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 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 cause more hardship 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 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. Moreover, for seniors who are tenants, loss of utility service may result in eviction since landlords view such loss of service as a potential hazard for the rental unit (for example, frozen pipes may burst and cause extensive damage, use of alternative sources of heat or light can cause fires). Some subsidized housing leases require the tenant to maintain utility services at the risk of both eviction from the rental unit and loss of the housing subsidy.
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 try to find someone with experience helping customers deal with utility problems. This might be a lawyer or paralegal at the local legal services office or a staff member at the local agency that makes fuel assistance payments (usually but not always the local community action program, or CAP). Area Agencies on Aging (AAAs) or other state, local, or nonprofit advocacy groups that work with seniors may also be able to offer suggestions.
Utility law is very specific to each state because states, not the federal government, regulate gas and electric companies. However, the National Consumer Law Center (NCLC) has recently published a book, entitled “Guide to the Rights of Utility Consumers,” which is written to be useful for utility consumers around the country. The book can be purchased at www.nclc.org/publications/guides.
At least one state – Massachusetts – has a guide book specific to issues that utility consumers face in the state, entitled “Utilities Advocacy for Low-income Households.” A free copy of the book can be viewed or printed at http://www.masslegalservices.org/cat/1430.
Strategies for Keeping Up with Utility Bills
The strategies below range from ways to spread the payments over time to finding sources that will help make payments on the bills:
Budget Plans. Budget plans, also called “level payment plans,” may help customers who are current on their utility bills but may have trouble paying their utility bills at certain times of the year – especially in the winter (when heating bills are high) or summer (when air conditioning can drive up electric bills). To avoid running up debts during these months, customers can establish budget plans with utility companies. Many states require utilities to provide these plans. In a budget 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, and the customer either receives a “catch-up” bill (if actual usage was higher than estimated) or a credit (if the actual bills were lower than estimated).
Payment Plans. Households in financial distress can quickly get so far into the hole with their utility bills that a budget plan is not enough. Such households cannot catch up on back-due payments (called arrears) and still keep up on current utility bills. One solution is for the consumer and utility to negotiate a payment plan by which 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. To make a successful payment plan, the customer – preferably with the help of an advocate or caseworker – must develop a simple budget that the household can reasonably meet and must not be hesitant to advocate for 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. (For your state’s utility commission contact information, go to www.naruc.org; click on “State Commissions” on the left-hand side, then click on your state.) Some utilities also are more willing to negotiate with consumer counselors than with consumers themselves.
Federal Energy Assistance. The federal Low Income Home Energy Assistance Program (LIHEAP), commonly called “fuel assistance,” is administered by the states. It helps low-income households (families or individuals) pay their winter heating bills. Some states also use LIHEAP funds to assist with summer cooling expenses. LIHEAP benefits can also go to renters and even to some public- and subsidized-housing tenants, with the energy assistance payments sometimes paid directly to the landlord's fuel supplier and 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 to twelve months be below 150% of the federal poverty guidelines. (In some states, income limits will be as low as 110% of the poverty guideline or as high as 200% of the guideline.) 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 that administers the program. This is usually a nonprofit agency, such as the local community action program (CAP), or a state welfare office. (To find out the local fuel assistance agency in your area, go to: http://liheap.ncat.org/referral.htm or call 1-866-674-6327. 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.
Utility Fuel Funds. Many utility companies utilize special funds, sometimes directly subsidized by other customer contributions, to provide funds 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 specifically on helping seniors or low-income consumers.
Other Special Payment Plans. A growing number of utilities and state utility commissions are experimenting with plans in which individuals or families pay only a certain percentage of their income instead of the amount listed on their regular utility bills. Typically, if a low-income household regularly pays according to this percentage-of-income payment schedule, the household is rewarded with a gradual forgiveness of its back bills or arrears. These plans are sometimes called Percentage of Income Plans (PIPs) or Energy Assurance Plans (EAPs), 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 utility or the public utility commission and ask whether there are special payment programs for low-income customers.
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 are any special lower rates.
Energy Conservation Programs. Some states run programs that provide homeowners and tenants with funds to weatherize their homes, tune up/repair/replace old or inoperative heating systems, or replace inefficient appliances like old refrigerators. Many utility companies also provide assistance for weatherization of homes and replacement of old appliances in the form of low-cost loans or outright grants. To find out where to apply for weatherization programs in your area, contact your local fuel assistance office. (See #3, above, for how to find the local fuel assistance office.) It is also worth asking your local Area Agency on Aging or other local government or private agencies if there are weatherization or appliance programs specific to your area. Most agencies maintain waiting lists for weatherization assistance and usually give priority to seniors. 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 by 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.
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.
Other Government Programs. Other state agencies, such as those providing welfare, social service, or mental health services, may also have access to funds that help with utility bill payments. In particular, state welfare departments may be able to make Emergency Assistance payments on utility bills. 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.
Fighting a Termination of Service
The threat of immediate termination of service, and the need to restore service that has 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:
Financial Hardship. Public utility commission regulations in some states prohibit or restrict termination of service for households with incomes falling below certain levels, households with incomes limited to certain government benefits, or households that can otherwise demonstrate financial hardship.
Serious Illness. Similarly, state law or public utility commission regulations often restrict termination of service for households with members who are facing or are threatened with a serious illness or who depend on life-support systems. Often, a doctor must certify the illness and the family must certify that it is experiencing financial hardship and is unable to pay its bills. A household with very young children may also cite the health risk to the children as grounds to stop utility termination –again, this issue may be helpful for seniors who are caregivers for their young grandchildren or other young children.
Winter/Summer Protection Rules. Many states and cities have enacted legislation that prevents termination of utility service during certain times of the year, chiefly heat‑related services during the heating months. A few states also limit terminations when temperatures exceed a certain level in the summer. To qualify for the protection, financial hardship may have to be demonstrated.
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.
Tenant Protection. Sometimes a landlord fails to pay for utility service, putting tenants at risk of losing the utility service. Tenants in this situation may have special protections. In some states, tenants must receive a special shutoff notice if the landlord is delinquent (behind on his or her payment). In such cases, tenants can make utility payments directly to the utility and deduct those payments from their rent.
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.
Contesting the Termination. A state’s utility commission's consumer division responds to phone calls, letters, and visits by residential customers. Many customer complaints are resolved informally, through consultation between the consumer division and the utility. The consumer division also holds hearings on complaints that cannot be resolved informally. 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. It is important for consumers to bring all relevant documentary evidence, such as a physician's affidavit or past bills, to support their claim. It may also be helpful to have witnesses, such as friends and neighbors, present.
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 during which the consumer 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. However, the utility can require that the consumer provide adequate assurance that future bills will be paid, for example, by providing a new deposit or requiring a co-signer to such an agreement.
Additional Resources
The National Consumer Law Center (NCLC) publishes a manual, entitled Access to Utility Service (3d ed. 2004 and Supp.) which provides detailed discussions of 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 about the book, go to http://www.nclc.org/publications/manuals/access_utility.shtml. For additional information on where to turn with questions on utility problems, contact Charlie Harak or John Howat at NCLC’s Boston office (617 542-8010) or Olivia Wein at NCLC’s Washington, D.C., office (202 452-6252).
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