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

Dhara Singh
·Reporter
·4 min read

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.

Read more: Here's why utility disconnections are becoming a bigger problem

“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.”

PHOENIX, ARIZONA - OCTOBER 09: Odelis Navarro cooks breakfast for her family while in their RV on October 09, 2020 in Phoenix, Arizona. Even for families who have remained healthy from the coronavirus, the indirect effects of the pandemic have been especially tough on America's poor, who often deal with simultaneous crises, even in normal times. In the case of Odelis' father Hector Medrano, inconsistent work, a string of tragedies and even family separation have combined to push his family to the brink of homelessness, having narrowly avoided eviction only days before. This summer Medrano's work as a truck driver was sporadic due to the pandemic economy. Meanwhile, he spent his entire savings on three funerals for family members in less than four months. Causing further family stress, Medrano's wife Ana Cecilia, who had temporary residency status in the U.S. traveled to Mexico in December of 2019 to care for her sick mother, but has now been unable to return to Arizona due to a sealed U.S.-Mexico border. The separation left Medrano to care for their three children, supervising distance learning during the day, while working nights. For families like the Medranos, new federal pandemic assistance, yet to be authorized by Congress, cannot come soon enough. (Photo by John Moore/Getty Images)
PHOENIX, ARIZONA - OCTOBER 09: Odelis Navarro cooks breakfast for her family while in their RV on October 09, 2020 in Phoenix, Arizona. (Photo by John Moore/Getty Images)

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.”

Jenn Katchmark, of Washington, holds up an eviction sign intended for Pres. Donald Trump while walking through Black Lives Matter Plaza, Thursday, Nov. 5, 2020, in Washington. (AP Photo/Jacquelyn Martin)
Jenn Katchmark, of Washington, holds up an eviction sign intended for Pres. Donald Trump while walking through Black Lives Matter Plaza, Thursday, Nov. 5, 2020, in Washington. (AP Photo/Jacquelyn Martin)

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.

Read more: Rental aid: Here's where you can find help in every state

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.

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“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.”

Read more: Here's what's in Joe Biden's $1.9 trillion 'rescue plan' that could help your wallet

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.

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