A delicate balance

There are a lot of articles this time of year related to people in need.  There was one such article in the New York Times on Sunday, but the need wasn’t related to Christmas or empty stockings.  It was related to monthly utility bills.

As unemployment rises, so do unpaid utility bills.  And no matter how much funding is allocated to programs to help people pay their utility bills — and Federal funding sits at $5.1 billion annually — it’s never enough to cover all the arrears. Thus, several states are enacting caps for people below a certain income level.  According to the Times article, for example, in New Jersey, a household of four with an annual income under $38,588 only pays around six percent of its income in utility bills.  No matter how much electricity and natural gas they actually use.

Therein lies the problem.  At the risk of being exposed as a Scrooge, I think this is a terrible idea.  Our ongoing research with consumers reveals over and over that price and a willingness to conserve energy are intermingled.  It’s human nature:  if something gets very expensive we’ll figure out how to use less of it.

Now, I do not think folks at the lower end of the income spectrum are just kicking back without a care in the world intentionally using all the energy they can.  I get it.  But I’d like to see these programs tied to behavior change and, frankly, I’d like to see them tied to the billions of dollars set aside for weatherization in the Stimulus Package.  Fair enough that state agencies have been overwhelmed with more money than they’ve ever seen for such programs, and it takes time to get workers trained.  But while we’re getting all that sorted out, low income consumers are racking up utility bills they can’t pay.  In the end, that burden falls to you and me.

The vast majority of our country is served by for-profit utility companies, and they do what any business does when they have increased costs (in this case, millions of dollars of energy sold with no payment collected):  they raise the costs for those who are paying.  Expect to see this happening on a state-by-state basis.  Utilities will go to their public utility commissions and apply to increase their base rates.  And why shouldn’t they?  They have businesses to run and shareholders to satisfy just like any other company we buy from.

Back to solving the problem:  my hope is that first and foremost, when the states have their Biggee Sized weatherization programs up and running, they’ll weatherize the homes of those people who are in arrears with their utility companies to stop the bleeding.  Secondly, utilities need to deploy Smart Meters on those homes first and include a display unit inside the home so the consumer can see exactly how much energy the’re using on a daily basis.  Third, those consumers need energy education so they understand what they can do when the display tells them they’re in danger of using more energy than they can afford.  Fourth, the caps on utility bills should be tied to that consumption, which could now be easily tracked.  In other words, “we’ll cap your utility bill at 6% of your income, provided that you only use ______ killowat-hours every month.”

Easier said than done, perhaps.  And very Scrooge-like at this time of year, I know.  But an issue that needs to be solved swiftly, nonetheless.