Electric Bills Skyrocket, Crippling Low Income Families With No End In Sight

Inflation has hurt everyone in the United States, regardless of income level. Between rising gas prices, shocking grocery costs, and crippling utility bills, many of us have to get creative with our monthly budgets. 

I’ve always been a hawk with my finances, checking my balance sheets daily and analyzing my spending habits regularly. Like many Americans, I work hard, pay my debts on time, and find a deal where I can get them.

One area I’m not too keen on adjusting is the comfort level in my home, especially during these hot summer days. However, rising electric costs across the country have caused millions of households to choose between air conditioning and food.

It’s Getting Hot In Here

The pandemic was challenging for many Americans whose jobs couldn’t easily translate into a remote positions. Many of us may take this for granted. I was in the military when COVID kicked off, and while my job wasn’t remote, I still worked and received the same paycheck I had always received.

However, for many in the food service industry, housecleaning and custodial services, and other such industries, work was scarce, if at all available. There was some relief for many during the pandemic. Still, many of the payment moratoriums are no longer in effect at the worst possible time.

Currently, there are approximately 20 million American households that have fallen behind on their utility bills. To put that into perspective, that’s one in six homes. 

Over the past year, nearly 20% of households reported that they kept their home at a temperature that they felt was unsafe for about a month to stay afloat on their utility payment. Often utility companies are instructed not to turn off power to houses during the winter months so as not to put lives in danger.

However, that is not generally the case during the summer, and these months have been particularly steamy. Forty-one states have safety shutoff protections for residents during the winter. Only 19 states have protections in the summer.

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How Much Do We Owe?

In the last year, electricity bills are up on average 15%, which is the highest increase since 2006. The price hike has been felt across the country, from the north and south to the east and west.

Texans have paid about 50% more in electric bills. New Hampshire residents have paid varying increases depending on the region, from 25% to a whopping 77% increase. In addition, U.S. households owe about $16 billion in late energy payments, which is double the pre-pandemic amount.

California PG&E has seen a 40% increase in past due accounts, and New Jersey Public Service Enterprise Group saw a 30% increase in delinquent accounts. Generally speaking, most electric companies turn off power as a last resort.

However, with inflation and the unprecedented amount of past-due accounts, companies are left with little choice. Jean Su, a senior attorney at the Center for Biological Diversity, puts it best with her warning; “I expect a Tsunami of shutoffs.”

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80% of customers who have their power shut off will have it back online within a few days, thanks to nonprofit assistance and payment plans. But what about the other 20%? 

How Did We Get Here?

There are a few culprits to the rising cost of power. First, the price of power is directly linked to the cost of natural gas. The price of natural gas has skyrocketed by 200% since the Russian invasion of Ukraine. 

Adding insult to injury we’ve had to export quite a bit of our natural gas to help out Europe, which has also suffered from stratospheric electric bills. As the Chief Financial Officer for CPS Energy in San Antonio, Cory Kuchinsky said:

“We’ve seen Texas gas go over to Europe, which has then created a supply issue locally in the state of Texas.”

The war in Ukraine doesn’t appear to be ending anytime soon; if you thought the prices would go down once the war ended, you’re probably wrong. Instead, costs are anticipated to continue to rise over the next few years.

Last year’s winter storm in Texas brought many power companies across the country to the realization that the electric grids need to be hardened, which, you guessed it, costs money. With power companies spending more on new transmission lines, batteries, wind turbines, and solar farms, customers can expect to see their electric bills continue to rise. 

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Affordability Emergency

Like most things related to inflation, the people who feel this pain the most are those in the lower income brackets. New Hampshire consumer advocate Don Kreis puts it perfectly:

“Energy burdens fall disproportionately on people with low incomes and so, when you see an increase of that magnitude, it hits hardest on those who can’t afford that kind of increase and people are going to have to make some very difficult budget choices.”

Wasn’t it bad enough earlier this year when families had to make hard choices to find the baby formula, then struggle to get to work with rising gas prices, but now they have to choose between air conditioning and groceries possibly? Is anyone doing anything about this crisis?

Congress did ask for more emergency funding on top of the $4 billion already allocated for federal assistance programs geared towards helping those with overdue utility bills. But perhaps they were too busy figuring out how to forgive student loans, a tax the same families who are hurting from the utility bills will carry no doubt.

The Executive Director of the Utility Reform Network, Mark Toney, said plainly:

“This is an affordability emergency. If you want to control inflation, one of the things you have to control is energy costs.”

The problem is it doesn’t appear that anyone wants to control inflation in D.C. It’s just too great of a political football to punt around; add it to the list with immigration reform, college tuition hikes, and the tax code.