Higher Costs Hit Residential Utility Bills
Two weeks ago we looked at housing costs in the “The Rent is Too Damn High,” now let’s look at utility bills.
For a number of reasons, energy costs have been increasing. According to the U.S. Energy Information Administration (EIA), the average homeowner saw their electricity climb 4.3% in 2021, to 13.72 cents per kilowatt-hour, the largest jump since 2008. Even before the start of global supply constraints intensified by the war in Ukraine, the EIA had expected that nearly half of U.S. households that heat primarily with natural gas would spend 30% more than they spent last winter on average.
There are a number of reasons for the rising costs. One is that demand for natural gas and electricity has been increasing as the economy continues to recover. The other is that the price of electricity has increased due to severe weather conditions in various parts of the country, causing utilities to spend more weatherizing equipment. In the southwest, power utilities and customers are still contending with the aftermath of a 2021 storm that brought record high energy prices to some states.
The pandemic, and continued rising costs in the U.S. and United Kingdom, bring up another important debate (or what really shouldn’t be a debate): access to electricity should be a basic human right. A UN report stated that nearly 759 million people around the world lack access to electricity in 2019. That number has likely increased in the past year as the pandemic has forced many into poverty.
In the U.S., there are a number of programs designed to help low-income families with their energy bills, but these programs are not always well-funded or well-publicized. And in many cases, they only provide a temporary reprieve from high energy costs. Pandemic related assistance programs are ending, but people still need help.
This week’s digest looks at energy prices in the U.S. and residential utility bills.
IN FOCUS
What’s Going on With Natural Gas?
- Why Your Electric Bill Is Soaring — and Likely to Go Higher Wall Street Journal
- Electric Bills Double for U.S. Families With Fuel Costs Surging Bloomberg
- High natural gas prices continue to fuel home-energy inflation KSHB 41 Kansas City
Utility Bills Increasing Most in Cities
- New Yorkers struggle to pay utility bills as electricity prices soar Financial Times
- Utility bills are soaring in the Philly region and so is customer outrage The Philadelphia Inquirer
- As natural gas prices climb, so will electric bills, experts say CBS 12 — Georgia
- ‘A lot of people need help’: Soaring electric bills leave some struggling to pay NBC News
How are State and Local Governments Responding?
CHART OF THE WEEK
The percent of U.S. electrical generation by energy source has been changing over time. Use of renewables has been increasing while coal has been decreasing. Natural gas has also seen a steady increase to a high of 40% in 2020, but forecasted to modestly decline as renewables continue to grow.
In the residential sector, natural gas provides for over 50% of energy use. At at time when energy prices are increasing and COVID-19 related payment programs are ending, low-income consumers could be hit particularly hard. According to the latest data from the National Energy Assistance Directors’ Association, around 21 million consumers were late on their utility payments in December.
In an effort to help those affected by the pandemic, utility bill assistance programs were put in place. This helped to ensure that families would not have to worry about losing their power or heat during a time when they needed it the most. However, these programs are ending. Companies resumed collection activities that were postponed for two years since the start of the pandemic on March 15.
According to The City, ConEd (New York State) is looking to raise rates again. In January the company filed a proposal for “$1.2 billion more to cover new transmission and resiliency projects, which would result in an estimated 11% bill increase for electric customers (gas customers will also see increases).” And according to Public Utility Law Project, more than 1.3 million New York City households are 60 days behind on utility bills, about 20% of the city.
In New York and other states, advocates have urged state lawmakers to utilize federal pandemic assistance to rescue residents who are unable to pay their utilities.
INTERESTING READ
The Incidence of Extreme Economic Stress: Evidence from Utility Disconnections NBER Publications
- The Issue: Using monthly zip code-level data on electricity disconnections, the paper documents the socioeconomic correlates of extreme economic distress among 5 million customers in Illinois.
- Key Finding:
In 2018–2019, customers in Black and Hispanic zip codes were about 4 times more likely to be disconnected for non-payment, 2–3 times more likely to be on deferred payment plans, and 70% more likely to participate in utility-based low-income assistance programs, controlling for zip code distributions of income and other demographic characteristics.
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