Electric Utilities May Need Policy Help For COVID-19 Losses

Partners Tara Kaushik, Todd Kimbrough and Dane McKaughan co-wrote an article published in Law360 describing how the COVID-19 pandemic has affected electric utilities and offering possible solutions to recover lost revenue. As businesses close and people work from home, electric utilities face dramatic decreases in commercial and industrial usage, a major source of revenue. Although stay-at-home orders may increase residential usage, it is not enough to bridge the gap. More significantly, the decreased revenue affects regulated utilities' ability to set rates and budgets. As the authors explain, because these numbers are often based on a typical operating year — and 2020 has been anything but that — utilities are unable to recover lost revenue through a typical rate case analysis. They go on to discuss several possible solutions and recommend that utilities and regulators work proactively to address these issues.

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