Jared. S. des Rosiers is the partner in charge of Pierce Atwood LLP’s Energy Practice group and chair of the firm’s Energy Infrastructure group. Kayla Grant is an associate in the firm’s Energy Practice Group. Jared and Kayla practice in Pierce Atwood’s Portland, Maine office and regularly represent utility clients before state commissions and FERC.
COVID-19 has created unforeseeable changes in the way electric utilities operate and will ultimately affect their abilities to recover costs incurred as a result of the pandemic. COVID-19 has increased utility costs and reduced revenue.
Many jurisdictions have suggested utilities begin tracking COVID-19 related costs and revenue impacts. Some have allowed for deferral of those costs through the creation of a regulatory asset.
However, for states that have allowed deferral or regulatory asset treatment, many regulators have yet to address the time period of cost recovery, what costs can be included, the availability of carrying charges and/or the ability to recover lost revenues, and what mechanism is appropriate to collect approved costs from customers.
These variables create risk of under-recovery for utilities. By implementing the following practices, utilities can increase the likelihood that COVID-19 related costs will be recovered in the future.
Communicate Frequently and Be Proactive
While many jurisdictions have implemented some guidance on cost recovery issues associated with COVID-19, some jurisdictions have yet to take action.