Households Are Caught in a Patchwork of Policies as Electrical Shut-Off Moratoriums End

In response to the COVID-19 pandemic, 33 states and the District of Columbia suspended utility disconnections for gas, water, or electricity customers. State leaders hoped to alleviate the burden of paying utility bills during a time of mass layoffs, as well as ensure that everyone sheltering at home can do so safely. However, as moratoriums expire, an absence of uniformity in state policies and a lack of adequate funding for energy-bill assistance are now adding to households’ financial stress.

Many moratoriums have already expired, and several more are set to end in the coming weeks despite the uncertainty of COVID-19 and the ensuing economic downturn. As of July 15, eight state policies have expired, and another seven states have policies set to expire by the end of July.

As the moratoriums expire, households are finding they now owe larger sums to their utilities. Indeed, though the shut-off moratoriums ensure that people’s electricity will not be disconnected, they do not make electricity free, nor do they reduce the amount people will ultimately owe to their utilities. Therefore, when these policies expire, customers who were unable to pay their bills, but whose power was not shut off due to the moratoriums, will face high accumulated utility bills.

What happens to these customers varies widely. In many states, utility companies and those with unpaid bills are left to negotiate a solution on their own. This typically involves payment plans, in which the accumulated arrearage is paid back over time, though the length of time allowed also varies by state and utility company. Some states set rules for post-moratorium repayment plans. In Indiana, North Carolina, and New Hampshire, utilities are required to allow repayment over the course of at least six months. Illinois’s plan, which was praised by consumer advocates, requires up to 24 months for consumers with financial hardships and 18 months for all other consumers. For consumers outside these states, the repayment term for their debts will be determined by utility companies.

Many consumer advocacy groups see the wide variation in utility disconnection policies as unfair to those who live in states without moratoriums. These groups have therefore called for a nationwide moratorium on utility shutoffs. However, according to S&P Global, it’s “unclear” if Congress has the power to enact such a policy. Senator Ed Markey (D-Mass.) recently introduced a bill that would establish a “sense of Congress” in support of moratoriums, but, if it were passed, it would do little beyond encouraging state governments to enact a moratorium.

Though Congress has little, if any, power to control shut-offs, it can provide assistance to families that are struggling to keep up with or repay accumulated energy bills. The Low-Income Home Energy Assistance Program (LIHEAP) offers bill payment assistance to households whose income is 150 percent or less than the federal poverty level. In its original 2020 budget, Congress appropriated $3.7 billion for LIHEAP. Since then, an additional $900 million was added by the CARES Act. The House-passed HEROES Act provides an additional $1.5 billion, although it is awaiting action by the Senate.

By aiding customers in repaying their debts, increased LIHEAP funding would also help utilities, many of whom are struggling with decreased revenue due to COVID-19. Seven utility associations, including the American Public Power Association and the National Rural Electric Cooperative Association, recently wrote a letter to Congress expressing the need for additional LIHEAP funds. The letter stated that the additional $900 million for LIHEAP from the CARES Act “will only scratch the surface of what families will need to stay afloat.” The groups are therefore asking Congress to increase LIHEAP funding by $1.4 billion, citing the fact that the number of households eligible for LIHEAP has increased from “35.2 million to 43.8 million in just a matter of weeks.”

For households in states with expiring moratoriums, or states that never passed one, applying for LIHEAP funds may be their best path forward. At the moment, only one state, Indiana, has extended its moratorium’s expiration date past July 31, even as cases have increased in all but ten states. None of the 17 states that did not originally pass moratoriums have since passed them, despite the fact that ten of these states are currently seeing their highest seven-day COVID-19 case averages since March 1.

Families whose power is disconnected now, as the moratoriums lift, will be left without electricity at a time when many parts of the country are experiencing record-breaking heat. State governments can protect families by extending shut-off moratoriums, and the federal government can help families and utilities by expanding LIHEAP funding. However, if no action is taken, families around the United States will have to deal with not only a pandemic and a recession, but also electricity shut-offs and hundreds of dollars’ worth of accumulated utility bills.

 

Author: Maia Crook