Consumer Concerns for Older Americans

How To Help Older Americans Avoid  Loss Of Utility Services

Maintaining utility service is a crucial issue for older Americans.  While these consumers may not be able to afford to pay their utility bills, they cannot afford to go without service either.  For older consumers it may be particularly difficult to cut back on their use of basic utilities, especially during the winter or summer months, because of the serious threat that extreme temperatures can pose to their health.   For retired or disabled seniors, reducing their basic electric, gas, or water bills will be even harder because they may spend more time at home.  Significant savings in utility bills normally require major investments in insulation, home repairs, and energy-efficient appliances, which may be beyond the reach of financially limited consumers.

Unable to reduce utility costs and unable to cover the cost of utility bills, many older Americans accrue substantial debts to their utility companies.  Unpaid utility bills can mean loss of water, electric, or gas service which can have dire consequences for seniors, particularly in the winter or summer months.   Moreover, for seniors who may be tenants, loss of utility service may pose the possibility of eviction since landlords view loss of utility service as a potential hazard for the rental unit (for example, frozen pipes burst and cause extensive damage, use of alternative sources of heat or light can cause fires).

This issue of Consumer Concerns for Older Americans offers practical advice on how to prevent a utility termination before it is threatened and how to challenge a pending utility termination. 

Key Sources of Assistance

Seniors with utility problems should consult someone experienced in utility law or practice.  Lawyers and paralegals at local legal services offices have suggestions on how to protect consumers.  A local community action program (CAP) can be another good source for advice, especially if the CAP administers an energy assistance or weatherization program.  Area Agencies on Aging (AAAs) or other state, local, or nonprofit advocacy groups that work with seniors may also be able to offer suggestions.

A variety of useful handbooks are also available, the most helpful of which will be state specific.  For example, The Right to Light (and Heat) Handbook, published by the Massachusetts Poverty Law Center, is an excellent consumer guide to utility service in Massachusetts.  Similar guides are available in several other states.

Strategies for Becoming Current on Utility Bills

1. Level Payment Plans.A level payment plan may help customers who are current on their utility bills, but who may have trouble paying their utility bills at certain times of the year, especially in the winter, when heating bills are high.  To avoid running up debts during these months, customers can establish level payment plans with utility companies.  Many states require utilities to provide these plans.In a level payment plan, a customer's projected yearly bill is divided into equal monthly installments; monthly bills reflect this amount rather than each month's actual costs.  For example, a customer whose total gas bill for a year is $1200, would pay $100 each month instead of $200 to $300 a month in the winter, and $30 to $40 a month in the summer. At some point during the year, the average bill and the actual usage are reconciled.

2. Budget Payment Plans.  Households in financial distress can quickly get so far into the hole with their utility bills that a level payment plan is not enough.  The household cannot catch up on back due payments (called arrears) and also keep up current utility bills.  One solution is for the consumer and utility to negotiate a budget payment plan whereby the consumer makes a fixed monthly payment and the utility promises not to shut off service.  State utility commissions often require utilities to offer such a plan.The plan may be designed so that the customer pays current usage, but only slowly catches up on the amount in arrears.  Sometimes the consumer can negotiate a plan whereby the monthly payments do not even completely cover current bills, and there is no requirement to catch up on arrears. To make a successful payment plan, the customer, preferably with the help of a counselor, must develop a simple budget that the household can reasonably meet, and must not be hesitant to push that plan with the utility company employee who negotiates the agreement. Payment plans need not require payments to be made in equal monthly installments.The utility company is likely to want a payment plan that requires larger payments than the customer can afford. Large payments are in the company's short-term interest, because they recover past debts more quickly. Too many customers, believing they have no choice, agree to these payments.  Unrealistic plans, however, harm both customers and utility companies in the long run.  The customer is unable to make the payments, and may lose the service, and the company does not collect its debt.  In some states, utilities are not required to enter into a second payment plan with consumers who have defaulted on a first payment plan.  If a company should refuse to agree to a reasonable payment plan, help can be obtained from the consumer division of the local utility commission.  Some utilities also are more willing to negotiate with consumer counselors than with consumers themselves.

3.  Federal Energy Assistance. The federal Low Income Home Energy Assistance Program (LIHEAP), administered by the states, helps low-income households (families or individuals) pay their winter heating bills.  Some states also use LIHEAP funds to assist with summer cooling expenses.  All states set aside some of these funds to help out in times of crisis.  LIHEAP benefits can also go to renters and even to some public and subsidized housing tenants, with the energy assistance payments usually going directly to the landlord's fuel supplier and the amount being credited against the family or individual's rent.Guidelines for LIHEAP eligibility vary by state, but most states require that family income over the past three or twelve months be below 150% of the federal poverty guidelines.  (In some states, income must be even less.)   Under federal law, the household income for LIHEAP recipients cannot exceed 150 percent of the federal poverty guidelines or 60 percent of the State median income.  The size of a household's LIHEAP benefits generally depends on its income and the number of household members, and may also depend on housing type, fuel type, fuel prices, weather conditions, or actual energy consumption.To apply for LIHEAP benefits, the individual or family should contact the local agency in its community administering the program.  This is usually a nonprofit agency, such as the local community action program (CAP), or a state welfare office.  LIHEAP requires special outreach to senior households so many AAAs or other local agencies working with older consumers may be able to provide information about LIHEAP and how to apply for it.  Benefits are usually paid directly to the utility company or fuel vendor, and the household's utility or fuel obligation is reduced accordingly.

4.  Utility Fuel Funds. Many utility companies participate in special funds, sometimes directly subsidized by other customer contributions, to give loans or grants to those who cannot pay their utility bills.  To determine the availability of these funds, contact the utility company or the local agency that administers the LIHEAP program.  Many of these fuel funds focus specific attention on helping seniors or low-income consumers.5.PIP, EAP and Other Special Payment Plans.   A growing number of utilities and state utility commissions are experimenting with plans by which individuals or families pay only a certain percentage of their income instead of the amount called for by their normal utility bills.  Typically, if a low income household regularly pays this lower payment schedule, it is rewarded by gradual forgiveness of its back bills, or arrears.  These plans are sometimes called Percentage of Income Plans (PIPs) or Energy Assurance Plans (EAP's), but each utility seems to have its own unique name for the program.  The best way to determine if a utility has such a program is to contact that particular utility or the public utility commission.6.Discounted Rates. Some electric, gas and water utilities have special discounted rates for low-income, elderly and/or disabled households.  Ask your utility company or the state public utilities commission if there is a special, lower rate for seniors.

7.  Energy Conservation Programs. Some states provide homeowners and tenants with funds to weatherize their homes, thereby reducing heating and cooling costs.  Many utility companies provide low cost loans or outright grants for home weatherization, and some have sizeable programs targeting seniors and/or low-income customers, providing weatherization services directly to customers.  More information on weatherization programs is usually available through local energy assistance offices.  Ask your local AAA or other local government or private agencies that help seniors about these programs.Most agencies maintain waiting lists for weatherization assistance, and give priority to households that most need the help; seniors are usually given such priority.  Separate from such programs, individuals and families in many states can obtain assistance from utility companies to save on energy bills in other ways, such as replacing light bulbs with energy-efficient bulbs, insulating hot water tanks, and providing "low-flow" efficient faucets or shower heads. Again, many of these programs give special attention to seniors and/or to low-income households.

8. Other Government Programs. Other state agencies, such as welfare departments, may also run small energy assistance programs. In particular, federally funded Emergency Assistance provides aid to households that within the past six months have had or currently have a member under age twenty-one.     Emergency Assistance can be provided only once in a twelve month period. States may restrict the emergencies for which aid is provided, requiring, for example, that the emergency be unforeseen or out of the household's control. Utility shut-offs should be among the emergencies covered by general relief. This assistance could be helpful to seniors whose grandchildren or other young children may be living with them.  Since 1996, Emergency Assistance has been incorporated into the TANF block grant.   You should check to see if your state has chosen to provide emergency utility service assistance under its block grant.

9. Charities and Other Private Sources. Many charities, churches, and other private organizations help people pay their utility bills. These groups provide assistance only when they have funds available, and sometimes only at certain times of the year. In some areas, AAAs, community action programs or agencies or organizations that work with seniors maintain referral lists of such private energy assistance programs.

Fighting a Termination of Service

The threat of immediate termination of service, and the need to restore service that has already been terminated, are the two most urgent problems faced by utility customers. In many states, statutes and public utility commission regulations provide a variety of significant protection against utility terminations. These protections include:

1. Financial Hardship. Public utility commission regulations in some states prohibit or restrict termination of service for households whose income falls below certain levels, or whose income is restricted to certain government benefits, or who can otherwise demonstrate financial hardship.

2. Serious Illness. Similarly, state law or public utility commission regulations often restrict termination of service for households whose members face a serious illness, are threatened with serious illness, or depend upon life support systems. Often, a doctor must certify the illness. A household with very young children may also be able to use the health risk to the children as grounds to stop utility termination - - again, this issue may be helpful for those seniors who have become caregivers for their young grandchildren or other young children.

3. Winter Protection Rules. Many states and cities have enacted legislation that prevents termination of utility service during certain times of the year, chiefly termination of heat‑related services during the heating months. To qualify for the protection, financial hardship may have to be demonstrated.

4. Special Rules for Senior Households. Some states offer general protection for older customers, while others protect them against termination if a winter storm is forecast or if the temperature is expected to drop below a certain level. Similar protection may be offered to households with children.

5. Tenant Protection. It is all too common, particularly in difficult economic times, for a landlord to fail to pay for utility service, putting tenants at risk of losing the utility service. Tenants in this situation sometimes have special protection. In some states, tenants must receive a special shutoff notice if the landlord is delinquent (behind on his or her payment). Then, tenants make utility payments directly to the utility, and deduct those payments from their rent.

6. Advance Notice of Utility Termination. All customers are protected against surprise termination of service. Utility companies cannot legally terminate service without first providing customers with requests for payment and notices of termination. Many utilities must also provide customers with an opportunity to dispute or contest the reasons for the shutoff.

7. Contesting the Termination. A utility commission's consumer division responds to phone calls, letters, and visits by residential customers. Many of their complaints are resolved informally, by consultation between the consumer division and the utility. Consumer divisions also hold hearings on complaints that cannot be resolved informally. In large states, several hundred of these hearings are held each year. Consumers generally have a legal right to a hearing whenever they have grounds to dispute a utility termination. Simply request the utility commission to provide a hearing before service is terminated. While municipal utilities are generally not regulated by the utility commission, customers of municipal utilities have a constitutional right to a hearing before termination. Consumers need not have a lawyer represent them at the hearing. However, it may be helpful to have a paralegal or experienced utility counselor assist with the hearing. To support their claim, it is important for consumers to bring all relevant documentary evidence, such as a physician's affidavit or past bills. It may also be helpful to have witnesses such as friends and neighbors present.

8. Bankruptcy Protection. The mere filing of a bankruptcy petition automatically requires the utility to restore service or cease a threatened termination. The bankruptcy filing creates a twenty day period where the consumer is has a right to service from all applicable utilities. The utility can only terminate service after that twenty day period if the consumer fails to pay future bills, even if the consumer never pays another penny on past due bills. The utility, though, can require that the consumer provide adequate assurance that future bills will be paid, such as the consumer providing a new deposit or requiring a co-signer to such an agreement. Additional Resources on Access to Utility Services The National Consumer Law Center (NCLC) has published a manual, entitled Access to Utility Service (1996) and a 1998 Cumulative Supplement, which provides a current utility and energy law developments, including customer service and utility termination issues, special utility payment plans and rates for low-income consumers, and federal LIHEAP and weatherization developments.  For more information, contact NCLC’s Boston Office at 617/542-8010. For additional information on where to turn with questions on utility problems, contact NCLC’s DC office at 202/986-6060 or Boston office at 617/542-8010.

About NCLC

Since 1992, NCLC has received funding from Administration on Aging to conduct the National Legal Resource Initiative for Financially Distressed Older Americans, intended to improve access to and the quality of consumer representation for older Americans.  Founded in 1969, NCLC provides legal advocates with technical and expert assistance, training and publications that cover all major topics in consumer law.  NCLC has established itself as the nation’s consumer law specialist, making its legal expertise available to the attorneys for low income clients.  These services are now available to advocates representing older Americans.

March 2000

A publication of NCLC’s National Legal Resource Initiative for Financially Distressed Older Americans 

NCLC – 77 Summer Street, 10th Floor– Boston, MA  02110– 617/542-8010