Community Engagement

Fending off a new energy crisis

Before the pandemic, millions of Americans lived from paycheck to paycheck. Many were one crisis away from losing everything, including their homes. Now, many of these families have lost their jobs, have seen their work hours reduced, or have had to stay home to help their children study remotely until schools reopen. We know from the long lines seen at food pantries around the nation that millions of Americans are living precariously, on the edge of sinking into homelessness.

The numbers are heartbreaking. One out of three families reported that they struggle to pay their home energy bills. And this proportion is even higher for nonwhite families, who have been hardest hit by COVID-19, where 50% of African American households, 40% of Latinx households, and 60% of Native American households report struggling to pay their home energy bills. 

Utilities across the nation are reporting significant increases in the numbers of households falling behind on their utility bills. Electric and natural gas arrearages are expected to reach $40 billion by the end of the pandemic, based on an analysis of utility arrearages by the National Energy Assistance Directors Association. NEADA estimates that 15% to 20% of residential customers are at least 60 days behind on their electric and natural gas bills. We are hearing reports of households with arrearages already up to $3,000 and expect the debt to only get worse as the pandemic drags on.

The effects of this crisis are starting to be felt by utilities and their customers. The U.S. energy infrastructure is not designed to absorb arrearages of this magnitude. Large investor-owned utilities with diverse customer bases would likely be able to weather the storm by raising rates and offering repayment plans. However, smaller publicly owned and cooperative utilities, many of which have a disproportionate amount of customers with low-income, are more vulnerable. And for customers who have been staving off economic ruin since last March, having their electricity turned off or being stuck with a repayment plan or rate increase will set them back even further.

The primary federal program to help with energy bills, the Low Income Home Energy Assistance Program, only receives enough funding to help about 1 out of every 6 eligible households, funding that cannot be stretched to help the newly unemployed with their growing bills. The $900 million in supplemental funds provided for LIHEAP by the Coronavirus Aid, Relief and Economic Security, or CARES, Act in the summer of 2020 are now fully obligated and have been able to reach only a fraction of the households that need support.

NEADA and the American Public Power Association are calling for an additional $10 billion in supplemental LIHEAP funds. The states would use 50% ($5 billion) of the additional funds to help up to 4 million families pay off their growing utility debt. The other $5 billion would be used to help up to 7 million families pay current bills through September 30, 2021, when both the winter heating and summer cooling seasons are over and pandemic conditions are expected to improve.

The long-delayed stimulus bill passed by Congress in December 2020 included no additional funding for LIHEAP. A $25 billion rental and utility assistance program will help up to 5 million families facing eviction, but it is not enough to help all families, and it will likely not do much to help those who are behind on their utility bills.

According to John J. Drew, president/CEO of Action for Boston Community Development, “The victims of the current economic collapse are coming through our doors — low-income workers, elderly, disabled, all struggling to put food on their tables and hold off evictions in the midst of a bitter New England winter following several months without federal unemployment assistance.”

Drew said that last year’s LIHEAP funding will not provide enough fuel and utility assistance for the unprecedented 2020–21 year. He added, “The next six months are critical. We are pleading now, on behalf of the millions facing homelessness, cold, and food deprivation, for a major federal commitment beyond the pending funds, to save lives and keep our most vulnerable neighbors, friends and loved ones safe and secure.”

The Biden administration’s proposed COVID-19 relief package includes $5 billion for LIHEAP, water assistance, and a competitive clean energy program. President Joe Biden has also extended the rental moratorium through the end of March this year to give local relief agencies time to help families pay their outstanding bills. We also need to let Congress know that LIHEAP alone will need $10 billion before the pandemic is over to prevent both small utilities and their customers from facing crippling debt that will affect their financial stability for years to come.