Investor Alert

New York Markets Open in:

Feb. 16, 2021, 11:32 a.m. EST

As a winter storm pounds much of the country, there’s ‘significant risk’ of mass utility disconnection — but these Americans may feel it most

Watchlist Relevance

Want to see how this story relates to your watchlist?

Just add items to create a watchlist now:

or Cancel Already have a watchlist? Log In

By Andrew Keshner

A wicked winter storm is putting states as far south as Texas in a deep freeze, leaving snow, ice, tornadoes , and power outages in its path.

The severe weather follows a major winter storm earlier this month that smacked the Midwest with snow and then blanketed the East Coast, as far south as the Appalachian Mountains and as far north as New England.

There’s a greater likelihood Black and Hispanic families had to weather these storms without power.

In another example of the pandemic’s outsized consequences on minority communities, a recent study says there’s been “a troubling increase in disconnections and deferred payments agreements” on electricity accounts — especially for minority households.

The research focused on data from 5 million customers in Illinois. The earlier recent storm dumped more than a foot of snow in some parts of Chicago, according to the Chicago Tribune . The latest storm, Winter Storm Uri, dumped 7.5 inches of snow on Chicago O’Hare International Airport since Sunday and is blasting the city and the Upper Midwest with frigid temperatures.

The research looked at 2018-2019 data from two major Illinois utilities, Commonwealth Edison (ComEd) and Ameren, and compared it with data from late 2020 to find:

  • Customers in minority neighborhoods were between four and five times as likely to have their power disconnected before and during the pandemic.

  • Customers in Black- and Hispanic-majority ZIP codes were already two to three times as likely to be in deferred payment plans where households pay their outstanding balance in installments, but during the fall and winter of 2020, deferred payment agreements rose three-fold.

  • At the same point in the fall and winter, participation in low-income energy assistance programs rose nine-fold.  

  • Each month from September to December, roughly 20% of all accounts were hit with a non-payment fee, and utilities served disconnection notices to 3.4% of residential accounts and 2.5% of commercial accounts.

Like other states, Illinois had a formal moratorium pausing utility disconnections during the pandemic. Illinois’s moratorium ended in late July but the government, utilities and consumer advocates agreed to a deal where companies extended the pause to end of March 2021 for customers who were either on low-income energy assistance or called the utility stating a financial hardship.

The study’s author, Steve Cicala, a Tufts University economist, worries what will happen next. “With deferred payment agreements accumulating balances due and higher residential consumption during the pandemic, there is a significant risk of mass disconnection when moratoria expire at the end of March 2021,” he wrote.

By the end of this month, 180 million people across the country will be shielded from utility shutdowns by winter-disconnection moratoriums that recur every year and special COVID-19 utility moratoriums, according to projections from the National Energy Assistance Directors’ Association. (Illinois has an annual cold weather moratorium that ends in March.)

That’s approximately 55% of the population, the organization said. By the end of 2020, consumers racked up $32 billion in arrears on gas and electric bills nationally, the organization of state energy assistance administrators told federal lawmakers in a recent letter.

Seven states have no utility shutdown moratorium related to cold temperatures or COVID-19, according to the NEADA. Those states include Louisiana, one of the states snarled by Winter Storm Uri’s ice and unseasonably cold temperatures.

Cicala emphasized that he wasn’t saying the utilities were biased against minority customers. Instead, “this study reveals the disproportionate economic stress experienced in these communities, both in normal times, and especially during the COVID-19 pandemic,” he wrote in the study.

The pandemic’s extra-hard stress on Black and Hispanic communities plays out in various ways.

That starts with the fact that while Black and Hispanic people aren’t inherently more susceptible to the virus, they still are enduring a disproportionate amount of hospitalizations and death from coronavirus.

The early spring shockwave in job loss hit Black and Hispanic workers harder than their white counterparts and as of December, their jobless rates still exceeded white unemployment, standing at 9.9% and 9.3% respectively, noted Lael Brainard, a member of the Federal Reserve’s Board of Governors. White unemployment stood at 6%, she added.

Light, energy and heat are part of life’s necessities, Cicala wrote. But the absence of it cuts extra deep during the pandemic, he noted. For one thing, he said the lack of electricity can cut off a child’s educational lifeline in distance learning.

Consumers worried about paying their energy bills have resources, according to consumer advocates speaking at a national scale and specific to Illinois.

National Energy Assistance Referral has a hotline, 866-674-6327, where consumers can call to learn about energy assistance programs in their state. Consumers can also email energyassistance@ncat.org to seek more information.

Illinois consumers have options too, including a June 30, 2021 deadline to seek financial assistance with gas and electric bills. More information is available here.

Representatives for Ameren and ComEd did not immediately have a comment on the study.

This story was updated on Feb. 16.

This Story has 0 Comments
Be the first to comment
More News In
Personal Finance

Story Conversation

Commenting FAQs »

Rates »

Partner Center

Link to MarketWatch's Slice.