Utility shut-offs loom after pandemic freezes expire for US households

The coronavirus pandemic and rising energy prices have left millions of US households in arrears on their electric and gas bills, and some are now about to lose service as moratoria on utility shut-offs expire.

More than 20mn households were behind on utility payments worth $23bn at the end of February, nearly double the number behind in 2019, according to the National Energy Assistance Directors Association, a group representing state agencies that disburse government payments to low-income energy consumers.

The number of accounts in arrears built up during the pandemic when some state regulators and utilities froze disconnections for non-payment. Customers received additional protection in the winter, when states regularly ban shut-offs.

The moratoria largely expired by May 1, however. NEADA predicts more than 2mn households will be disconnected over the next few months.

“We see a wave of shut-offs coming because we weren’t prepared for this much debt,” said NEADA executive director Mark Wolfe.

Utility gas prices are up 23 per cent from last year, according to April’s consumer price index. Electricity prices, driven in part by the cost of wholesale gas fuel purchased by power plants, are up 11 per cent. Higher energy costs are helping to drive inflation that has been straining household budgets.

One in five US households could not pay their energy bill at least once in the past year, according to last month’s Household Pulse Survey from the US Census Bureau. Nearly a third of households reported forgoing expenses such as food and medicine to pay their utility bills.

Korie Bosley, a single mother in Michigan, received a shut-off notice last month from DTE Energy when her bill doubled and she was unable to pay. Ineligible for state assistance, Bosley reached out to a private organisation, the Here to Help Foundation, to avoid a shut-off. According to the Michigan Public Service Commission, 1mn accounts worth $346mn were in arrears as of April 2022.

“I’m just doing what I can to make ends meet on a day-to-day basis,” Bosley said. DTE did not respond.

In financial filings, utility companies acknowledged financial impacts from customers who are behind on their bills.

The New Jersey utility owned by Public Service Enterprise Group reported it will take “several years” for its cash flow and levels of unpaid accounts to return to normal after shut-off moratoria in the state, according to a securities filing.

Duke Energy, a North Carolina-based utility operator, observed a “significant increase” in arrears and expected an increase in charge-offs.

“From the beginning of the pandemic, we took swift and unprecedented action to assist customers by voluntarily suspending disconnections for non-payment,” the company said. Disconnections were down 41 per cent in 2021 compared to 2019.

Utilities say that disconnections are a last resort and many efforts are made to assist families before a shut-off.

“Today, customers have more flexible payment options and programs than ever, and these programs are helping customers to manage the cost increases that are resulting from rising natural gas prices,” said the Edison Electric Institute, a trade group for US investor-owned utilities.

Last month, President Joe Biden announced an additional $385mn in Low Income Home Energy Assistance Program funding. Over $8.3bn was provided in LIHEAP assistance this year, the largest yearly investment in the program to date. Advocates say it’s not sufficient to cover demand, and some households face bureaucratic barriers when trying to use the program.