As states begin to reopen from coronavirus-related shutdowns, a wave of unpaid utility bills coming due will not only saddle Americans still out of work with new debt, it could also drive up rates for everyone.
“We’ve basically wiped out a decade worth of job creation in a month and a half,” an economist says. May’s unemployment figures will likely look even grimmer. The association estimates that as many as 36% of households nationwide may now fall into the income bracket that qualifies them for help through the program.
Before the pandemic about 28% qualified, though far fewer actually received help, largely due to a shortage of funds.The federal program, created in 1981, provides $3.74 billion nationwide annually. How and where that money is spent largely depends on state rules. Consumers can qualify if they earn less than 150% of the federal poverty rate, or 60% of the state median income. Californians must earn less than 60% of the state’s median income of $88,343 to qualify. So a family of four with an income of $53,006 or less qualifies. The state also considers other factors including the age of people in the family and existing medical needs. Wolfe said the program normally reaches about 20% of the 32 million eligible households across the U.S. The CARES Act provided another $900 million to the program, enough to subsidize another 2 million homes, Wolfe estimated. In early May, California received its share — $49.5 million — from the supplemental money approved by Congress.But it won’t be nearly enough, state officials said. The $206 million that California typically receives each year through the program allows it to only serve about 6% of eligible Californians, said David Scribner, acting director of the California Department of Community Services & Development. He said applications for utility assistance haven’t begun to increase since the COVID-19 outbreak, likely because the newly unemployed may not be aware of the program. Wolfe agreed that increased demand for the program’s assistance is temporarily being masked in many states because many people don’t learn that they can apply for help until they get a shut-off notice, and those notices have been suspended in many states. “At the end of the moratorium we may see a dramatic increase in applications,” Scribner said, predicting that the additional $49.5 million for California will not meet the demand.Many customers in California won’t need to worry about shut-offs any time soon. The state’s moratorium prohibiting energy, water, sewer and communications companies under its jurisdiction from suspending or disconnecting service for ratepayers who cannot pay their bills ends April 16, 2021. The moratorium only applies to investor-owned companies, like Pacific Gas & Electric and Southern California Edison, that are regulated by the state. Many public utilities in California, such as Los Angeles Department of Water and Power, have voluntarily suspended shut-offs and can resume them at any time despite the governor’s moratorium because they are not regulated by the state. There are already signs of trouble. Southern California Edison, which provides electricity to 15 million people, has seen an increase of nearly 150,000 customers who have fallen behind on their bill payments in the span of one month. The patchwork of different shut-off policies nationwide may lead to disparities in different states in how long people have to pay the bill and how soon utilities get turned off if they can’t. In half of states there are no statewide orders, so individual utility companies decide. In some states, water can’t be turned off but other utilities can. As in California, most statewide orders don’t apply to utilities not regulated by the state, such as utility cooperatives and municipality governed utilities, which serve about 30% of the country.Most states don’t require utility companies to publicly disclose the number of shut-offs that occur or how many customers are behind on their bills, so the scope of what is coming as states reopen is difficult to track. Low-income advocates are pushing Congress for a national moratorium on shut-offs for the length of the national emergency and a six-month grace period to allow people to pay the bills once it ends. Rather than add money to the Low-Income Home Energy Assistance Program, Jean Su, director of the Center for Biological Diversity’s energy justice program, said Congress needs to provide monthly direct payouts to families.
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