The following is a contributed article by John Howat, Senior Energy Analyst at the National Consumer Law Center.
If there was ever a time to appreciate that electricity service is not a "luxury item," this is it. Large utilities across the nation and half of all states have taken steps to prevent power shutoffs for customers who fall behind on their bills during the coronavirus crisis. It's a recognition that energy is essential to every household's health and safety, as well as to broader community resilience.
But what happens when the bans on utility disconnections end? Many are voluntary and scheduled to end this month, including in New York and New Jersey.
With at least 26 million thrown out of work in the past month, the current economic crisis reveals a wide population vulnerable to losing essential utility services: the 67 million who work in jobs that are at high risk for layoffs. These include people employed in food and restaurant services, retail sales, production, maintenance and repair. Workers in these jobs are typically paid 75% less than those in occupations with low layoff risk.
Yet year in and year out, there are also tens of millions of U.S. households that are continually vulnerable to losing electricity or other essential home energy services. These are households living on the lowest incomes, including many elderly, who are spending the highest percentage of their total income on utility bills.
When disconnection moratoriums end, there will be an explosion of utility debt, which then immediately puts customers at risk of service disconnections. Each year, in states that adopt seasonal disconnection bans, there's a pronounced spike in shutoff notices and shutoffs right after the bans expire. So planning is urgent now.
Here's what states, utilities and utility commissions can do now to keep the power on for struggling families who will be saddled with debt:
- Restore access to service for any utility customer whose service has been cut off without requiring a hefty down payment on overdue bills, and develop strong disconnection protections for vulnerable customers going forward. These include cutoff moratoriums seasonally when the weather necessitates, and year-round for low-income households where occupants are elderly or disabled or where there is an infant.
- Waive late payment fees that have accrued and prohibit such fees and security deposit tactics into the future as well. These types of punitive measures don't lead to more timely payments by cash-strapped households.
- For past-due bills, provide deferred payment plan options that are affordable based on a household's actual income and expenses, and that extend over a term that doesn't strain household cash flow limitations. This is a design principle for these plans that's always needed, no matter what the cause of financial hardship.
- For households with low incomes, use debt forgiveness programs that avoid adding to current monthly bills. One approach is to write down debt all at once. Another approach is to eliminate a portion of the overdue balance every month, as long as the customer keeps current on their bills, and their bills are affordable.
- Expand bill payment programs that reduce monthly bills to an affordable level. These programs already exist in many states but need to serve the full scope of need. A common effective approach is to reduce total bills by a set percentage, or to cap total bills at a percentage of household income.
- As weatherization crews safely return to work, expand access to comprehensive whole-house energy efficiency and retrofit opportunities so that households living on lower incomes can lower their energy bills — a highly effective investment in long-term affordability and resilience.
- Programs and policies for consumer protection are far more effective when utilities, regulators and advocates know exactly what affordability challenges residents are facing, and who is facing them. This means requiring much more comprehensive utility tracking and reporting of data on residential customer overdue bills, disconnections and repayment efforts, while still respecting billpayer privacy.
States vary widely when it comes to ensuring equitable access to residential energy service. A few model some of these best-practice recommendations, but many use ineffective and punitive approaches or have neglected the need to overcome existing, long-term inequities. The current economic crisis combined with heightened awareness about the importance of public health and resiliency should prompt a chance to make real progress now.
Strong and effective consumer protection approaches will serve us well in times of crisis as well as in times of calm. Vulnerable and at-risk residents need them during both.