By: Elizabeth R. Marx, Supervising Attorney, Pennsylvania Utility Law Project
Energy powers our modern world. It brews our coffee in the morning and provides light in our children’s room at night. It is, quite simply, what makes our lives and our homes “livable.” But today, in the richest nation in the world, a vast and growing number of economically vulnerable households are unable to access affordable energy to power their homes. Indeed, the cost of energy in many states has long outpaced inflation, and a number of energy market trends further threaten long-term utility affordability.
Without energy service, families face a palpable threat of eviction and, often, periods of homelessness. In many areas, children are removed from their family after utility services are disconnected. Individuals – particularly seniors, children, and people with a disability – also face short and long-term physical and mental health consequences when service is interrupted.
As energy markets evolve, and costs continue to rise, it is imperative that all social service providers are well informed about current threats to energy affordability and prepared to confront those threats to protect vulnerable households from harm which is inherent to the loss of critical utility services.
Threats to Energy Affordability
- Cuts to Federal Assistance Programs
As many know, the Low Income Home Energy Assistance Program (LIHEAP) and the Weatherization Assistance Program (WAP) – two critical federal energy assistance programs which help low income households meet their energy needs — was on the chopping block for this year’s federal budget. While at this time it appears likely that each program will be level funded for this year as a result of action by advocates and Congressional support, the future of the programs remains uncertain.
It is important to recognize that even with level funding, these programs only serve a fraction of those who need assistance to meet basic energy needs. To successfully tackle energy poverty, more resources must be committed – both at the state and federal level – to ensure that all Americans have access to basic utility services
- Regressive Rate Design
How a utility charges for service can be difficult for even the most seasoned anti-poverty policy expert to understand – let alone an average consumer. But the way a utility structures their rates for service can have far-reaching implications on the affordability of utility services – particularly for low income households.
Recently, utilities across the country have been proposing high fixed charges as part of their proposed rate design. High fixed charges more adversely impact low income families who disproportionately live in apartments or small single family homes and, therefore, use less overall energy compared to higher income households. A fixed charge is the same each month, regardless of the amount of energy used. So, when fixed charges are high, those who live in smaller homes pay more in comparison to those with larger homes.
High fixed charges also take away the ability for households to reduce their energy bills through the adoption of energy efficiency or weatherization measures. While low income households use less energy overall, their usage per square foot tends to be higher because they are more likely to live inefficient, aging, or poorly maintained homes. High fixed charge rate designs make programs like WAP less effective at driving bill savings for low income households to reduce the household’s energy costs over the long term.
- Prepaid Energy Services
Several utilities across the country have recently rolled out plans to switch payment troubled customers to prepaid energy services, and in some states this form of second-tier service is already fully deployed. Utilities claim that these programs promote conservation, but in fact the programs deprive low income households of safe and stable energy services. Even the strongest energy efficiency advocates recognize that prepay service is an economic justice issue, not an effective energy efficiency program. Jennifer Miller, Senior Campaign Representative for Energy Efficiency at the Sierra Club, explained in a recent article that when a prepay customer saves, “it’s because of how difficult it is to pay. It’s deprivation, not conservation.”
Data from prepaid energy programs across the nation is deeply troubling, and underscores fears that prepay service is dividing consumers into two tracks of service: Those who can access stable energy service and those who cannot. Households with prepaid energy service are often disconnected multiple times each month. In addition, households make very small and frequent payments on their prepaid service accounts – and are commonly charged a “convenience fee” for each payment, heaping additional costs on top of a consumer’s already unaffordable bill.
- Predatory Energy Marketers and Lenders
In states where energy markets have been deregulated, consumers have been inundated with offers to purchase energy from competitive suppliers. Many offers are rife with teaser rates, introductory offers, and sign-on bonuses. Low income households are particularly susceptible to this sort of marketing, given the constant economic pressure the household is under to reduce costs and maintain critical services. But the evidence from Pennsylvania shows that most households end up paying significantly more than they would have had they remained on default service. The promises of savings are illusory, but the harm to economically vulnerable households is tangible: higher bills that they cannot pay and, ultimately, loss of service.
In addition to predatory energy supply markets, low income households are also subject to predatory lending for home improvements which claim to offer significant energy efficiency savings. But the terms of these loans often do not guarantee savings. After the work is done, utility savings often never materialize to a degree which will offset the monthly loan obligations. Failure to keep up with the loan obligation – regardless of energy savings achieved – can result in foreclosure. This sort of lending is particularly troublesome for low income households, given these households can often access the same or similar services for free through WAP or other state or utility-run energy efficiency programming.
Effective Energy Advocacy
While there are often teams of lobbyists, policy specialists, and lawyers to represent the interests of utilities and energy companies, there are few advocates across the country that specifically work to protect the unique interests of low income utility consumers.
- Form a Coalition of Allied Organizations
There is strength in numbers. Service providers across the country are working in their sphere to address individual client needs. But together, a coalition of service providers could help to share expertise, tool, and resources to better meet the needs of our client populations.
Potential allies in your community include: legal services providers; local chapters of national organizations like AARP and NAACP; low income housing advocates and providers; senior centers; statewide or local domestic violence organizations; environmental groups; medical providers; Community Action Partnerships; food banks; public schools; and child welfare agencies.
Convene a roundtable, and invite potential partners to share their experience and develop strategies for how to effectively advocate for energy affordability in your area. Assess strengths and identify areas of expertise within the coalition. Draw from that expertise to focus your advocacy on achievable results.
- Advocate at the State Level
Advocacy before a state public utility commission is critical to establish and/or maintain well-designed and robust programs that are effectively coordinated and administered to meet the needs of low income households. Social service providers are on the front lines, and are often contracted to administer assistance programs in the community. As such, social service providers are well-positioned to notice program inefficiencies and to advocate for improvements. What works? Where can improvements be made? What rules are inappropriately excluding needy families from connecting and maintaining their utility assistance?
Find out how decisions are made at your state Public Service or Utility Commission, and get involved! Check to see whether there are any open or upcoming proceedings that will assess the cost or terms of utility service in a given service territory. Write a letter or comments to the Commission about your experience serving low income households. As noted above, forming a coalition of partners can help to enhance your impact and share the burden that this sort of policy work can have on smaller social service providers.
Elizabeth is a Supervising Attorney at the Pennsylvania Utility Law Project (PULP). PULP is a specialty project within the Pennsylvania Legal Aid Network focused exclusively on low income energy issues, and is administratively housed within Regional Housing Legal Services. PULP’s mission is to assist Pennsylvania’s low-income residential utility and energy consumers connect with and maintain affordable utility and energy services within their homes. In fulfilling that mission, PULP provides information, education, advocacy, representation, and supportive services on issues impacting low income energy and utility affordability. You can contact Elizabeth at firstname.lastname@example.org for more information or with questions.