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Julianne Geiger

Julianne Geiger

Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group.

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What Happens If You Can’t Pay Your Electricity Bill?

With over 3 million Americans losing their jobs, and many more forced into lockdown, utilities are facing lower demand and more consumers that can’t afford to pay the bills At a time when over 3 million Americans have already lost their jobs, and as many as 47 million may be added to the unemployment roster, all that virus-forced staying at home will increase energy bills for people with limited means of paying them--at least until unemployment benefits and the stimulus checks come in. 

Until then, a number of states are moving to ensure that basic utilities aren’t shut off due to non-payment in this time of crisis--but not everyone’s on board, and the picture gets exponentially more complicated for the utilities that could face bankruptcy as a result.

The Energy Cost of Being Unemployed

Overall, energy consumption is expected to fall, with electricity demand during the week looking more like weekend demand, according to Genscape analyst Adam Jordan, who spoke to Bloomberg. Bars, restaurants, industry, and commercial businesses are closing up shop, denting power demand.

But this has also resulted in millions of workers throughout America being sent home. Some have been sent home to work from their couch in the comfort of their pyjamas. Others have simply been sent home. 

Either way, residential electricity usage (as well as water consumption) is likely to increase. Between Zoom and Netflix, laptops, phones, and lights--even extra freezers to keep all that hoarded food--residential electricity consumption is set to increase.

This will result in higher bills for the average consumer. But do you have to pay it now? The answer to that depends on where you live. 

State-by-State, Who’s Being Energy Kind?

At the national level, health officials have advised state and local authorities against shutting off water services to households in order to maintain the national guidelines that include frequent handwashing. 

Related: Shale Giant Files For Bankruptcy As Oil Price War Rages On
While states are not necessarily forgiving utility bills or offering free electricity or water, many states have taken up the charge to at least refrain from shutting off services during these difficult economic times. Some states, however, have been slower than others to hand down those executive orders.

North Carolina: On Tuesday, North Carolina Governor Roy Cooper issued an executive order that prohibited electricity, gas, water, and wastewater companies from discontinuing services due to nonpayment. The order will last for 60 days, and residents will have six months to make good on any back bills. The utilities also may not collect any interest, late fees, or penalties associated with the late payments during that time. 

Michigan: Michigan water utilities have been instructed to not shut off anyone’s water, and they’ve been instructed to turn on anyone’s water that had previously been shut off. For matters of power, many individual electric companies are suspending shutoffs due to non-payment. Some are extending this only to low-income and senior households, and dates vary as to how long their measures last. 

New York: All utilities in the state of New York--which has been hardest hit of anywhere in the country--have voluntarily agreed to keep services going, regardless of payment status. 

Texas has also banned shut-offs during the crisis to residential customers but allows shut-offs to businesses. It also provides interest-free loans (on the backs of customers) to electricity providers--something Texas decided to do to keep utilities from going bankrupt.  

The Fate of the Utilities

Thankfully, because the grid and utilities are considered a critical infrastructure, planning has already been done by utility companies in advance of any pandemic. SARS, Ebola and other scares have prompted many to become preppers of sorts, even storing food on-site for workers should they need to isolate from the public to keep critical workers from getting sick. 

According to the Los Angeles Times, some utility company employees are working from home. Maintenance work is being pushed off into are friendly time, and control staff are being seated further apart--generic pandemic plans that existed prior to the Covid-19 pandemic. 

NBC detailed that outside Albany, New York, electrical grid operators are living two-to-a-trailer, completely cut off from the outside world that might infect them, all to keep New York’s power on. This has been a hypothetical drill that they have practiced on a yearly basis, but have never had to put into practice, according to Rich Dewey, president of the New York Independent Systems Operator, which oversees New York’s energy grid.

These are just a few of the extraordinary measures that utilities are taking to keep the lights on, all the while forgoing service lockouts if you can’t pay.

Related: U.S. Drillers Face Doomsday Scenario As Some Crude Blends Hit $1

But this doesn’t mean it’s all smooth sailing for utilities. 

Like companies in other industries, much about how well any given utility company is expected to fare in this difficult environment of increased costs and lowered revenue can be predicted by how well they were doing prior to the pandemic.

The five largest U.S. energy utilities are Pacific Gas & Electric Company of California, Southern California Edison, Florida Power & Light, Commonwealth Edison Company of Illinois and Consolidated Edison Company of New York. 

PG&E, the largest of the large, wasn’t doing well going into the coronavirus crisis, coming off bankruptcy proceedings. It was also facing an extra $462-million fine over the California wildfires. For PG&E, it’s been one crisis after another of late. But one positive effect of COVID-19 may be a regulatory decision to back off that extra fine. Nothing has been decided, but talks to that end are in progress. 

Overall, the utility sector is in big trouble, and it’s always been a safe haven investment in the U.S. That’s because, well, everyone needs utilities so demand is always there. Some reports put the sector’s loss, year to date, at nearly 30% so far, and they predict it will get much worse. Critical infrastructure or not, someone’s got to foot the bill. 

And what’s worse, utilities haven’t yet experienced the significant reduction in demand for power because businesses have only recently been shut down. It’ll start catching up to the utilities within the next couple of weeks, though. 

By Julianne Geiger for Oilprice.com

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