- face during the pandemic.

Graham, the lone dissenting vote Tuesday, described the safety-related costs as “just part of doing business.”
Gulf, the largest utility in Northwest Florida, said in a May filing that it received about $6 million less in customer bill payments in April than it ordinarily would have collected during the month. About $2.1 million was considered bad debt, up from the historical average for April of about $300,000.

Also, the filing said Gulf expects to spend millions of dollar this year for safety-related measures, including monitoring the health and temperatures of employees and contractors at power plants and other facilities, testing for the virus and antibodies and buying personal-protective equipment such as masks and gloves.

Gulf, like other utilities in the state and country, suspended electric-service disconnections in March for customers who did not pay their bills.

Responding to questions from Clark, company attorney Russell Badders estimated Tuesday that 15 to 20 percent of customer bills have past-due amounts. He said the utility uses strategies such as payment plans to work with customers who owe money, though it expects to resume disconnections in August.

The state Office of Public Counsel, which represents consumers in utility issues, argued against the Gulf proposal Tuesday and said customers shouldn’t be responsible for potentially picking up all of the utility’s pandemic-related costs.

Associate Public Counsel Stephanie Morse pointed, in part, to Gulf’s profitability, which is commonly measured through what is known as a return on equity. She said Gulf has maintained a 10.29 percent return on equity, which is within an allowable range set by the commission.

Article reposted with permission from The News Service of Florida.