Finance Fundamentals are Key to COVID Recovery

By Dawn Lund
Posted in Insights

This article first appeared June 25, 2020 on Hometown Connections


Current financial data on the impact of COVID-19 on community-owned utilities reveals several national trends and the need to factor in case-by-case issues during the analysis. Above all, the data makes clear that the best strategy for a strong recovery is following the fundamentals of utility financial management: develop key financial targets, make a plan to meet those targets, and stay true to the plan.

Revenues During COVID-19

Since the beginning of the COVID crisis, there has been a decrease in small commercial sales across the country while industrial sales are varying widely. In general, decreases in industrial and commercial sales are not being offset by increases in residential sales. Utilities that derive most of their revenues from residential customers are likely to weather the pandemic more easily.

A large number of utilities are experiencing an increase in customer delinquencies, reducing line extension fees, delaying capital investments, and postponing rate increases. To manage expenses, some utilities are alternating employee schedules, furloughing staff, and restricting travel and training.

The data is beginning to show that the ultimate financial impact of COVID-19 may not be as deep as it may have appeared during the first few months of the disruption. The chart below indicates the possible COVID effect on sales for one public power utility.

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