Utility debt payment plans place unreasonable burdens on low-income residents, and debt forgiveness doesn’t address the problem; electrification does.
By Adenike Adeyeye, Special to CalMatters
Adenike Adeyeye is a senior analyst and Western states energy manager at the Union of Concerned Scientists, AAdeyeye@ucsusa.org.
As of October 1, California ratepayers with overdue utility bills will once again be at risk of disconnection. The California Public Utilities Commission extended the disconnection moratorium from its April 16 deadline but has declined to extend it further. As the country attempts to return to normal, utility customers who owe their energy provider will be once again on their own. Shouldn’t California use this moment to create a new normal that supports families with high energy burdens?
The state could provide enough relief to help those who have accrued high debt during the pandemic. The Greenlining Institute has outlined steps the state could take to support low-income households, including debt forgiveness. But there is another way: Help those families electrify their homes and vehicles.
The CPUC’s annual report on rates and utility costs, called the SB 695 report, found that electrifying your home and driving an electric vehicle might make your electric bill a bit higher but would eliminate your natural gas bill and gasoline spending. Because natural gas and gasoline prices are more volatile than electricity, this shift could be beneficial for households with a high energy burden.
That is, if electrification policies prioritize helping such households. There are high up-front costs associated with electrifying homes. Replacing a gas furnace with a heat pump may save a family money in the long run, but heat pumps often cost more than gas furnaces.
And this idea doesn’t even begin to consider low-income renters, who are at the whims of their landlord and cannot decide for themselves to go electric or install charging equipment for electric vehicles. In 2015, 3.3 million low-income households rented their homes, and most spent more than half their income on rent.
It’s estimated that California ratepayers already owe more than $2 billion to their electric utilities. While Gov. Gavin Newsom is proposing to dedicate some of California’s budget to debt relief for electric and water utility bills, the amount proposed ($2 billion for both water and energy utilities) will not cover all the energy bill debt households have accrued. The moratorium on utility shut-offs has protected families from losing their electricity or gas service, but it has not protected them from accruing more debt throughout the pandemic. At the end of September, the shut-off protection will disappear.
California is known for having high electricity rates, but average bills have typically been lower than the national average. That, however, is changing.
The SB 695 report projects that rates will increase somewhere between 3.5% and 4.7% per year, depending on the utility, over the next 10 years. The report also found that average bills are increasing, and that the average PG&E bill is already higher than most other utilities nationally. The forecasted cost increases are driven, at least in part, by the utilities’ investments in hardening their infrastructure to prevent utility-sparked wildfires.
Last Thursday, the CPUC issued a decision that requires utilities to put customers on payment plans if they are behind on their bills. Those customers will be ineligible for disconnection while they remain on the payment plan, but if a family is struggling, how will they be able to manage an additional debt payment?
Although people are eager to go back to normal, our old version of normal was unfair: It put unreasonable burdens on low-income families. As California opens back up and the disconnection moratorium expires, we need to use this moment to envision a system that helps people escape debt, and reduce energy costs while reducing emissions from fossil fuels. It’s time for Californians to call on our leaders to invest heavily in electrification for low-income households.