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Consumer utility disconnections have grown into a crisis, report says

Lorraine Mirabella  


    BALTIMORE - Electricity shut-offs soared 80 percent in Maryland last year, according to a report that said terminations of consumers' electric and gas service for nonpayment has turned into a national epidemic.

    Electric companies cut off power to Maryland households more than 74,000 times last year, according the report, "Powerless in the U.S.," released Monday. Shut-offs in the 30 states and Washington where data was available, including Maryland, totaled 1.5 million. Based on that data, researchers estimate that in all 50 states, 4.2 million household shut-offs occurred.

    "Utility shut-offs are spiraling out of control," said the report by the Energy and Policy Institute, Center for Biological Diversity and BailoutWatch, using data that utilities file to regulators, including the Public Service Commission in Maryland.

    The researchers blame what they call a broken utility business model as well as the surge in fossil-fuel gas and electricity prices last year. Electricity prices have increased about 12 percent since 2021, driven by the Russian war in Ukraine and utilities' reliance on natural gas for power generation.

    The researchers argue that utilities' "shortsighted overinvestment in fossil infrastructure" helps drive price volatility and fuels the shutoff crisis. Many states banned utility shut-offs as the pandemic hit, but those expired in 2021, including Maryland's moratorium, helping drive up disconnections.

    The report found a 29 percent increase in power disconnections and a 76 percent increase in gas disconnections in the first 10 months of last year compared with 2021 in the United States where data was available.

    Among states that report data, Maryland ranked seventh-highest in the country in the number of utility disconnections for nonpayment, the report found.

    A dozen companies, among them Baltimore Gas and Electric parent Exelon, were responsible for more than 4 in 5 of the shut-offs from 2020 through October 2022. The report argues that 1 percent of those companies' spending on dividends for shareholders could have prevented disconnections.

    Exelon, which owns BGE, Delmarva Power and Pepco in Maryland and utilities in Illinois, Pennsylvania and Washington, saw turnoffs jump 31 percent last year compared with 2021.

    BGE, the state's largest electricity provider with 1.2 million residential customers and another 690,000 gas customers, reported 7,902 shut-offs in 2020; 27,846 in 2021 and 60,659 last year through October, according to the report.

    Both BGE and its Chicago-based parent, Exelon, said disconnections last year were largely consistent with pre-pandemic historical trends. Both said terminations are a last resort and said they work with customers facing hardship.

    "We serve 10 million customers across major urban areas and know that market conditions, coupled with economic impacts of the pandemic, continue to create economic hardship for many of our customers," an Exelon spokeswoman said. "At the same time, disconnections are a last resort to protect customers from arrearages so substantial that they may never recover, and to protect other customers from the burden of paying those unrecovered costs."

    BGE said that while disconnections for non-low-income residential customers increased last year, compared with pre-pandemic years, disconnections for low-income residential customers decreased substantially, to approximately 4,000. Before the pandemic, the utility reported 8,228 disconnections for low-income households in 2017; there were 10,809 in 2018 and 9,093 in 2019.

    "We are mindful, though, that energy affordability remains a challenge for families in central Maryland, particularly those who are the most vulnerable, and there continues to be a need for energy assistance in our communities and across the country," said Nick Alexopulos, a BGE spokesperson.

    Although energy-supply charges are passed through to customers, BGE says it works through purchasing processes to reduce price volatility and invests in energy efficiency programs to help consumers reduce energy use and costs.

    BGE said customers facing shut-offs have chances to make payments, enroll in payment plans and seek financial assistance, such as through the Low-Income Home Energy Assistance Program. BGE said it helped more than 46,000 customers secure $116 million in energy assistance last year. The utility aims to reconnect customers as quickly as possible, many times within hours, Alexopulos said.

    In response to the pandemic, then-Gov. Larry Hogan (R) put a moratorium on water, gas and electric service turnoffs in March 2020 that was extended to Nov. 15 of that year. The Maryland Public Service Commission gave residents an extended time, 45 days, to address unpaid bills with their utility company once they receive a termination notice and options such as setting up payment plans.

    The sharp increase in turnoffs in Maryland last year may appear artificially high when compared with 2021, when many pandemic-related protections remained in place, said David S. Lapp, head of the Maryland Office of People's Counsel, an agency that advocates for residential utility consumers.

    "While we're concerned obviously about the big jump in terminations in 2022, there are some reasons for that big jump," Lapp said.

    There were likely fewer termination in 2021 because the General Assembly approved $83 million for utilities to cover overdue customer payments and because some restrictions remained after the general moratorium ended. Protections included payment plans as long as 24 months - with no down-payments required - and extended turnoff notice periods.

    Despite all the help available, many people fall behind on bills, Lapp said. As many as two-thirds of customers who qualify for energy assistance in Maryland are not receiving it, either because they have trouble accessing the aid or don't know about it, he said.

    But others who find themselves "on the edge of poverty" often do not qualify. Last year, 126,000 customers with past-due bills either did not qualify for energy assistance or did qualify but were not getting it, Lapp said.

    Lapp said he fears the service disconnection problem could worsen when several protections expire April 1. After that, utilities will be required to give only a 14-day notice before termination and will not be required to offer payment plans for a minimum of 12 months. Utilities also will be allowed to request down payments.

    "We're very concerned that there will be this flood of terminations coming later in the spring," he said. "Customers are feeling the effects still of the pandemic, also of inflation and also from increased energy prices. So this is not the time to be eliminating or reducing protections for customers."

    - Baltimore Sun


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