Reducing the Impact of Utility Disconnections

I was looking at the holiday lights in my neighborhood the other evening and it made me think about how my electric bills usually spike over the month of December with all the additional lights outside and inside, extra baking and cooking, along with additional evening gatherings with friends and family. Others must see the same spikes in energy usage. Would people change their energy usage behavior if they had more insight on that usage? Maybe changing their house lighting schedule (who’s really looking at your lights from 1:00 am to 6:00 am, anyway)? Between the higher electric bill and the impact of present buying, many family budgets are maxed out. This can lead to unpaid bills in the new year and potentially utility disconnects in those early months of the new year.

There is a real public impact from regulated and unregulated utility disconnections. Many of these disconnects are related to debt accumulation from arrearages. These disconnects are a manifestation of a problem, but not the root of the problem. The number of disconnects alone is a poor metric for this public impact.

Earlier this year the Ohio Disconnection Redirection Team, which is a collaboration of Ohio State University and the Ohio PUC, interviewed experts in utility disconnections from social, legal, engineering, economic and business backgrounds. Six potential solutions were identified that could be implemented to accomplish the objective of 𝗿𝗲𝗱𝘂𝗰𝗶𝗻𝗴 𝘁𝗵𝗲 𝗻𝗲𝘁 𝗽𝘂𝗯𝗹𝗶𝗰 𝗶𝗺𝗽𝗮𝗰𝘁 𝗼𝗳 𝘂𝘁𝗶𝗹𝗶𝘁𝘆 𝗱𝗶𝘀𝗰𝗼𝗻𝗻𝗲𝗰𝘁𝗶𝗼𝗻𝘀. Here are brief descriptions of these six tentative solutions:

1. 𝗜𝗻𝗰𝗿𝗲𝗮𝘀𝗲𝗱 𝗗𝗮𝘁𝗮 𝗥𝗲𝗽𝗼𝗿𝘁𝗶𝗻𝗴: Mandate increased data reporting (ex. zip code, duration of disconnection, number and dollar amount of arrearages, number of partial payments, payment plan success, etc.) from utility companies to identify trends in customer behavior.
2. 𝗣𝗿𝗲-𝗣𝗮𝗶𝗱 𝗮𝗻𝗱 𝗙𝗹𝗲𝘅𝗶𝗯𝗹𝗲 𝗘𝗻𝗲𝗿𝗴𝘆 𝗢𝗽𝘁𝗶𝗼𝗻𝘀: Require utilities to provide additional flexible payment options for customers (weekly/biweekly payment options, prepaid energy services).
3. R𝗲𝗾𝘂𝗶𝗿𝗲 𝗟𝗼𝗰𝗮𝗹 𝗥𝗲𝘀𝗼𝘂𝗿𝗰𝗲 𝗜𝗻𝗳𝗼𝗿𝗺𝗮𝘁𝗶𝗼𝗻 𝗶𝗻 𝗥𝗼𝗯𝗼𝗰𝗮𝗹𝗹𝘀 𝗮𝗻𝗱 𝗧𝗲𝘅𝘁𝘀: Negotiate content of robocalls and automated text messages from utility companies to households facing disconnect to include information on local community action agencies and other pertinent resources.
4. 𝗜𝗻𝗰𝗿𝗲𝗮𝘀𝗲 𝗖𝗼𝗺𝗺𝘂𝗻𝗶𝘁𝘆 𝗢𝘂𝘁𝗿𝗲𝗮𝗰𝗵 𝗮𝗻𝗱 𝗘𝗱𝘂𝗰𝗮𝘁𝗶𝗼𝗻: Allocate increased resources for community education and outreach to utility assistance programs and application processes.
5. 𝗘𝘅𝗽𝗿𝗲𝘀𝘀 𝗟𝗮𝗻𝗲 𝗘𝗹𝗶𝗴𝗶𝗯𝗶𝗹𝗶𝘁𝘆: Implement Express Lane eligibility (automatic enrollment for those enrolled in other state and federal programs with similar/identical requirements, ex. Medicare, SNAP, Headstart) and enhanced application bundling (multiple programs applied to with single application).
6. 𝗠𝗼𝗻𝗲𝘁𝗮𝗿𝘆 𝗜𝗻𝗰𝗲𝗻𝘁𝗶𝘃𝗲𝘀 𝗳𝗼𝗿 𝗨𝘁𝗶𝗹𝗶𝘁𝘆 𝗖𝗼𝗺𝗽𝗮𝗻𝗶𝗲𝘀: Provide incentives to utility companies via increased rate of return for reduced disconnections and enhanced community investment using a performance-based rate making mechanism.   

The report showed that a combination of solutions 1, 2 and 5 would lead to the best outcomes. I completely agree that giving energy consumers flexible billing options, such as prepay, allows consumers to better budget and manage their energy consumption and spend. This better budgeting capability enables consumers to avoid getting into arrears. To do this, increased data reporting that comes from AMI data is needed. Properly reporting outages as described above would also be very valuable. However, the disconnect report needs to flag disconnects on prepaid accounts. It has been shown that because of the speed of reconnecting on AMI (seconds to a few minutes), some prepay consumers elect to use the disconnect as their "reminder" to "top-up" their account. Since these types of very short-term disconnections are unique to prepay usage, they need to be highlighted as such. In addition, some utilities have implemented programs of prepay that do not even use the AMI remote disconnect on prepay subscribers, they are just switched to normal postpay after a grace period of a few days.

Robocalls and unsolicited texts are often viewed as nuisance calls and I would consider a "band-aid" type of solution. Allowing utilities to raise rates puts an undue burden on those that do pay their bills. Without the ability to offer real utility billing programs that work, Community Outreach and Express Lane solutions, while valuable, only offers access to limited funds available to a limited set of low-income households.

Flexible billing options already exist today and have been implemented by many utilities and have proven to be beneficial to both energy consumers and utilities. One needs only to look at two very successful programs at Salt River Project and Georgia Power. Proper disconnect reporting is a great step in getting valuable insight into how these impact consumers. Community Outreach and Express Lane combined with utility programs for flexible options greatly improves the experience of energy consumers who are challenged with utility bills. Flexible billing programs, such as prepay energy, are also desired by many in the 18-40-year-old age group, with 47% of survey respondents being very interested or extremely interested according to 2022 research by DEFG LLC. This demographic group likes the budgeting benefits of getting usage data on a nearer real-time basis instead of being surprised at the end of the month with a larger-than-expected bill. Near real-time data allows consumers to modify their energy usage behavior, reducing their bills and their carbon footprint.