Balancing Act Utilities Face with Consumers Due to the Pandemic

Congress is currently negotiating a new round of potential relief for citizens, businesses, and local and state governments impacted by COVID-19. Let’s hope there is support coming for Americans to pay their utility bills.

Americans are using more electricity, gas, and water because they are working from home and engaging in remote schooling. Higher utility bills during a time when millions of Americans out of work has caused a drastic increase in utility consumers being in payment arrears. Utilities in this country are estimated to be out $25 billion so far from consumers not paying their utility bills, and by March the projected debt to utilities is projected to rise to $35 billion or more.

To make matters worse, as consumers get deeper in debt with their utility providers, many mandated utility shutoff moratoriums are expiring, putting millions of customers at risk of losing service (when the pandemic first hit, state legislatures provided relief by enacting moratoriums on shutoffs in over 70% of the states). 

The industry is facing an unprecedented balancing act. On one hand, utilities need to be sensitive to their customers’ needs during this ongoing crisis. On the other hand, utilities have already supplied $25B of utility services which needs to be paid back somehow. As to who repays this debt could be a source of contention in many states across the country.

State regulators may likely need to intervene to decide how this debt will be repaid. Should the customers that owe the money be forced to pay up or have their services cut off, or should some combination of ratepayers, investors, and taxpayers pay this debt? Without intervention by the government or regulatory commissions, helping Americans pay their utility bills will come down to the utilities themselves, with some help from local community organizations such as the United Way and Low Income Home Energy Assistance Program.

We have heard that utilities are discussing ways to combat the financial crunch caused by the pandemic, such as raising rates or considering bill surcharges, deferring major investments, and finding ways to cut costs. This could also be an opportune time for utilities to provide consumer engagement tools, as well as promote energy efficiency and demand response initiatives. Utilities can also serve as a trusted partner by educating consumers on community organizations that might be able to help with bill payment options. Utilities should also be lobbying their legislative allies and regulatory bodies for financial help (several states have earmarked millions in taxpayer dollars or CARES Act funding to help with utility payments). After all, we need utilities, municipalities, and cooperatives to remain financially stable because, as we have learned in 2020, customers are more dependent on their utility provider than ever before.