Private Electricity Companies Push To End Shutoff Moratorium As Summer Looms
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Despite hotter-than-normal summer temperatures in the forecast, private electricity companies are pressuring the Public Utility Commission of Texas, or PUC, to allow power shutoffs for people who haven’t paid their bills.
Many Texans are behind on electricity bills: nearly 170,000 in San Antonio and about 50,000 in Austin — areas where electricity is provided by city-owned utilities. The average past-due amount is about $600. NRG and Vistra — the massive conglomerates whose subsidiaries dominate the state’s deregulated electricity market, which includes Houston and Dallas — did not answer TPR's questions about how many of their customers owe money.
Due to a “network outage affecting several agencies,” the PUC’s website was down at the start of Friday’s open meeting, limiting the public’s access to information discussed in the meeting and to details about how to even attend the meeting.
When Will Disconnections Actually Resume? No Answers From Providers
The PUC has put disconnections on hold for much of the past year due to the February storm and the COVID-19 pandemic — the economic fallout of which is still being felt. The moratorium does not apply to municipally owned utilities or cooperatives, although CPS and Austin Energy willingly implemented their own holds on disconnections.
In written statements, Austin Energy said the City of Austin is “looking to resume disconnections for non-payment later this summer,” and CPS in San Antonio said, “We have not decided on a date to resume, but are in discussions with our Board to resume disconnects.” Both utilities said consumers will receive advance notice.
Vistra and NRG did not say when they will resume disconnects.
For weeks, a coalition of private electricity companies have pressured the PUC to lift the disconnection moratorium. A few days before the meeting, Payless Power CEO Brandon Young wrote to commissioners and said the ban on shutoffs “effectively requires (private electricity companies) to purchase power to serve customers who do not pay their electric bills.”
The moratorium doesn’t waive bills. Customers are still charged for electricity — and will eventually have to pay — even if they are already behind on payments.
Young added, “The competitive industry cannot last long if this untenable situation continues.”
He also called into the PUC’s meeting on Friday to request an immediate end to the moratorium.
“Like any business, we must have the ability to enforce balances owed,” Young said.
In a move that surprised some analysts, commissioners skipped over the agenda item without discussion during their biweekly open meeting on Friday. It is likely to appear on the agenda of the next meeting on June 11.
If the moratorium is lifted before or during the summer, the results could be deadly. A GateHouse Media investigation found more than 100 Texans died from heat-related causes — in their own homes — from 2008 through 2018, and that many of those who died were trying to cut back on electricity use because they feared disconnections.
“It's inexcusable — shouldn't be allowed to happen in a state with as many resources and as much wealth as we have,” said Austin-based energy and climate consultant Doug Lewin.
Paula Gold-Williams — the CEO of CPS, San Antonio’s municipally owned utility — appeared on TPR’s The Source to discuss the organization’s finances in early May, a few weeks after the utility signaled its intention to resume disconnections by the beginning of the summer.
More than 10% of CPS customers are behind on bills. Gold-Williams was asked if 1 out of 10 homes in San Antonio will lose power.
“We're going to do everything we can not to (disconnect 1 out 10 homes),” she said. “Normally, in non-COVID years, we have about less than 1% of our customers really end up getting disconnected and staying disconnected. We believe, though, that what we're supposed to do — what we're committed to do — is help every customer get out of this bad economic situation.”
CPS and other providers are in a “bad economic situation” of their own. Taking CPS as an example: February’s extreme winter weather took offline one of the utility’s significant generators of power — the controversial J.K. Spruce coal plant — which forced CPS to buy even more natural gas and additional electricity on expensive, real-time “spot markets” than would normally be necessary. The approximately $1 billion hit from the storm led to a downgraded credit rating.
Vistra and NRG also suffered massive losses.
In contrast, Austin Energy made money during the storm — largely because its power generators worked as planned.
What Are Your Options If You Can't Pay Your Power Bill In Texas?
First and foremost, company spokespersons and customer advocates said people should contact their electricity provider if they can’t pay bills. Several providers also encouraged customers to look into the Texas Rent Relief Program, which offers payments directly to landlords or utility companies on behalf of people who pass a means test based on income and financial hardship.
Provider representatives also said to beware of scams. Disconnection notices are typically served weeks in advance, and most providers do not demand immediate payment by phone.
DeAnna Hardwick, Interim VP of Customer Success at CPS, said there are options for financially disadvantaged customers in San Antonio.
“We will work with customers,” she said.
In addition to flexible payment plans and potential discounts, Austin Energy pointed to a slate of programs for people who can’t pay their bills.
As municipally owned utilities, Austin Energy and San Antonio’s CPS ostensibly have significant flexibility to work with customers who can’t pay their bills.
The situation is likely to be more complicated in the deregulated market, which includes Houston and Dallas, where a handful of for-profit companies compete for consumers. The state’s biggest electricity conglomerates — Vistra and NRG — hold most of the market share.
A spokesperson for NRG-subsidiary Reliant encouraged customers who need help to reach out to the company directly and to look into the CARE program.
Vistra did not respond to any questions. One of its large subsidiaries, TXU Energy, has an “energy aid” web page that includes customer testimonials and contact information.
Tim Morstad, an electric utilities analyst with AARP Texas, encouraged customers to look into deferred payment plans, which can stretch out past-due balances over several months. But, he warned, deferred payment plans often come with a “switch hold” for consumers in the deregulated market, where people choose from a handful of private providers.
“Which means that once you enter into a deferred payment plan, the state is going to prevent you from switching to another retail electric provider and starting service with another company until your bills are completely paid off,” he said. “That's a tough pill to swallow. It's something that electricity customers need to consider before they enter into a deferred payment plan.”
Energy Injustice, Stalled Assistance And Slashed Benefits
Morstad said a resumption of shutoffs is likely to have an outsize effect on retired people who rely on fixed incomes. AARP Texas wants to see the moratorium extended.
“Electricity usage goes up in the summer. Electricity bills go up as people use air conditioning to stay safe and cool,” he said. “It's really important to make sure that the power keeps flowing to customers in need.”
Low-income households in Texas use about 10% of their income on energy costs, according to the Texas Energy Poverty Research Institute. Households that receive low incomes make up more than 40% of the state population, and the low-income population’s average “energy burden” — the percentage of income spent on energy — is three times the state average.
According to Tony Reames, an assistant professor and director of the Urban Energy Justice Lab at University of Michigan in Ann Arbor, 10% is considered a “severe” energy burden.
He also said studies show, in areas of the U.S. where data is available, that shutoffs disproportionately impact Black, Indigenous and Latinx people.
“I don't believe that shutoffs should necessarily be the result of nonpayment,” Reames said. “And I think we could do some additional data analysis and root cause analysis to understand why people can't afford their bills. It's not always just that they don't have the income, but there are other reasons — like energy efficiency.”
Hotter temperatures during the summer means an increased energy burden for all Texas households, but especially for homes that aren’t energy efficient due to lack of insulation and old technology.
Much of Reames’ work looks at achieving energy justice through ideas beyond cash assistance, including “place-based” energy efficiency programs — “a safety net for energy that is strategic,” he explained. “So, you know, for 12 months, you get some assistance with your utility bills, as you're signed up for an Energy Efficiency Program that will then make your home more efficient, and hopefully reduce your energy costs. And can we do that at a community scale? Where you do Block A this year, Block B next year, Block C — and then you move through a city, and all your blocks are now more efficient and affordable.”
Reames said direct assistance in the absence of energy efficiency can be a helpful stop-gap measure. According to him, an energy assistance program in Michigan that reduced peoples’ debts led to more than 80% of participants staying current with their bills “because now they didn't have this big mountain of debt hanging over them, and so they could actually see a way to make their payments.”
“But now, another caveat is that a paid bill does not necessarily mean an affordable bill because we know that tons of people make tradeoffs between paying their energy costs and buying food, buying medicine,” he said. “And so I think that's why the percentage of income becomes a really, really interesting metric because it allows us to think about people's disposable income and how much money they have to do all these other things they have to do.”
An energy efficiency bill in the Texas legislature was dropped in favor of what many experts considered a bizarre proposal from Berkshire Hathaway Energy to build a state-controlled set of emergency electricity generators. Berkshire Hathaway Energy — which would receive more than a 9% rate of return from the plan — has been trying to garner grassroots support for the initiative through digital ads linking to a petition.
The state legislature also considered giving one-time cash assistance to Texans who were “affected” by the extreme winter storm in February. The POWER Act would have used the state’s massive rainy day fund to allocate $1,000 to $2,500 per affected household.
Peter Cramton is an economics professor at University of Cologne and former vice chair of the ERCOT board.
“(Direct cash assistance) is a good idea, and ultimately, it saves Texans money,” he said. “Because if you put people out on the street, it is actually more costly to Texans to manage the consequences of that.”
But the POWER Act stalled in the House State Affairs committee.
Cramton said disconnections should be a “last resort,” and should not be used against people who genuinely can’t afford to pay.
“Ultimately, it's important for people to pay their bills,” he said. “And it's also important to recognize that we are in a very unusual time with the pandemic, and that there are lots of folks that are not so well off — that have lost their job because of the pandemic or whatever reason — and then to just throw huge bills at them on top of that is not smart.”
On top of the stalled relief in the legislature, Gov. Greg Abbott announced on Monday an upcoming $300 cut to weekly benefits for unemployed Texans.
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