Don't miss out
Every morning, the Energy News Network compiles the top stories about the clean energy transition and delivers them to your inbox for free. Sign up today!
Amanda Le did what she could to keep her two young kids distracted while they were staying in a motel paid for with coronavirus housing relief money following a rushed move from a home with severe water damage last year.
Le spent weeks searching for an affordable new home with room for her kids that would accept her emergency Section 8 housing voucher. When she found a three-bedroom house in early July 2021, she jumped to pay $525 to cover half of the deposit so the landlord would hold the property. A local nonprofit agreed to pay the rest.
But when she called the utility company OG&E to turn on electrical service ahead of an Oklahoma City Housing Authority inspection, she discovered the utility deposit would cost $440. Le said OG&E told her it needed the full amount to turn on the power. Without electricity, the home wouldn’t pass the inspection, which is required for Section 8 housing assistance. Le feared she wouldn’t be able to move in.
“I didn’t really know what to say. I was kind of speechless and had to catch my breath for a second,” Le said. “That’s a lot of money.”
Paying hefty utility deposits can be a barrier to housing, social service providers say. A growing number of Oklahomans need help paying their utility bills post-pandemic and while facing high inflation. The Oklahoma Corporation Commission, which regulates utilities, allows companies to require customers with a history of service cutoffs for nonpayment or more than two late payments in a year to pay a deposit. A recent federal report found such policies can punish poor people already struggling to pay their monthly bills.
A November 2021 report partially funded by the U.S. Department of Energy found most states allow utility companies to require “onerous security deposits” that are frequently as much as two or more average monthly bills.
“For low-income households, this up-front cash requirement can serve as an impediment to establishing service,” the report found. “Millions of U.S. households lack the income and savings to pay for basic necessities.”
John Howat, a senior energy analyst with the National Consumer Law Center, and one of the report’s authors, said it’s a public policy concern when people struggle to gain or keep access to utility services.
“It’s extremely unfair for folks who are experiencing poverty or are on the brink of that,” Howat said. “The deposit is oftentimes determined by the extent to which a household has been late previously in paying a bill. And folks are late for the most part because they can’t afford to pay for all necessities at the end of the month.”
Statewide, calls to Oklahoma’s 2-1-1 helpline for utility assistance spiked during the pandemic in 2020 and have stayed elevated since, according to HeartLine Inc., which runs the program. Between January and May of 2022, 2-1-1 made an average 3,524 referrals each month to get people utility assistance.
Oklahoma’s Corporation Commission rules allow regulated electric utilities to charge a deposit if a person hasn’t been a residential customer for 12 consecutive months out of the last 18 months, if they have made more than two late payments in a year, if they have had service cut off for nonpayment or if they’ve bounced a check.
OG&E, along with at least five other electric and gas utilities in Oklahoma, calculate deposit prices as up to one-sixth of the customer’s estimated annual bill, according to policies The Frontier obtained from the Corporation Commission. Under OG&E’s policy, if a person moves into a home where the previous tenant used a large amount of electricity, the new tenant’s deposit price would reflect that past usage. An OG&E spokeswoman said historic use and energy consumption are the best ways they have to determine potential upcoming energy usage at a property.
State regulations say utilities may allow customers to pay in installments, but it’s not a requirement.
OG&E, the largest electric utility in the state servicing 820,000 Oklahomans, and at least two other utilities may also base deposit amounts on a customer’s credit history. The top reason customers are required to pay deposits to OG&E is because of poor credit or a lack of credit, according to the company. OG&E said it doesn’t disclose the number of customers currently behind on their bills.
PSO, the state’s second largest utility, allows customers to pay deposits on a brief installment plan, but OG&E requires the money upfront.
Companies may waive deposit requirements for customers with sufficient payment history, according to several companies’ policies, which are approved by the Corporation Commission.
Dana Murphy, chairwoman of the three-member Corporation Commission, said the agency has a duty to balance the needs of the consumers with the needs of the utility companies.
“I think (deposits are) a burden. I think the question is, is it unfair?” she said. “Because if you have a large percentage of people that don’t make their payments and then all the other customers have to share in that cost, is that fair to everybody else? So I think fairness can’t be looked at from one perspective.”
Sommer Brown, director of utility customer operations for OG&E, said the company prioritizes payment plans when possible for monthly bills. A small social services team works with customers with financial difficulties to find nonprofits that help with payment assistance. The team can also sign people up for other programs to reduce monthly bills through energy conservation.
“We know we have customers who are in a difficult financial situation, and so we have these partnerships with these agencies to help them pay their bills,” Brown said. “We’re looking at all of our billing policies to see where can we make adjustments and what are other utilities and other companies doing regarding their deposits and avenues to pay.”
The Frontier asked OG&E how much money it spent last year to cover customers who didn’t pay their utility bills, but the company didn’t respond. OG&E reported a net income of $360 million in 2021, according to a press release.
Oklahoma does have some of the cheapest power in the country, according to data from the U.S. Energy Information Administration, but the state also has a poverty rate about 3% higher than the national average, according to the U.S. Census Bureau.
Tenants could also face eviction for violating the terms of a lease after a service cutoff for nonpayment or if they are unable to pay a utility deposit.
“It’s a catch-22,” said Carly Akard, communications director for Catholic Charities of the Archdiocese of Oklahoma City. “Because these are utility companies that are running a business, but at the same time, you don’t want to punish the poor.”
Saving up enough money to cover the $440 electrical deposit would have taken Le more than a month, she said. With affordable housing in short supply in Oklahoma City, Le knew the home would likely soon be taken if she couldn’t pay. She had already paid half of the rental deposit on the house, and her funds to stay in the hotel were running out.
She receives some money from an Oklahoma Department of Human Services’ program called LIHEAP, the Low Income Home Energy Assistance Program, which helps over 182,000 Oklahomans pay their electric bills. But, the program and other utility assistance options typically don’t help pay for deposits. Even if it did, income thresholds to qualify for LIHEAP are low and wouldn’t capture the number of Oklahomans that likely need help.
Utility assistance is one of the top needs Oklahomans have, but outside of the state’s metros, it can be hard to find utility assistance at all, said Beth Burke, HeartLine’s 2-1-1 director. Most nonprofits focus on helping people pay existing utility bills rather than deposits.
In Oklahoma City, nonprofit agencies like Neighborhood Services Organization offer housing programs where the agency makes utility deposits and payments on behalf of clients. Stacey Ninness, president of the agency, is looking to expand beyond its current roughly 60 units to remove deposits as a barrier to housing for more individuals.
Catholic Charities helps people pay utility bills and deposits on a case-by-case basis, but it doesn’t have enough money to help everyone who needs it, Akard said.
“It’s awful to turn people away,” she said. “The demand is more than we can bear.”
The Homeless Alliance, an Oklahoma City nonprofit, helped Le pay her $440 OG&E deposit so the home could pass inspection and she could move in. Le said she felt blessed to have had the assistance as she watched her kids look around their new rooms, playing hide and seek.
“It was a huge weight off,” she said.
In the last two years, the Homeless Alliance has paid more than 200 electrical deposits and service initiation fees for people who otherwise couldn’t afford it. More than 60 of those payments were over $200, according to Homeless Alliance data.
Nonprofits may have agreements with utility companies where the agency can promise to pay the deposit amount and get a person moved in with electricity a few days or weeks before the deposit is actually paid, said Meghan Mueller, associate director of the Homeless Alliance. Individuals typically cannot do this and must have the full amount upfront.
Utility bills will continue to rise as temperatures become hotter due to climate change, and OG&E customers are already paying a rate increase after the company reached a $30 million settlement with state regulators earlier this year. That’s in addition to bill increases customers will pay over the next two decades to help OG&E recover costs from the 2021 winter storm.
As prices rise, more people could fall behind on their bills or have service cut off because of nonpayment, meaning a deposit would be required to turn service back on in the future. Customers must also pay balances back before service is restored.
“It’s expensive to be poor,” Mueller said.
The Frontier is a nonprofit newsroom that produces fearless journalism with impact in Oklahoma. Read more at www.readfrontier.org.