“The hardest choice so far is to choose between paying my bills or buying the food I need for my family [...] do we want to let the bills rack up? Or pay them and suffer?” - Annamarie from Oklahoma
COVID-19 is having a devastating impact on low-income households. Living paycheck to paycheck, millions of Americans already faced uncertainty. Low-income families and families of color struggle with a high energy burden that predates the pandemic: these households spend a much higher percentage of their income on utility bills than the average family. COVID-19 has intensified these persistent financial challenges, with the economic fallout resulting in widespread layoffs for low-wage workers who disproportionately work in industries like food service and retail.
Early in the crisis, 25 states and the District of Columbia mandated utility shutoff moratoriums to protect customers who have been unable to pay the bills. Numerous utilities in other states also instituted voluntary moratoriums. Now, months into COVID-19, households face an unmanageable accumulation of utility bill debt and, in some communities, the resumption of disconnections.
What can utilities do next to keep the lights on for low-income families? Survey responses from about 1,700 people who use the Fresh EBT app highlight three areas utilities can help those living below the federal poverty line (about $20,000 for a family of three).
Offer programs and policies to help customers pay back bills and reduce debt
When the family is home all day, utility bills are even less affordable than normal. Many households have few checks coming in and little savings on hand.
The shutoff moratoriums have addressed the immediate need of preserving access to power for all customers. However, without additional payment programs, moratoriums may only delay disconnections for low-income families.
Invest in income-eligible bill discount and energy reduction programs for longer term affordability
Utilities should leverage existing programmatic tools to support growing populations of low-income households and their ability to pay for the long term. Programs available to customers based on income should be prioritized to reduce the total amount and percentage of income that cash-strapped families pay toward monthly bills.
Ensure programs actually reach low-income customers through targeted outreach and effective communications
Even when supportive utility programs are in place, many low-income families don’t benefit because they don’t know such programs exist. More than half of Fresh EBT survey respondents reported not receiving any information on a COVID-19 shutoff ban from their utility nor did they hear about it from other sources.
Fresh EBT survey data suggest that customers see and remember program information displayed on their bills more than communications delivered through any other channel. Utilities should employ opportunities to reach customers when they’re already primed to think about finances to drive awareness and activations. Partnering with frontline organizations that directly serve these customers can also reduce the lift and increase the impact of outreach.
While the ability to implement depends on each organization’s financial health, protective programs can benefit utilities by playing a role in revenue recovery efforts. Utilities such as Georgia Power, AEP, and Eversource have already offered installment plans in response to COVID-19. Payment options and debt-forgiveness policies like these that align with customers’ financial realities can increase the likelihood that customers repay at least some of their debt.
Enrolling low-income customers in energy reduction programs can also advance energy efficiency targets. Low-income families tend to have energy inefficient housing, consuming more energy per square foot than higher-income households, and presenting greater opportunities for energy savings. Moreover, lowering monthly bills through energy efficiency now can support long-term affordability, ensuring more customers can make on-time, regular payments to their utilities.
COVID-19 has impacted the finances of families and utilities alike. Progress toward a shared recovery will only be made by working together and strengthening these connections.