The Problem
Current state laws are failing to adequately protect consumers from utility disconnections, threatening their access to essential needs such as electricity, water, and heating simply because of their economic status. Disconnections disproportionately impact low-income households, elderly people on fixed incomes, and people of color. A study by the University of Minnesota found that regardless of poverty or housing type, households of color are three times more likely to face utility disconnections.
Disconnecting utilities creates more financial hardship and poses serious health and safety risks. For instance, during extreme weather conditions, a lack of access to electricity or heating can be a serious threat to life. Additionally, no access to water is detrimental to hygiene, sanitation, and overall health.
The Solution
State lawmakers can protect the health, safety, and welfare of residents by eliminating utility disconnections for at-risk populations and during extreme weather, guaranteeing access to essential utilities as a fundamental human right, and eliminating abusive late fees.
This could be accomplished by replicating what French state-owned utility Électricité de France did in 2022, when it made a commitment to no longer shut off electricity to customers behind on bills. Instead, the utility replaced its disconnection program with a guaranteed minimum power reduction (unless there is a physical or technical impediment to limit the power supply to the home), allowing households behind on their utility bills to receive a “lifeline” amount of electricity (1 kW), sufficient enough to meet basic electricity necessities.
A more robust and equitable approach would be the discontinuation of utility disconnections for nonpayment for low-income, senior, and disabled residential customers. The Los Angeles Department of Water and Power adopted a similar policy in 2022; however, their policy only applied to at-risk customers enrolled in the utility’s bill assistance program.
Access to essential utilities during life-threatening events is critical. Lawmakers can help save lives during these events by prohibiting utility disconnections during extreme weather conditions, state-declared emergencies, and public health emergencies, such as the COVID-19 pandemic. Earlier this year, Virginia passed such legislation after a multi-year effort that began when a Virginia municipal utility disconnected water service to nonpaying customers at the height of the COVID-19 pandemic.
Beyond limiting utility disconnections, states can rein in disconnections by mandating utility companies to offer flexible payment plans to consumers facing financial hardship, so that they can properly manage their utility bills and outstanding debt without the constant fear of falling behind, being kicked off the program, and immediately losing access to essential services. States can also better design debt relief programs that either retire balances on a one-time basis or gradually reduce payments if the customer continues to make timely payments.
Lastly, enforcing penalties for unjust disconnections and customer rights violations would help reform the state utilities system to ensure equitable and affordable access for all.