PA Needs Utility Bill Assistance to Prevent Mass Shut-Offs

Pennsylvania has appropriated only two-thirds of the $3.9 billion it received under the federal CARES Act for “expenditures incurred due to the public health emergency with respect to [COVID-19].” This blog explores one urgent need for the remaining $1.3 billion: providing financial assistance to millions of Pennsylvanians at risk of losing access to electric, gas, and water in their homes because they've fallen behind on their utility bills. Without such aid, the Commonwealth will join others facing a “tidal wave” of shutoffs when temporary restrictions on utility disconnections are lifted, endangering public health – especially for Black and Latino Pennsylvanians – as well as the state’s economic recovery.

Governor Wolf, the Public Utility Commission (PUC), and the state’s utilities all support using a significant amount of CARES Act funds for utility bill assistance, and legislation to appropriate funds has been introduced in the General Assembly. But as the PUC considers lifting an order that prohibits investor-owned utilities from terminating service due to non-payment, there is no sign of legislative action.

Background: The Shut-off Moratorium

Pennsylvania law generally allows investor-owned utilities – which in exchange for state-granted monopolies over utility service are extensively regulated by the PUC – to terminate service due to unpaid bills (the technical term is “arrearages”) if they follow certain procedures. The major exception is that terminating service for low-income households is mostly prohibited during the winter.

Publicly-owned utilities – including hundreds of municipal systems that provide water to the vast majority of Pennsylvanians – are not subject to these rules at all. They are generally free to set their own shutoff policies.

On March 13, 2020, a week after Governor Wolf proclaimed a Disaster Emergency over the pandemic, the PUC issued an Emergency Order prohibiting utilities from terminating service for as long as the Disaster Emergency is in effect. “It is beyond argument,” PUC Chair Gladys Brown Dutrieuille wrote, “that the provision of public utility service is necessary for the safety of the public. This is especially the case under the current challenges that resulted in the Proclamation of a pandemic emergency.” The PUC order applied only to utilities under its jurisdiction – in other words, it left most water customers unprotected. Unlike many other states, Pennsylvania never adopted a shutoff moratorium covering publicly-owned utilities.

The governor’s Disaster Emergency was originally set to expire in June. After Wolf extended it to September (this week Wolf extended it again), utilities began to press for an earlier end to the PUC’s shut-off moratorium. In June, PUC Commissioners Coleman and Yanora moved to end it effective July 1, but the Commission deadlocked (one of the five seats is vacant) and the motion failed, Chairman Brown Dutrieuille then proposed a stakeholder process to inform the decision; that motion failed too. Finally, in August, the Chairman opened a one-week public comment period on when to end the moratorium and what new consumer protections to establish, given the continuing pandemic.

The PUC is scheduled to make a decision on September 17. NRDC has joined Governor Wolf, Attorney General Shapiro, the state Office of the Consumer Advocate, and the Pennsylvania Utility Law Project, (among others) in calling for the moratorium to be continued during the ongoing public health crisis and for the PUC to establish additional customer protections.

The Consumer and Business Need for Utility Bill Assistance

Whenever the moratorium is lifted, there will be hundreds of thousands of Pennsylvania households and local businesses with significant utility arrearages.

In late May, the PUC asked the utilities it regulates to provide data on how many of their customer accounts would be subject to termination due to non-payment if the moratorium were lifted. The utilities reported that at the time, more than 700,000 electric and gas customers could be terminated, along with an additional 50,000 water and wastewater customers.

These figures understated the scope of the problem in two key respects. First, they did not include past-due accounts at municipal water and wastewater utilities (which the PUC does not regulate). Second, they did not provide comprehensive data on arrearage amounts. The PUC did not request those data, but the delinquency balances that were voluntarily reported by utilities were significantly higher than they had been at the same time in 2019.

While more recent data are not publicly available, it is likely that both the number of delinquent accounts and the amount of arrearages owed are higher today, because while economic activity has increased since June, Pennsylvania’s unemployment rate remains above 13 percent and supplemental unemployment benefits under the CARES Act expired on July 25.

And arrearages are a problem for local businesses, as well as households. As the Pittsburgh Post-Gazette recently reported, data collected by The Energy Association of Pennsylvania showed that unpaid bills rose by 54% for nonresidential customers over 2019 levels, “the largest jump among the customer groups.”

COVID isn’t the sole cause of the utility arrearage problem.  The decade preceding the pandemic was the longest economic expansion in U.S. history, but in 2018 more than a quarter of Pennsylvania households had incomes below 200 percent of the federal poverty line ($43,440 for a family of three); the outright, i.e., deep, poverty level was around 12 percent (25 and 26 percent for Black and Latino households); and consumer debt was at an all-time high.

We desperately need to build an economy that’s both fairer and greener – an economy where gains in income and productivity are shared by all who contribute to them, not channeled to the top 1 percent, and are driven by investments in clean energy. First, though, we need to help those immediately in need.

Using CARES Act Funds to Provide Utility Bill Assistance

Pennsylvania policymakers can help Pennsylvanians with utility bill arrearages by putting CARES Act funds into payment assistance programs. Legislation has been introduced in the Senate by Senator Tom Killion and in the House by Representative Chris Quinn to appropriate $150 million of CARES Act money as follows:

• $100 million to the existing Low-Income Home Energy Assistance Program (LIHEAP) administered by the Department of Human Services (DHS),
• $25 million to a new PUC-administered program to provide grants to utilities so that they can make grants to "small businesses," (defined as businesses with peak loads of 25 kilowatts or less) and
• $25 million to a new program administered by the Pennsylvania Infrastructure Investment Authority (PennVEST) to make grants to water and wastewater utilities not regulated by the PUC, so that they can make grants to residential customers and small businesses.

A co-sponsor memo circulated by Senator Steve Santarsiero proposes a slightly different approach: allocating some of the money to LIHEAP and the rest to a new DHS program that covers unregulated water and wastewater utilities and expands LIHEAP eligibility so that some middle-income, as well as low-income households can qualify.

Pennsylvania Needs to Get This Right

Again, legislation to provide utility assistance to low- and middle-income households and local businesses enjoys broad support in Pennsylvania. But its enactment is in doubt because Republican leaders want to maximize the use of CARES Act money to replace lost revenue – and avoid new revenue-raising measures.

Because of past tax cuts and the General Assembly's rejection of meaningful new revenue-raising measures (e.g., a severance tax on fracking or higher taxes on investment income), revenue was a problem in Pennsylvania before the pandemic. Now the state is looking at a $5 billion budget shortfall. But that's not a reason to oppose using a relatively small part of the CARES Act money for utility bill arrearages help. There are other solutions for revenue; among other things, state leaders should push for enactment of the HEROES Act, which would both support Pennsylvanians with billions of dollars of new COVID-19 relief funds and provide new flexibility for using CARES Act funds to replace revenue.

The General Assembly recently passed a new tax credit that would spend over $700 million in state tax dollars to support petrochemical plants that buy fracked gas. Will members now act to help Pennsylvania households and businesses struggling with utility bill arrearages? 

“Who gets through this crisis more or less whole, and who does not, is almost entirely a political decision,” economist Dean Baker observed in May. He’s right, and the political decisions in question have climate implications, because as my colleague Khalil Shahyd recently wrote, rising inequality and economic stress fuels distrust and discontent that limit aggressive action on climate change. To rapidly decarbonize its economy, Pennsylvania needs a stable civil society in which all residents have an opportunity to flourish. That can't happen if people can't pay their utility bills.