HomeMy WebLinkAboutStaff Report 13865
City of Palo Alto (ID # 13865)
City Council Staff Report
Meeting Date: 1/10/2022 Report Type: Consent Calendar
City of Palo Alto Page 1
Title: Adoption of Two Resolutions Authorizing Participation in the California
Arrearage Payment Program (CAPP) for Gas and Electric Utilities, and the
California Water and Wastewater Arrearage Payment Program (CWWAPP),
Including Acceptance of Funds and Crediting Eligible Utility Accounts; and
Approval of Amendments to the Fiscal Year 2022 Budget Appropriation
Ordinance for the Electric, Gas, and Water Funds to Account for CWWAPP
and CAPP Funds
From: City Manager
Lead Department: Utilities
Recommended Motion
Staff recommends that the City Council:
1. Adopt a Resolution authorizing participation in the California Arrearage Payment
Program (CAPP) for gas and electric utilities, including the acceptance of funds in the
anticipated amount of $735,969, and upon receipt of funds the application of credits to
delinquent utility accounts; and
2. Adopt a Resolution authorizing participation in the California Water and Wastewater
Arrearage Payment Program (CWWAPP), including the acceptance of funds in the
amount of $274,857, and upon receipt of funds the application of credits to delinquent
utility accounts; and
3. Approve amendments to the Fiscal Year 2022 Budget Appropriation Ordinance (requires
a majority vote) for the
a. Electric Fund, by:
i. Increasing the Revenue from the Federal Government by $486,876;
ii. Decreasing Utility Sales Revenue by $486,876;
b. Gas Fund, by:
i. Increasing the Revenue from the Federal Government by $249,093;
ii. Decreasing Utility Sales Revenue by $249,093;
c. Water Fund, by:
i. Increasing the Revenue from the Federal Government by $274,857; and
ii. Decreasing Utility Sales Revenue by $274,857.
City of Palo Alto Page 2
Executive Summary
In March 2020, the State of California implemented a moratorium on electric, natural gas, and
water utility disconnections as a result of the COVID-19 pandemic. To provide utility consumers
financial relief, the State developed two financial assistance programs to pay for delinquent
utility balances of 60 days or more incurred during the COVID-19 pandemic bill relief period,
from March 4, 2020 through June 15, 2021.
The City of Palo Alto Utilities (CPAU) applied to the California Arrearage Payment Program
(CAPP) for electric and gas utilities and California Water and Wastewater Arrearage Payment
Program (CWWAPP) to request funding to assist utility customers in repaying past due balances
for electric, gas and water service. The City has been granted $247,857 from CWWAPP and
anticipates a grant of $735,969 from CAPP. Program funds will be distributed by January 31,
2022 and must be promptly applied to customer accounts. Funding for these programs is
provided through Federal COVID-19 Relief funding. The State programs are distributing the
funds on behalf of the federal government.
Background
The California Arrearage Payment Program (CAPP) will offer financial assistance for California
energy utility customers to help reduce past due energy bill balances that increased during the
COVID-19 pandemic. Established by Governor Newsom and the California Legislature in the
2021-22 State Budget and administered by the Department of Community Services and
Development (CSD), CAPP dedicates $1 billion in federal American Rescue Plan Act funding to
address Californian's energy debts. The program will provide financial assistance to residential
and commercial customers that have delinquent utility balances of 60 days or more between
March 4, 2020 through June 15, 2021.
The California Water and Wastewater Arrearage Payment Program (CWWAPP) is funded
through $985 million in federal funding allocated by the state legislature. The State Water
Board was directed by the state legislature to administer CWWAPP, allocating funds to provide
relief to community water and wastewater systems for unpaid bills related to the pandemic.
The funding will cover water and wastewater arrearages from residential and commercial
customers accrued between March 4, 2020 through June 15, 2021.
The Program will initially prioritize drinking water residential and commercial arrearages.
Funding to community water systems, like CPAU, will be disbursed through January 31, 2022. If
the Program still has funding available, it will extend to wastewater residential and commercial
arrearages by February 2022.
Due to the COVID-19 pandemic, CPAU has seen a dramatic increase in arrears. Prior to the
pandemic, the total arrearage greater than 60 days was below $75,000. As of November 23,
2021, total utility customer arrearage greater than 60 days is $2,707,888 for all utilities (Table
1). Additional funding from the CAPP and CWWAPP programs will assist customers in reducing
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these past due balances. For the CAPP and CWWAPP pandemic relief period, covering March 4,
2020 through June 15, 2021, the total arrearage balance is $2,030,948 (Table 2).
Table 1: Utility Arrearage Balance Greater than 60 days as of November 23, 2021
Utility 60 - 89 days 90 - 180 days > 180 days Grand Total
Electric 183,445 221,614 636,196 1,041,254
Gas 44,307 92,635 313,666 450,609
Water 72,203 96,365 250,465 419,033
Sewer 33,854 61,642 223,431 318,927
Fiber 26,511 (92,317) 114,906 49,100
Refuse 40,103 79,439 248,872 368,415
Storm 8,547 13,803 38,198 60,549
408,971 473,182 1,825,735 2,707,888
Table 2: Utility Arrearage Balance from March 4, 2020 through June 15, 2021
Utility 90 - 180 days > 180 days Grand Total
Electric 109,869 603,815 713,684
Gas 48,127 291,020 339,147
Water 39,005 237,954 276,959
Sewer 32,035 212,510 244,545
Fiber 29,031 114,906 143,937
Refuse 40,478 230,064 270,542
Storm 6,086 36,046 42,133
304,632 1,726,316 2,030,948
Discussion
California Arrearage Payment Program (CAPP)
CAPP benefits will be credited to customer accounts on a rolling and priority basis upon CPAU’s
approval for CAPP funding. There are four distinct phases of CAPP implementation that are
required for energy utilities participating in the program.
The four CAPP phases are as follows:
1. Survey – Utilities submit information to the state department of CSD regarding utility
arrearage amounts by customer type.
2. Application – Utilities that submitted a survey are eligible to submit an application for
funding request.
3. Benefit Delivery – Utilities that receive CAPP funds will be responsible for disbursing
benefits to eligible customers within 60 days of receiving CAPP funding; funds must be
fully disbursed by January 31, 2022.
4. Report – Utilities that receive CAPP funds will be responsible for submitting a report to
the state department of CSD on funds applied, schedule of accounts, and remittance
of unapplied funds within 6 months of receiving CAPP funding.
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Eligible Customers:
CPAU identified 873 residential accounts that have incurred past due balances of 60 days or
more totaling $443,107 during the period of March 4, 2020 through June 15, 2021. CPAU
identified 131 commercial accounts with past due balances of 60 days or more totaling
$292,861 during the same period.
Funding:
CAPP funding has allocated $298,546,750 to publicly owned electric and gas utilities and
electric cooperatives, and $694,953,250 to investor-owned utilities and community choice
aggregators. Based on the guidance from the state department of CSD, CPAU’s allocation is
anticipated to be $735,969.
If funding is insufficient to meet all electric customer debt, credits must be applied to eligible
customers’ past due balances according to the following prioritization:
1. Active residential customers with past due balances who are at risk of disconnection
due to nonpayment.
2. Active residential customers with past due balances.
3. Inactive residential customers with past due balances.
4. Commercial customers with past due balances.
Customer Protection:
As condition for applying for CAPP allocation from the state department of CSD, CPAU provided
the following customer protections:
• CPAU did not discontinue service due to nonpayment for customers with arrearages
accrued during the COVID-19 pandemic bill relief period while the state department of
CSD reviews and approves all pending CAPP applications.
• CPAU will waive any associated late fees and accrued interest for customers that are
awarded CAPP benefits.
• CPAU will not disconnect a CAPP recipient’s utility service, regardless of balance owed
after applying a CAPP benefit, for 90 days after a CAPP benefit is applied.
• CPAU will notify customers that receive a CAPP benefit and have a remaining balance
after that benefit is applied of the option to enter into an extended payment plan with
late fees and penalties waived.
California Water and Wastewater Arrearage Payment Program (CWWAPP)
The COVID-19 pandemic has made it difficult for many Californians to pay their bills due to job
loss and other hardships. As a result, systems that provide water services to customers have
been financially impacted. The State Water Board is administering the CWWAPP to provide
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community water systems with financial relief for unpaid water bill debt from their residential
and commercial customers.
CPAU applied for funding on behalf of residential and commercial water accounts that are 60
days or more behind on payments for debt accrued between March 4, 2020 and June 15, 2021.
CPAU will credit customers’ accounts using CWWAPP funds and notify them that their water bill
debt has been reduced. The program’s funds will apply to debt related to drinking water first.
Beginning in February 2022, the program’s funds will apply to wastewater debt. Similar to
CAPP, the customer water arrearage funding stage of CWWAPP has four phases.
Four CWWAPP Phases:
1. Water Survey – Utilities submit information to the State Water Board regarding water
utility arrearage amounts by customer type.
2. Water Application – Utilities that submitted a survey are eligible to submit an
application for funding request.
3. Water Benefit Delivery – Utilities that receive CAPP funds will be responsible for
disbursing benefits to eligible customers within 60 days of receiving CWWAPP funding.
Unused funds must be returned to the State Water Board.
4. Water Report – Utilities that receive CWWAPP funds are responsible for submitting a
report to the State Water Board on total funds applied, total number of accounts that
received the benefit, total number of customers that entered a payment arrangement
for remaining balances, total number of customers that did not enter a payment
arrangement for remaining balances, and any costs BWP incurred while administrating
CWWAPP.
Eligible Customers:
CPAU has identified 299 residential water accounts that have incurred past due balances of 60
days or more totaling $164,457 during the period March 4, 2020 through June 15, 2021. In
addition, there are 77 commercial water accounts with past due balances of 60 days or more
totaling $110,400 during the relief period.
Funding:
There is $985,000,000 allocated to publicly owned utilities for water and wastewater arrears.
CPAU requested $301,335 in customer water arrearage funding. Based on the guidance from
the State Water Board, CPAU’s eligible water debt of $274,857 will be funded. The State
Water Board will establish an assistance program no later than February 1, 2022 to address
wastewater arrearages.
Recommendation: Staff recommends that City Council approve the resolutions allowing CPAU
to accept both the CAPP and CWAPP funds and directly apply credits to utility customers
accounts affected by the pandemic.
Timeline
City of Palo Alto Page 6
Staff completed the grant applications by December 6, 2021. The City can anticipate receiving
approved CAPP and CWWAPP funds by January 31, 2022. Within 60 days of receiving the funds,
CPAU must distribute the funds to the eligible customer utility accounts. Any unused funds
must be returned to the funding agencies.
Resource Impact
The City will receive $274,857 from CWWAPP and $735,969 from CAPP, a total of $1,010,826,
to help reduce past utility bill balances during the COVID-19 pandemic relief period of March
4, 2020 through June 21, 2021. The breakdown of the total $1,010,826 by utility is as follows:
• $274,857 for Water,
• $486,876 for Electric, and
• $249,093 for Gas.
Funding will be recognized and appropriated in each utility respectively to offset utility
arrearage balance from FY 2020 and FY 2021 from customer accounts in arrears as a result of
impacts from the COVID-19 pandemic. All funds, from the State of California, originated from
Federal relief packages, and therefore will likely be treated as federal funding and subject to
the annual single audit.
The remaining balance greater than 90 days is approximately $1.0 million across the funds.
CPAU will notify customers that have remaining balances and offer an extended payment plan
with late fees and penalties waived. Funding to offset CPAU customer revenue in arrears was
not factored into the development of the FY2022 budget since the Utilities Department was
not notified of these programs until end of CY 2021. However, the Department did factor in
delinquent and unpaid bills in developing the utility rate forecasts for FY 2022. Although the
budgetary impact of the actions in this report is net zero, the funds will be positive because of
reducing outstanding aging debt balances.
Stakeholder Engagement
Utility customers will be notified of the credits from CAPP and CWWAPP by direct mail. CPAU
will offer payment arrangement plans for customers with remaining utility arrearage balances if
requested.
Environmental Review
Approval of this resolution does not meet the California Environmental Quality Act (CEQA)
definition of a project under Section 21065 of the Public Resources Code of the State of
California and CEQA Guidelines Section 15378(b)(4), therefore, an environmental assessment is
not required.
Attachments:
• Attachment A: Resolution California Arrearage Payment Program (CAPP)
• Attachment B: Resolution California Water and Wastewater Arrearage Payment
Program (CWWAPP)
*Not Yet Passed*
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Resolution No. ________
Resolution of the Council of the City of Palo Alto to Authorize
Participation in the California Arrearage Payment Program for Electric
and Gas Utilities
R E C I T A L S
A. The State Budget Act of 2021, as established by Assembly Bill No. 128 (Chapter 21,
Statutes of 2021) and as amended by Senate Bill No. 129 (Chapter 69, Statutes of 2021),
provided $993,500,000 to the State Department of Community Services and
Development (“Department”) to administer the California Arrearage Payment Program
(CAPP) to reduce delinquent electricity and natural gas utility balances for customers
experiencing financial hardships related to the economic impacts of the COVID-19
pandemic.
B. Funding for CAPP is payable from the State’s share of the federal Coronavirus Fiscal
Recovery Fund of 2021.
C. Assembly Bill No. 135 (Chapter 85, Statutes of 2021) formally established the CAPP
within the Department, enumerating the program’s requirements for utility
participation and setting aside $298,953,250 for financial assistance to customers of
local publicly owned electric and gas utilities.
D. A local publicly owned electric utility is considered a utility applicant under CAPP and
may apply to the department for CAPP funds for eligible customer accounts for past due
bills during the COVID-19 pandemic bill relief period.
E. Eligible customers are all residential and commercial customers. Past due bills mean any
customer utility bills that are 60 days or more past due and includes both active and
inactive accounts, as well as customer accounts that have payment plans or payment
arrangements. The COVID-19 pandemic bill relief period means the period starting
March 4, 2020 and ending June 15, 2021.
F. City of Palo Alto Utilities (CPAU) is a local publicly owned electric and gas utility with
eligible customer accounts with past due electric and gas bills during the COVID-19
pandemic bill relief period.
G. To receive CAPP funding on behalf of eligible customers, a utility applicant must
complete both a utility survey and application including submitting all necessary data
and information to support the utility applicant’s request for CAPP funding.
H. CPAU uploaded the completed Utility CAPP Survey to Department servers on September
9, 2021, supporting CPAU’s request for $1.13 million in customer electricity and natural
gas arrearage funding. The Department requested additional documentation on
December 16, 2021, which CPAU submitted on December 20, 2021.
*Not Yet Passed*
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I. Because total utility funding requests from across the state exceeded the Department’s
program budget, the Department is anticipated to grant 65% of CPAU’s requested
funds. Upon the Department’s receipt of CPAU’s additional documents, the Department
is anticipated to allocate to CPAU $735,969 of funding to apply to customer accounts,
with $486,876 applying to electric accounts and $249,093 applying to gas accounts.
J. CPAU is required to disburse funds as expeditiously as possible to utility applicants, but
no later than January 31, 2022.
K. Within 60 days of receiving CAPP funds, CPAU must issue CAPP Assistance benefits to
customers as bill credits to help address the eligible past due balance and must include a
statement that the credits are a result of California’s CAPP funding. Eligible CPAU
customers need not apply for the program.
L. Where CAPP funding is not sufficient to meet all need, CAPP requires CPAU to prioritize
the issuance of CAPP assistance in a particular order. Assistance must go first to active
residential customers who are past due and who, absent the CAPP assistance, might be
subject to service disconnection, consistent with current law, due to nonpayment of
balances incurred during the COVID-19 pandemic bill relief period. Second, assistance
must go to active residential customers with delinquent balances incurred during the
COVID-19 pandemic bill relief period. Assistance must then go to inactive residential
accounts with delinquent balances incurred during the COVID-19 pandemic bill relief
period. Last, assistance must go to commercial customers with delinquent balances
incurred during the COVID-19 pandemic bill relief period.
M. Assembly Bill No. 135 created customer protections to require a utility applicant to
notify customers of the option to enter into an extended payment plan with late fees
and penalties waived for any remaining balanced after CAPP funds are credited to the
customer’s account, to refrain from discontinuing service while CAPP applications are
pending, for 90 days after the CAPP benefit is applied to a customer account, and while
a customer remains current on a repayment plan, and to waive associated late fees and
accrued interest for customers awarded CAPP benefits.
NOW, THEREFORE, the Council of the City of Palo Alto RESOLVES as follows:
SECTION 1. The Council hereby approves CPAU’s participation in CAPP and
authorizes the Director of Utilities or his designee to execute program participation on behalf of
the City of Palo Alto.
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*Not Yet Passed*
140527 6055571
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SECTION 2. The Council finds that the adoption of this resolution does not meet
the definition of a project under Public Resources Code Section 21065, thus, no environmental
assessment under the California Environmental Quality Act is required.
INTRODUCED AND PASSED:
AYES:
NOES:
ABSENT:
ABSTENTIONS:
ATTEST:
__________________________ _____________________________
City Clerk Mayor
APPROVED AS TO FORM: APPROVED:
__________________________ _____________________________
Senior Assistant City Attorney City Manager
_____________________________
Director of Utilities
_____________________________
Director of Administrative Services
140527
Resolution No. ________
Resolution of the Council of the City of Palo Alto to Authorize
Participation in the California Water and Wastewater Arrearage
Payment Program
R E C I T A L S
A. The State Budget Act of 2021, as established by Assembly Bill No. 128 (Chapter 21,
Statutes of 2021) and as amended by Senate Bill No. 129 (Chapter 69, Statutes of 2021),
provided nearly $1 billion to the State Water Resources Control Board (“Board”) to
administer the California Water and Wastewater Arrearage Payment Program
(CWWAPP) to reduce delinquent water and wastewater balances for customers
experiencing financial hardships related to the economic impacts of the COVID-19
pandemic.
B. Funding for CWWAPP is payable from the State’s share of the federal Coronavirus Fiscal
Recovery Fund of 2021.
C. Assembly Bill 148 (Chapter 115, Statutes of 2021) formally established the CWWAPP
within the Board, enumerating the program’s requirements for community water
system participation. Participating community water systems must have accrued
residential and commercial customer arrearages.
D. A community water system is a public water system that serves at least 15 service
connections used by yearlong residents or regularly serves at least 25 yearlong residents
of the area served by the system.
E. Eligible customers are all residential and commercial customers. Past due bills mean any
customer utility bills that are 60 days or more past due and includes both active and
inactive accounts, as well as customer accounts that have payment plans or payment
arrangements. The COVID-19 pandemic bill relief period means the period starting
March 4, 2020 and ending June 15, 2021.
F. City of Palo Alto Utilities (CPAU) is a community water system that accrued residential
and commercial arrearages during the COVID-19 pandemic relief period. CPAU has
customers who have past due water bills during the COVID-19 pandemic.
G. To receive CWWAPP funding on behalf of eligible customers, a community water system
must complete both a survey and application including submitting all necessary data
and information to support the water system’s request for CWWAPP funding.
H. CPAU uploaded the completed Utility CWWAPP Survey to the Board’s servers on
September 10, 2021, requesting $301,335 in customer water arrearage funding. The
Board allocated CPAU $274,857 of program funding to apply to customer accounts.
140527
I. Within 60 days of receiving funds, CPAU must allocate payments as bill credits to
customers to help address past-due bills incurred during the COVID-19 pandemic bill
relief period and notify customers of the amounts credited to their accounts.
J. If there are insufficient CWWAPP funds to fulfill all applicants’ requests, the Board must
allocate funds on a proportional basis to each community water system applicant based
on reported arrearages and shortfalls.
K. If there are sufficient funds to reimburse the total amount of reported arrearages and
revenue shortfalls of community water systems, the Board shall establish a program for
funding wastewater treatment provider arrearages and shortfalls in accordance with the
remaining funds.
L. The Board must begin disbursing funds no later than November 1, 2021 and complete
distribution of funds by January 31, 2022; the wastewater service program must start
following substantial completion of the water service program and in no instance later
than February 1, 2022.
M. A community water system receiving assistance under CWWAPP may expend up to 3
percent, or up to one million dollars ($1,000,000), whichever amount is less, of that
assistance for costs incurred in applying for the assistance or complying with use and
reporting conditions of the assistance.
N. Assembly Bill 148 created customer protections that require CPAU to offer a payment
plan to affected customers and refrain from discontinuing service until (1) September
30, 2021 or (2) for a customer that has been offered an opportunity to participate in a
payment plan, the date the customer misses the enrollment deadline for, or defaults on,
the payment plan, whichever is later.
NOW, THEREFORE, the Council of the City of Palo Alto RESOLVES as follows:
SECTION 1. The Council hereby approves CPAU’s participation in CWWAPP and
authorizes the Director of Utilities or his designee to execute program participation on behalf of
the City of Palo Alto.
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140527
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SECTION 2. The Council finds that the adoption of this resolution does not meet
the definition of a project under Public Resources Code Section 21065, thus, no environmental
assessment under the California Environmental Quality Act is required.
INTRODUCED AND PASSED:
AYES:
NOES:
ABSENT:
ABSTENTIONS:
ATTEST:
__________________________ _____________________________
City Clerk Mayor
APPROVED AS TO FORM: APPROVED:
__________________________ _____________________________
Assistant City Attorney City Manager
_____________________________
Director of Utilities
_____________________________
Director of Administrative Services