Utility shut-offs appear on the rise even before winter moratoriums expire

As many Americans struggle to keep their electricity, water, and gas on during the pandemic, utility shut-offs and ballooning balances appear on the rise, according to one study in Illinois.

Disconnections in the state doubled their historical average in October and deferred payment plans tripled their average, according to a new study from the National Bureau of Economic Research. One in 5 accounts were also charged late fees, the study found.

While the data covers about 5 million residents in Illinois specifically, Steve Cicala, a researcher on the study, said the findings can help inform what is happening across the country.

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“Illinois has a diverse economy, where the Chicago area has more service-oriented urban workers and then you have the downstate where there is rural agriculture,” Cicala said. “There’s enough of a range that you can learn how this impacts different parts of the American economy.”

The increase in disconnections and deferred payments occurred even though there was a nine-fold expansion in low-income assistance to pay utility bills, the study found. What’s more concerning is what could happen after winter utility protections expire.

“I think the forecast for spring is pretty worrisome as the winter disconnection moratorium in Illinois will expire soon,” Cicala said. “The average household already had $300 past due this October, which was a lot of money to keep their power connected.”

Read more: Here's what to do if your utilities are shut off

Having lights and heating turned off are not just inconveniences. Access to heating and cooling are key predictors of mortality, especially during the pandemic when staying home is a crucial way to avoid exposure to COVID-19, the study pointed out. The lack of electricity also hurts those relying on internet access for remote schooling and work.

“Housing in the United States means more than four walls and a roof,” said Eric Dunn, director of Litigation at the National Housing Law Project, a legal advocacy nonprofit group. “It means having heat in the middle of the winter.”

Around 20% to 25% of residential customers are at least 60 days behind on their electric and natural gas bills, according to estimates provided by the National Energy Assistance Directors Association in a letter last week to Congressional leaders.

The Low Income Home Energy Assistance Program (LIHEAP), which provides utility assistance, only has enough funding to help “only about one out of six eligible households and cannot be stretched to help the newly unemployed with their growing bills, without additional funding,” the letter said.

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Much of the $25 billion in funding included in the most recent stimulus package signed into law by former President Trump is primarily going to rental assistance, the NDEA said, rather than utility aid. That support is only for renters, too, and not available to struggling homeowners.

While the Biden administration extended the federal eviction moratorium until the end of March, the measure still has loopholes. A $300 past due utility bill might be enough to push a low-income resident out of their home in spite of the federal protection.

“It’s not clear in the federal moratorium if a landlord can still evict someone for a lease violation such as not paying your utility bills or having your water disconnected,” Dunn said. “My expectation is these would be grounds to evict tenants, especially in states like Florida.”

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The Senate on Friday passed a procedural motion to move forward with a budget resolution that could help push through some or all of President Joe Biden’s proposed $1.9 stimulus plan, which includes another $5 billion in utility payment assistance.

“I think my sense is that as we are thinking about another major stimulus package, we need to think about the targeting of that package,” Cicala said. “We want to ensure that people are keeping their lights on.”

Dhara Singh is a reporter at Cashay and Yahoo Finance. Follow her on Twitter at @Dsinghx.

Read more:

• Biden’s executive action to extend eviction moratorium is a ‘Band-Aid’ on the rental crisis

• Here's how the new stimulus deal could help struggling renters if signed into law

• Mortgage forbearances tick higher as homeowners reactivate payment deferral plans

• Landlords can start the eviction process despite moratorium, government says

• Housing expert: Eviction moratorium are ‘not enough’ during pandemic

• Read the latest financial and business news from Yahoo Finance and Yahoo Money

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