Those who never lost power during the winter storm will end up paying for that privilege. It’ll come in the form of higher utility bills due next month. Even those who did lose power can expect to see a spike in water usage from dripping faucets or burst pipes.
For those with financial means, bigger bills are an inconvenience. But a year into a pandemic-driven recession that has fallen mostly on lower-income Texans, those bigger bills can be a major burden.
“If we don’t have some plans put in place quickly by state and local governments and nonprofit organizations, we’re going to see people struggling in an already difficult situation,” said Leah King, president and CEO of the United Way of Tarrant County.
Throughout the pandemic, King said requests utility assistance have shot up. Even before the winter storm, people were struggling to come up with the cash to keep utilities on.
Nonprofits like the United Way are already raising money to help.
Utility bills are expected to be higher for a range of reasons.
Increased usage is one: Keeping a home heated with below-freezing temperatures outside just burns more gas and sucks up electricity.
Dripping faucets to prevent pipes from freezing will also come with costs, even if they’re cheaper than a busted pipe. Gushing water from a busted pipe will also show up on your water bill.
The electricity you use is also more expensive right now.
Exactly why it’s expensive is complicated, and requires a little explanation of how electricity works in Texas.
The winter weather shut down some power generators across the state — nuclear, coal and gas power plants, as well as renewable energy producers — just as demand was surging. That forced the Electrical Reliability Council of Texas (ERCOT), which maintains the grid, to tell electricity distributors to institute blackouts to keep the system from collapsing entirely.
In an effort to push more power generators back online, the state’s Public Utility Commission issued an emergency order that forced up the price of electricity. Essentially, it told power plants that they’d get paid more for each electron of electricity that they sent into the electric grid.
That more expensive electricity will, ultimately, be paid for by consumers. Whether that will show up in your next bill from the electric company, though, depends on a few factors.
A major factor is the nature of your contract with your retail electric provider — the brand-name companies like TXU or Reliant, from which you buy your energy from, or the municipal utility run by your city.
The key concern is how your electricity rate is determined.
People with variable-rate plans are likely to see the most eye-popping electricity bills.
Those variable-rate plans are tied to the fluctuating price energy providers pay to buy electricity from power producers. That means, when bulk electricity prices spike, the prices consumers pay can spike too.
This week, some retail energy provider companies offered customers cash to drop their variable rate plan, warning of five-fold rate increases.
Many retail energy providers move customers automatically onto variable-rate plans after their fixed-rate contract term expires. So, if your 12-month, fixed-rate contract ends and you don’t go shop for a new fixed-rate plan, you may find yourself moved onto a variable rate plan.
Kaiba White from the consumer rights group Public Citizen said the deregulated, market-based electric utility system is based on the assumption that individual customers will find the best plan for themselves.
“But in reality, people have a lot of different things tugging at their attention and their bandwidth, and so a lot of our economic decisions are actually made on autopilot,” White said. “And all these economic theories — that we will shop for the cheapest and best plan for ourselves – they don’t play out.”
Most households have fixed-rate plans, which offer stable pricing, White said.
That means, even though your electricity provider is now buying more expensive electricity, it won’t affect the rate you’re paying. You may be using more electricity, but each electron sucked into your appliances will cost the same now as it did a week ago.
“Those folks [with fixed-rate plans], for the most part, will be pretty well protected because their rates are set by the utility or their city council or whatever, and so they won’t immediately see a big impact, other than the energy they used,” said Cyrus Reed, conservation director for the Lone Star Chapter of the Sierra Club.
Still, even fixed rate customers will pay more in the long run, Reed said, in the form of higher prices in the future, or increased fees or fuel charges.
“There’ll be higher prices to pay for these scarcity prices,” Reed said.
The hardship of increased electricity, water and natural gas bills are also likely to be felt disproportionately on lower-income Black and Latino households.
Weatherization is, on the whole, worse in housing that is affordable to people with lower incomes. Drafts from older windows, doors that don’t seal tightly, and poorly insulated walls mean it takes more electricity to keep a home heated.
Folks who rent their homes are, essentially, at the mercy of their landlord’s decisions about investing in energy efficiency. Folks who own their homes may not be able to afford to invest in better windows, additional insulation, and other home improvements, said Leah King, president and CEO of the United Way of Tarrant County.
“That falls disproportionately high onto communities of color who, oftentimes, have experienced lack of access to capital and to second mortgages to weatherize their homes,” King said.
The yawning racial wealth gap in the US is another factor into why high energy bills disproportionately impact households of color. Wealth is a measure of a family’s assets minus their debts.
In 2019, the typical white family had roughly eight times more wealth than the typical Black family, and five times the wealth of the typical Latino family.
Black and Latino families are less likely to have cash on hand to invest in improvements that make their homes more efficient and more weather-resistant.
If you are struggling to manage bigger utility bills, there are some avenues to pursue help. While some states fund utility assistance programs, Texas does not.
“The state of Texas has been pretty bad at providing any sort of financial assistance,” said Kaiba White.
Local nonprofits and governments may have funds to help people pay bills in order to keep the lights on and the water flowing. Reaching out to utilities and electric providers could help too.
Many providers offer payment plans for customers facing hardship. It doesn’t relieve the burden entirely, but it spreads it out and keeps the lights on, White said.
One more concern are scams. The Better Business Bureau is also warning customers to watch out for utility “impostor” scams. When utility bills are high, usually during the summer, scammers start calling impersonating utilities and offering too-good-to-be-true rebates or deals in order to get credit card numbers or other sensitive personal information.
The bureau offers this advice:
- Remember prepaid debit cards, gift cards or wire transfers are always a red flag as a form of payment.
- If you receive any unsolicited calls please contact your electric provider using a number you find on your bill.
Got a tip? Christopher Connelly is KERA's One Crisis Away Reporter, exploring life on the financial edge. Email Christopher at cconnelly@kera.org.You can follow Christopher on Twitter @hithisischris.
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