By: Bickey Rimal, Senior Project Manager

The most recent electricity consumption data from the U.S. Energy Information Administration (“EIA”) reveals that the COVID-19 pandemic is significantly impacting electric utilities throughout the country. A continuing decline in sales during the peak summer period coupled with misaligned rate design and structures does not bode well for the utilities. The most adversely impacted utilities are those that:

• Possess rate structures that recover a disproportionate share of fixed costs through volumetric rates;
• Lack rate adjustment/revenue stabilization mechanisms (e.g., revenue decoupling, formula rate plans, multi-year rate plans, etc.); and/or
• Have a higher proportion of sales from the commercial and industrial customers relative to the residential customers.