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Throughout the COVID-19 pandemic, Black, Brown and Indigenous communities have been disproportionately at risk of hospitalization and death.
Recent research suggests high utility bills and utility shutoffs played a role in that impact — while companies were receiving federal funds and boosting executive compensation.
Pandemic-related job loss has increased household crowding and left many individuals and families unable to keep up with their utility bills. Lack of air conditioning can exacerbate breathing problems from chronic conditions such as asthma, and the absence of hot, clean running water makes it difficult to maintain handwashing and sanitation to reduce the risk of infection.
By contrast, utility shutoff moratoriums made it easier for households to remain in their own homes and adhere to stay-at-home orders during the beginning of the pandemic, thereby reducing rates of infection, hospitalization, and death. As restrictions have eased, families whose utility services are not disrupted are less likely to double up with relatives and friends or go to homeless shelters, also reducing the likelihood of COVID-19 community spread.
Had a nationwide ban on disconnections been in effect from March to November 2020, COVID-19 infections would have been reduced by 8.7% and COVID-related deaths reduced by 14.7%, according to a January 2021 working paper published by the National Bureau for Economic Research.
A September report from the Center for Biological Diversity and Bailout Watch highlights utility companies that refused to pause shutoffs for delinquent customers while collecting millions of dollars in federal support.
The report, titled Powerless in the Pandemic, found six utility companies accounted for 94% of all documented shutoffs. Four of these companies: NextEra Energy (parent of Florida Power & Light, among others), Duke Energy, Southern Company, and Dominion Energy are largely concentrated in the South.
“These utilities are functioning essentially in the Black Belt states,” said Jean Su, energy justice program director and senior attorney at the Center for Biological Diversity and a co-author of the report. “So, we know that … these are companies that very much are in the Southeast where the populations are disproportionately Black, and that suffer the highest energy burdens in the country. I think that’s another important data point to insert here in terms of the racial injustice and locations of the utility shutoffs.”
The other two utilities included in the report’s “Hall of Shame” — DTE Energy and Exelon — serve areas that include Detroit, Chicago, Baltimore and Philadelphia.
And while COVID-19 rates are presently on the decline, utility shutoffs remain a continuing threat.
Shutoffs and utility windfalls
Sixteen utilities received a combined $1.25 billion in financial support from the federal government through the CARES Act, passed by Congress and signed into law in March 2020. At the same time, nearly 1 million families nationwide had their electric service suspended or canceled between July 2020 and June 2021 — during the height of the pandemic — according to the report.
The report also stated that just 8.5% of the $1.25 billion received in bailout funds could have prevented every reported utility shutoff. NextEra Energy alone recorded more than 470,000 shutoffs between July 2020 and June 2021. The company received $41 million in CARES Act benefits — which alone could have covered much of the nearly $50 million it would have cost to avoid those disconnections.
The full impact is difficult to measure. No industry-wide standard or federal regulation exists to compel private utilities to disclose shutoff data. As a result, public reporting of shutoff data is split — with nearly half of states providing no public data on shutoffs, and four states providing only partial shutoff data through special reports.
Individual emergency orders by 32 states and the District of Columbia to prevent utility shutoffs mitigated the lack of a nationwide mandate to some extent. However, as of June 2021, just 10 states either still had moratoriums in place or had recorded no utility shutoffs. By the end of September 2021, only New York state still had a utility shutoff moratorium in place, according to the report.
While many customers suffered greatly due to utility shutoffs, top management and shareholders fared extremely well. In fact, the amount spent on executive pay and shareholder dividends could have more than covered the full cancellation of late utility bills, oftentimes several times over.
For example, NextEra Energy paid out more than $2.7 billion in CEO compensation and shareholder dividends — more than 55 times the amount required to prevent all of its utility shutoffs — between April 2020 and June 2021.
At the same time, utilities actively lobbied against legislative protections for ratepayers, according to Chris Kuveke, research consultant with BailoutWatch, who co-authored the report.
“That was pretty blatant. We saw the vast majority of these companies increase executive compensation. We limited the report scope to CEO compensation, but across the executive suite, these companies raised salaries. They raised stock awards [and] performance-based bonuses. Then on top of that, they raised dividends, in some cases pretty drastically, [to] compensate shareholders.
“Based on national studies of average utility rates, executive compensation and tax refunds, it was hundreds of times over the amount of money that they spent on shareholders and executives compared to what it would’ve cost to keep people’s lights on,” Kuveke said.
Utility shutoffs and housing insecurity
Utility shutoffs often generate adverse health effects, and can be a contributing factor to homelessness. No electricity means no air conditioning during the heat of summer, and spoiled food at all times of the year — along with leaving homes in the dark.
Hundreds of thousands of families suffering COVID-related job loss and other hardships faced housing insecurity due to utility shutoffs. In many cases, the result was unlivable conditions that essentially forced residents to leave their homes. In several states, renters are prohibited from remaining in units without working utilities.
The Centers for Disease Control and Prevention imposed a nationwide eviction moratorium in September 2020 to prevent evictions. After several extensions, the moratorium expired on July 31, 2021.
On Aug. 3, 2021, the CDC enacted a second moratorium effective only in areas with high COVID-19 transmission rates. The moratorium immediately faced multiple legal challenges, and finally landed before the Supreme Court, which blocked its enforcement on Aug. 31. The case has since been referred to the U.S. Court of Appeals for the District of Columbia Circuit.
However, moratoriums on rent evictions alone do not solve the dilemma of utility shutoffs. To address this shortfall, Democrats in the House of Representatives passed the HEROES Act in May 2020, which included a nationwide moratorium on utility and water shutoffs. However, the Senate, still under the leadership of Sen. Mitch McConnell at the time, failed to advance the measure.
Private companies and the public good
The report concluded that fundamental government intervention represents the only realistic path toward providing real relief to households burdened by utility bills that they cannot pay. Findings reported in the National Bureau for Economic Research report exposed a fundamental disconnect between the function of utilities and their financial structure.
Specifically, federal, state and municipal governments entrust utilities to deliver essential services such as electricity, heat and clean water while allowing them to operate as for-profit entities.
“For a very long time we have just assumed that giving private companies the ability to deliver a human right made economic sense because it’s economies of scale and it’s very expensive to create electricity. But over time, especially over the last few decades we have seen the choices that utilities have made — and that state regulators have allowed — are against public interest,” Su said.
As private companies, utilities work to increase profits — and reward stockholders with dividends. Too often, the result is that shareholders benefit at the expense of low-income consumers, according to Su.
“Utilities are private companies and we can’t expect private companies to be charitable. And I understand that. So that’s why I think our main target is government regulation. Because at the end of the day, a utility as a private company can take in so much revenue and yet they are not required at all to deal with this issue of not servicing all [customers regardless of income]. So, I think we need far greater utility accountability,” Su said.