Opinion: Struggling US families face a wave of power shutoffs if Congress doesn’t act

Opinion by Mark Wolfe for CNN Business Perspectives

Families across the United States are drowning in utility debt. In 33 states, families who can’t afford to pay their bills have been protected from energy shutoffs during the winter thanks to moratoriums that temporarily halted them. But 29 of those moratoriums have now ended, and the last ones expire on May 1.

Now, many families are facing potential power shutoffs if they cannot pay their overdue home energy bills. In fact, more than 20 million families are currently behind on their utility bills, owing about $23 billion, up from about $10.5 billion at the end of 2019. The White House, Congress and the states must work together to quickly address this looming crisis.

Rising energy prices are a primary factor behind this increase in utility debt. In the past 12 months, the price for natural gas increased by 21.6%, electricity by 11.1% and fuel oil by 70.1%. For the lowest-income households, the yearly cost of home energy increased from $2,511 in 2019 to $3,399 last year. If current trends continue, the cost could reach about $3,957 this year, almost 58% higher than costs were in 2019. On top of that, families are struggling with high rates of inflation for other essential goods like gasoline, food and rent.

When a family is shut off from power, they cut back on food, medicine and other essentials in order to get reconnected as quickly as possible. An estimated 3.5 million people were disconnected in 2020 and 2021 in 32 states plus the District of Columbia.

Available federal funds are not sufficient to help families pay off their full debt and become current on their bills. The American Rescue Plan (ARP) provided states with an additional $4.5 billion for the federal Low Income Home Energy Assistance Program (LIHEAP), which provides formula grants to states to help low-income families pay their heating and cooling bills. The White House has recommended that states use other recovery funds as well to help families pay these bills, and has called on utilities to not shut off families that have applied for assistance. While 14 utilities have committed to keeping families connected while they wait for assistance, it is unlikely that will be enough to fully solve the problem.

States are taking steps to protect families as well. New York Governor Kathy Hochul recently announced $250 million in funding for pandemic-related utility debt. Other states are likely to follow as shutoff notices are sent out, but this piecemeal approach will not protect struggling families nationwide.

Further, federal LIHEAP funding is only sufficient to help about 18% of eligible families, and even then, it only pays a portion of home energy bills, leaving millions of households unable to pay their bills month after month.

What we need is a nationwide systematic approach to keep energy affordable for low-income families.

First, all natural gas and electric utility companies should agree to not shut off any family from power while they are applying for energy assistance. Second, all available energy assistance resources should be coordinated as a “one-stop” application, so families do not have to apply to multiple offices for assistance. Third, if sufficient funds are not available, then long-term repayment plans should be made available to families so that no one is shut off from power. Lastly, Congress should provide $5 billion to LIHEAP in additional funding for energy assistance this year to help plug the gap between available funds and outstanding utility bills.

Once we get past this immediate crisis, we as a nation need to develop a better strategy to help families pay their home energy bills, especially when energy prices are rising faster than incomes. There have been many policy proposals to address unaffordable energy costs, but two stand out as possible solutions. The first is setting “lifeline” base rates for energy, which require utilities to provide a certain amount of energy per household — enough to run heating and cooling systems and basic appliances — at significantly discounted and affordable rates for low-income families. The second is to cap energy costs for households based on their ability to pay. These percent of income payment plans (PIPP) guarantee a household will never owe more than they can afford for energy, and the state picks up the rest of the tab. Several states, including Ohio and Illinois, are currently offering a PIPP for low-income households, and similar programs have run in other states in the past.

Congress, the administration and the states need to act to address both the short-term shutoff crisis that will be looming this spring, as well as the longer-term issue of energy affordability by implementing comprehensive, integrated solutions so that no family has to worry about being shut off.

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