Ending the Ban on Utility Shutoffs: Who Will It Hurt and How Can We Fix It?

By Elizabeth Marx, Executive Director of the Pennsylvania Utility Law Project

COVID-19 has had and continues to have an unprecedented impact on the health, safety, and economic security of Pennsylvanians in every corner of our state. But what is perhaps less often recognized is the fact that the economic impact of the pandemic has fallen most profoundly on low income communities, as low wage workers – especially women and people of color – have experienced disproportionately high levels of unemployment and reduced hours. At the same time, utility costs and other basic living expenses have increased as families spend more time at home – squeezing low income families from both sides. Many members of these families are also more likely to contract COVID-19 and experience more profound health impacts as a result.

Utility unaffordability has posed a palpable threat to the economic wellbeing of Pennsylvanians for many years, but is greatly exacerbated by the pandemic.

With the increased economic instability caused by the pandemic, together with dramatically increased usage in the home, we are now facing a perfect storm as we enter winter. Mounting utility debt poses an acute threat to the health, safety, and wellbeing of individuals, families, and the community at large. Lack of stable utility services to a home exacerbates negative health outcomes, interrupts family unity, interferes with child learning and development, and has a long-term impact on consumer credit – making it more difficult for an individual to connect to utility service in the future. The loss of utility service also has an immediate destabilizing impact on housing, and is often the catalyst for eviction and foreclosure proceedings and homelessness.

Pennsylvania needs a statewide plan to equitably address this unprecedented utility debt crisis, and avoid these far-ranging impacts which are likely to occur. Rather than a patchwork approach to recovery, it is critical that we have statewide policies and procedures in place to ensure that a household’s ability to access critical relief is not contingent on their zip code.

We believe that an equitable, statewide plan to address the unprecedented utility debt crisis should include the following:

(1) Ongoing Prohibition on Utility Shutoffs

As we enter a very long, dark winter at home, it is absolutely critical that Pennsylvania families remain protected from the loss of heat, electricity, water, wastewater, and telecommunication services.

Unfortunately, several unregulated utilities across the state have already begun to terminate customers for nonpayment. And on October 13, the Pennsylvania Utility Commission issued an Order allowing utility shutoffs for nonpayment to proceed for residential and business customers on November 9, 2020.

In an attempt to protect economically vulnerable consumers from the loss of service, the Commission established a new class of “protected customers” – further prohibiting termination until March 31, 2021 for residential consumers with income at or below 300% of the federal poverty level who apply for “all Available Assistance programs” and who seek a payment arrangement from their utility for any remaining balance. The Commission’s October 13 Order also requires utilities to send a pre-termination notice to consumers at least 10 days before shutoff advising that they are behind and may soon face termination.

We recognize the good intent of the Commission to protect vulnerable consumers while collecting from those who can otherwise afford to pay. That said, we have serious concerns for how these protections and notices will be implemented, and what requirements utilities will impose on consumers who seek this additional protection from being shut off.

Rather than place the burden on consumers to submit proof that they should be protected from termination, we believe the responsibility should instead be on utilities to improve outreach, strengthen and expand the reach of assistance programs, and advance proposals to equitably resolve debts through a mix of long-term payment arrangements and debt forgiveness.

Substantial additional challenges lie ahead – both in the next few weeks as we work to ensure that “protected customers” are shielded from the loss of service and over the next five months as we work to ensure that appropriate consumer protections are in place to address the staggering buildup of arrears. If the legislature does not rise to this challenge with additional resources and strengthened consumer protections, we will see a catastrophic loss of utility service this Spring, when terminations are set to resume for all residential consumers statewide.

Ultimately, until there is a comprehensive plan to address the buildup of arrears in an equitable and just manner, the protection against utility shutoffs continue for all those who cannot afford to pay.

(2) Increase Resources for Utility Assistance

We strongly support efforts to appropriate additional CARES Act funding to provide critical debt relief to low- and moderate-income consumers.

To ensure equitable distribution across Pennsylvania, it will be critical for resources to be apportioned in a manner that does not allow all resources to go to a few of the largest utility providers – and which ensures the availability of adequate assistance to water and wastewater customers, for which there are few if any programs already available. Care should be taken to simplify the design of an assistance program to ensure that smaller municipal utilities are able to participate as well.

Resources should be leveraged based on adherence to other important provisions, including requirements for utilities to further suspend shut offs – especially for vulnerable consumers, such as those with a medical condition – and to enter reasonable payment arrangements for any remaining consumer debts not covered by an allocation of federal or state funding. Given the existing patchwork of utility assistance program infrastructure, and the varied regulatory landscape, additional funds may be best delivered through various agencies – rather than a single agency.

In addition to direct bill assistance, we recommend investing additional resources to support the Weatherization Assistance Program and other comprehensive low-income energy efficiency programming. Additional funds should be targeted to fill gaps in existing programs to provide critical health and safety upgrades in the home – like remediation of mold and structural issues that prevent proper weatherization of the home and exacerbate health conditions that have contributed to the disproportionate health impacts of COVID-19 in communities of color. Weatherization provides a multitude of long-term benefits to low income consumers, including substantial reductions in household energy usage, improvements to home health and safety, and local workforce development.

(3) Strengthen Debt Collection Policies and Consumer Protections

The available tools in the tool box for utility consumer debt collection policies and consumer protections are inadequate to meet the demands of the current debt crisis.

Allow the Commission to Issue Additional, Flexible Payment Arrangements

The Commission is currently prohibited from providing more than one payment arrangement, and must follow stringent guidelines in issuing a payment arrangement based on household income alone – regardless of other critical factors which may impact the ability of the customer to pay.

Payment arrangement standards should be flexible to account for a household’s actual ability to pay, and should allow consumers to access an additional or longer PUC-issued payment arrangement if they fall behind. At the very least, any payment arrangement issued prior to or during the pandemic should not count against the consumer.

Permit Customers Enrolled in CAP to Access Payment Arrangements

The Commission is prohibited from issuing a payment arrangement to customers enrolled in a gas or electric utilities’ Customer Assistance Program. CAP customers often receive unaffordable bills – sometimes exceeding 17% of household income. It is difficult under normal circumstances for many CAP customers to keep up. It is critical that all consumers – including those enrolled in CAP – be afforded a reasonable opportunity to catch up with missed bills.

Improve Protections for Medically Vulnerable Consumers

Medically vulnerable consumers cannot have their utilities shut off if they obtain a medical certificate. But the process for obtaining a medical certificate is difficult even in relatively good times, requiring submission of a signed written document every 30 days even if the consumer’s condition is chronic. Each visit to the doctor most often requires an available appointment, time off work, money for a co-pay, child care, and transportation costs. Likewise, for the most part, the protection may only be renewed twice, for a total of 90 days’ protection from termination. This is hardly adequate time for those facing acute medical conditions to both attend to their immediate health needs and come up with the money to avoid termination.

In light of the pandemic, it is especially critical that households impacted by COVID-19 be able to maintain service to their home without being required to travel to a doctor’s office to obtain a written document to prevent the shut off of utility service to their home.

We recommend adoption of a 6-month medical certificate period for those with a chronic illness, as determined by their medical provider. Additionally, utilities should be required to accept medical certificates over the phone – rather than requiring a written certificate.

Enhance Post-Moratorium Termination Procedures

Currently, regulated utilities must follow a standard 10-day termination notice period. In normal times, this is a very quick turn-around – often leaving insufficient time for households to find additional resources or apply for assistance. But of course, these are not normal times.

Utility customers need enhanced notice of termination following expiration of the current emergency moratorium, which lists a variety of utility and housing-related assistance programs available in the utilities’ service territory. In turn, utilities should be prohibited from shutting off service while an application for assistance is pending.

Unregulated Utilities

Substantial reforms are also necessary to address the lack of standardized consumer protections for unregulated utility consumers. Many protections in place through regulated utilities would be consumer protections for unregulated utilities consistent with the consumer protections available to regulated utility consumers, including standardized termination notices, payment arrangement standards, winter protections, protections for medically vulnerable consumers, protections for victims of domestic violence, and a clear process for disputing a utility bill.

(4) Enhance Universal Service Programming

There are a number of gaps in existing universal service programs for both regulated and unregulated utilities that must be addressed to ensure that service is affordable to those facing profound economic hardship as a result of the pandemic.

Additionally, the legislature should act to require the creation of comprehensive water and wastewater assistance programming, modeled after the regulated gas and electric Customer Assistance Programs. CAPs provide both a discounted bill, based on a household’s ability to pay, as well as the opportunity for debt forgiveness over time (most often 1/36th for each payment). This combination of benefits has proven to be an effective low-income debt management tool to improve bill payment behavior and limit further accrual of arrears.

(5) Establish Equitable Cost Recovery of Pandemic Related Expenses

It should not be a foregone conclusion that residential ratepayers – and specifically, low income ratepayers – will shoulder the entire financial burden created by the massive job losses and economic devastation caused by the pandemic. It is critical for the legislature to establish parameters for how utilities may recover costs associated with the pandemic to ensure that costs are recovered in a just, reasonable, and equitable manner. Such a plan should include cost- sharing across the rate base and with utilities.

At a time when individuals and business across the Commonwealth are struggling profoundly to afford basic human needs, it is unconscionable that utilities would not also share in that burden.

Ultimately, our collective action to address the pending utility debt crisis will write our future, and will determine whether Pennsylvania emerges from this pandemic as a healthier, more vibrant community. Without substantial resources and bold policy solutions, we are likely to see unprecedented spikes in utility termination rates – resulting in a staggering ripple effect on housing stability, community health, and economic wellbeing. Failure to take decisive steps to address the impending utility debt crisis in a just and equitable manner can and will exacerbate disproportionate impacts of the pandemic on low income communities and communities of color – having lasting impacts on the ability of these households to regain economic footing.