Utility shut-offs rise amid downturn
Utility shut-offs for customers behind on their energy bills are increasing around the country, reaching 50% or more in some hard-hit areas, as the effects of rising prices and a sagging economy are beginning to drag down more vulnerable consumers.
Agencies that provide financial assistance for energy costs report long waiting lists and significant jumps in first-time applicants. With the prospect of much more serious trouble this winter, when bills traditionally are higher, Congress is exploring a significant increase in federal energy assistance as part of a second economic stimulus plan scheduled for consideration next month.
Consumers are being hit by an economic double whammy of high gasoline prices and rising utility bills, which are up considerably in most places because of the much higher cost of fuel used to generate electricity or heat residences.
“We are certainly seeing the signs of the economic downturn in people falling behind in their payments and more of them getting to the point where they’re getting their service shut off,” said George Lewis of PPL Electric Utilities, which serves customers in central and eastern Pennsylvania.
The increasing number of shut-offs also comes as the nation has struggled with job losses -- the national unemployment rate rose in July to 5.7%, its highest level in more than four years. There’s also the housing crisis, with almost 1.4 million foreclosure filings, including default notices, auction sale notices and bank repossessions, in the first six months of this year.
In Michigan, which had the nation’s highest unemployment rate in June -- 8.5% -- Detroit-based DTE Energy reported a 56% increase in utility shut-offs for nonpayment of bills for the first five months of this year compared with the same period a year ago.
Southern California Edison Co. reported that service was shut off to about 165,000 of its 4.8 million customer accounts from January through May this year, a 14% increase from the same period in 2007.
In Orange County, “people are coming to our office in record numbers with very high utility bills,” said Kathy Kifaya, director of energy and environmental services for the Community Action Partnership of Orange County, which provides financial aid for energy costs to low-income families.
In Illinois, Peoples Gas and North Shore Gas, which serve Chicago and its northern suburbs, reported a 33% increase in disconnections through July of this year, compared with the same period last year. Across the Mississippi River in Iowa, a record number of residential accounts were past due in June, said Jerry McKim, chief of the state’s energy assistance program, and more would have been shut off if not for floods that prevented utility workers from reaching homes.
“It’s pretty pathetic when the only thing saving someone from disconnection is being flooded out,” he said.
California’s largest utility, Pacific Gas & Electric Co., reported that service had been shut off to 163,700 customers for nonpayment through July of this year, up 6.1% from the same period a year ago. Southern California Gas Co. said that notices of late payments were up 17% from January through May compared with the same period last year, and disconnections were up 10%.
Lauren Bartlett, a spokeswoman for Southern California Edison, said her company “works hard to avoid situations in which service must be disconnected.”
The shut-offs have fueled a bipartisan effort in Congress to double, to $5.1 billion, the amount of federal assistance provided to help low-income families pay home heating and air conditioning bills under a program that arose from the 1970s energy crisis.
Sen. Bernie Sanders (I-Vt.) introduced legislation in June to increase funding for the Low Income Home Energy Assistance Program, but it stalled in the Senate last month after the White House and some Senate Republicans argued that it would worsen the federal budget deficit. The measure would have doubled California’s share of funding, currently about $100 million.
It also got caught up in a partisan spat over broader energy policy, with a number of Republicans arguing that if Congress increases financial assistance for energy costs, it also should move to expand domestic drilling to increase the supplies of oil and natural gas.
Still, the energy assistance program is co-sponsored by a majority of senators, including the presumptive Democratic presidential nominee, Barack Obama of Illinois, and several Republicans -- such as Norm Coleman of Minnesota, Gordon H. Smith of Oregon and John E. Sununu of New Hampshire -- who are in tight reelection contests this year. Obama’s expected Republican opponent, Sen. John McCain of Arizona, did not co-sponsor Sanders’ bill, but a campaign spokesman said Tuesday that McCain would “seek to ensure adequate help for low-income citizens struggling with home heating costs.”
The provisions of Sanders’ bill appear likely to be included in a second economic stimulus package that the Senate will take up next month.
“I think we’ve got a lot of support,” Sanders said Tuesday, calling it imperative that Congress increase such aid. “If we don’t, I will absolutely assure you that people will freeze to death next winter.”
Sen. Robert C. Byrd (D-W. Va.), who as chairman of the Senate Appropriations Committee will play a key role in writing the package, has proposed an additional $1.25 billion to aid low-income families in paying their energy bills from last winter and this summer and planning for “the soaring energy prices that are expected this upcoming winter.”
Separately, Sununu and New Hampshire’s other senator, Republican Judd Gregg, have called for repealing an oil industry tax break to help pay for added energy assistance.
“This is a billion-dollar problem,” said Mark Wolfe, executive director of the National Energy Assistance Directors’ Assn., which represents state and tribal programs that disburse the federal funds. Nearly 6 million families receive energy assistance. “We need at least $2.5 billion to maintain the purchasing power of the average energy grant and reach an additional 1 million households in order to provide immediate assistance to the families that have lost access to power, pay off high arrearages and help those purchase heating oil next month in the cold-weather states.”
In California, a family of four with an annual income of $42,427 or less is eligible for the utility-bill assistance. But demand for aid is far greater than available funding.
“It’s like triaging in a catastrophe,” said Kifaya, noting that priority for energy assistance is given to low-income families whose fuel bills consume a large proportion of their incomes, and to the elderly, the disabled and families with young children.
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About 15% of U.S. households were at least 30 days behind in their payments to utility companies at the end of March:
Households with unpaid debt to utilities, as of March 31, compared with March 31, 2007
*--* 2008 2007 Change Unpaid debt $5.0 billion $4.3 billion +14.0% Households 15.6 million 14.3 million +9.5% Average amount owed $318 $303 +4.9% *--*
Source: National Energy Assistance Directors’ Assn.