Utility bubble nears bursting point, but who will pay?

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Utility bubble nears bursting point, but who will pay?

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“The debt crisis in New York for utility consumers is at a level we have never seen before,” said Public Utility Law Project Executive Director Richard Berkley.

BUFFALO, NY — The clock is ticking for more than one million New York households that are at risk of having their electricity and gas turned off if they don’t pay down their debts, which ballooned during the pandemic.

Advocate groups like the Public Utility Law Project of New York are now urging the state to help those largely fixed, low and middle-income individuals stay afloat by allocating $1.25 billion dollars in funding from the American Rescue Plan.

“The debt crisis in New York for utility consumers is at a level we have never seen before,” said PULP Executive Director Richard Berkley.

According to their analysis, the total amount of debt owed to electric and gas companies like NYSEG and National Grid hit $1.7 billion in January; $775 million of which was owed before the pandemic. Up until December 21, New York shielded customers from having their heat and power shut off. For those who lost a job or had their hours reduced over the past two years, Berkley said it was a huge benefit not to have to pay utility bills but the reality is those arrears continued to build up.

PULP found that 27% more gas and electric customers now owe their providers than before the pandemic and while the state limits when heat and power providers can cut their services until April 15, payment is coming due.

“Consumers don’t really have any real likelihood of paying it off. We haven’t fully recovered from COVID. Like the Great Recession, it’s going to take 10 years for the low and moderate-income households to see any sort of economic recovery ,” Berkley said.

The data compiled by the Public Utility Law Project was based on reports from the state public service commission. While it did show a worsening debt bubble, fewer people were added to the list during the second half of the pandemic, and in December 2021 and January 2022 there were 1% fewer people in arrears. Berkley said the one gap in their analysis is that it only included electricity and gas.

“We’re estimating one and two billion for water but don’t have reported numbers for that and then probably another three billion for telephone and internet,” he added.

Those providers aren’t required to report to the state what’s owed to them by customers.

Compared to the statewide 27% more customers in utility debt, Western New York gas and electric providers were lower on average. NYSEG had 19% more customers in arrears, National Grid 18%, National Fuel was 27%, and RG&E 11%. The Public Utility Law Project is now pitching state lawmakers to use American Rescue Plan money to pay off those individuals’ debts.

“That’s $12.75 billion and we said look we’re asking for 9% of it and 9% of that is $1.25 billion and that is enough to wipe out all the arrears that have built up on energy consumer’s bills that we’re unable to pay during the last 24 and a half months,” said Berkley.

The funding isn’t guaranteed at this point and will depend on what’s included in the state legislature’s proposed budget. Berkley explained that one thing customers can do to help their debt situation is call their electric or gas provider and ask about setting up a repayment plan.

Berkley added while this funding isn’t a guarantee one thing customers can do is call their electric or gas provider and ask about setting up a repayment plan, to avoid getting hit with months and months of unpaid utilities all at once.

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