Heatwaves and COVID Mean Higher Home Electricity Bills; What Do We Do About That?

July 13, 2020 | 11:27 am
Joseph Daniel
Former Contributor

When the COVID-19 outbreak began to spread, states across the country began to institute stay-at-home orders in an effort to help contain the virus and “flatten the curve.” At the same time, advocates in the utility world began to call for moratoriums to electric and gas shut-offs, so that a lack of financial resources would not threaten a family’s ability could shelter in place safely, especially as the economic crisis deepens. Now, utilities want to start collecting on unpaid bills and many state policymakers are thinking of capitulating to utility demands by lifting previously imposed bans on utility shut-offs.

Here’s the problem: The COVID-19 pandemic hasn’t gone away—3 million US people have been diagnosed with COVID-19 and that number is rising, swiftly. Meanwhile, millions of people are unemployed as the COVID-related economic crisis worsens, and many families are struggling to pay for basic necessities like food and shelter. And now, a major heatwave is bearing down on the same states that are also in the throes of a dangerous surge in COVID-19 cases.

Even absent a health or economic crisis, the hottest days of summer are the absolute worst time to lift life-saving moratoriums on utility shut-offs.

As heat waves blanket the country, bills are expected to spike. UCS analysis found that the average family could see their bill increase 25% over past summers, that’s $50 a month for some.

The good news is that there are proactive measures states and the federal government can take to ease the burden for families.

Customers are facing an impossible decision

Families across the country are facing difficult decisions. It is in both their own personal interest and in the interest of public health to stay at home as new COVID-19 hot spots emerge in states like Arizona, Texas, and Florida.

But, staying at home means more electric use and higher electric bills. And with one and three families struggling to pay energy bills prior to the COVID pandemic, a spike in electric bills won’t be easy to deal with.

The summer comes with high temps and high electric bills

Summer electric bills are almost always higher than spring or fall bills, due to increased residential use of power for air conditioning and the like. But this summer, people are going to be spending unprecedented time at home and going to be using more power at home as well to keep cool.

Data on how home electric consumption patterns have changed this year are still very fresh and subject to refinement. Uplight, a customer-focused energy service company, is reporting based on 700,000 customers’ data that residential electric consumption in the parts of the country they examined was up 20-30%. Those numbers are in line with other reports from Texas.

Will those percent increases hold steady as heat waves spread across the country? I simply don’t know. It’ll depend on how long stay-at-home orders remain in place (or when they return), and on the weather, and on a range of other factors.

But, since they’re the best numbers available, it’s worth considering what will happen to electricity bills if monthly use continues to be that much higher, and what that adds up to. And that’s just what UCS has analyzed.

Increase electricity use means increased bills, but it isn’t one-to-one

UCS found that a 30% increase in power usage doesn’t mean a 30% increase in utility bills. That’s because most utilities bill customers based on fixed charges that don’t scale with increased (or reduced) electric use.

While different utilities even in the same state might price things differently, UCS studied data from OpenEI  (a repository of datasets that are crowdsourced by industry analysts) to estimate customers’ average volumetric rates (that is, cost per kilowatt-hour) by accounting for average state fixed charges.

What UCS calculations suggest is that a 20-30% increase in residential electricity use could result in an increase in electric bills ranging from 15 percent to 30 percent a month (depending on utility).

Applying that range to the data on average residential bills by state gives the potential increase in bills across the country. And the graphic below shows what UCS found about what an average customer might expect in terms of increased electric bills if recent apparent trends hold.

The estimated increase in electric bill ($/month) over the historical average for the same month

In the summer, households in Southern states see outsized increases in electric bills in our analysis. Those bill increases could reach over $50 extra a month in many southern states.

  • In Florida, for example, the average residential bill could exceed $211, which is about $46 above historical averages or 29% above typical July bills.
  • In Arizona, the average bill could exceed $267 for a typical family, which is about $55 above historical averages or 25% above typical July bills.
  • In Texas, the average bill could exceed $230 for the average family in the state, which is about $51 above historical averages or 29% above typical July bills.

It’s important to note FL, AZ, and TX—among many other states—are experiencing a resurgence of COVID-19 infections in July and thus it is likely stay-at-home guidance will continue for a while yet.

Low income and black families will be hit hardest

Paying an extra $20 or even 50 dollars a month pales in comparison to the healthcare cost and cost of human life if we fail to contain the spread of COVID-19 by lifting stay-at-home orders too soon. It’s also worth noting that reduced commuting or other financial burdens might help offset the increase in electric bills, which will make the increased electric bill more manageable for some households. (I, for one, haven’t used mass transit in over four months.)

But for those living near or below the poverty line, these increased costs might devastate already thin household budgets. Same for the recently unemployed, who are suddenly faced with a whole new math when it comes to meeting expenses (and who may well already have been among low salary earners). Furthermore, the economic pain is not equitably experienced in the US, even during the pandemic: the 2020 unemployment rate among Asian, Hispanic and Black workers is notably higher than for white workers, even in the same catastrophic COVID circumstances. As Jacqui Patterson, director of the NAACP’s environmental and climate justice program, pointed out in a recent Bloomberg article, this is “another situation where people are paying the price of poverty with their lives.”

And it isn’t just poor people who face higher than average electric bills.  A recent study found that Black families pay higher electric bills, even after accounting for variables including income. COVID-19 and heat waves are likely to compound existing inequities, including energy poverty. This is why I’ve described energy poverty acting like a pre-existing condition.

Existing programs can provide relief… if we fund them enough

While for many families the crisis exacerbates already serious electricity burdens, in aggregate the societal cost of the stay-at-home extra is not actually that much. Our calculations based on the above assumptions suggest that covering the increase in electric bills for everyone living at or below 4 times the federal poverty could take about $1 billion a month (on average). While this number might increase based on COVID crisis impacts and the number of families that have lost their primary sources of income, the amount will still be a drop in the bucket compared to the billions in relief the federal government has thrown away in corporate bailouts.

Congress’s initial response packages for this crisis were insufficient and need to include considerable increases to important federal programs that help struggling families deal with energy burdens, like the Weatherization Assistance Program (WAP) and the Low-Income Home Energy Assistance Program (LIHEAP). Substantial additional funding for those programs is a needed first step.

What can be done for these compounding crises?

State budgets are in disarray. Now more than ever the federal government really needs to step up and help support programs that can assist families through this pandemic.

Sen. Majority Leader Mitch McConnell has said that he won’t support a “blue state bailout”, but most of the hardest-hit families will be low-income households in red states like West Virginia, Tennessee, South Carolina, Georgia, Alabama, and Mississippi. Providing aid to states to increase support for LIHEAP or WAP would help all those in need, not just those in “blue states.”

Moreover, many of the states that are seeing waves of new COVID cases, states like Florida, Arizona, and Texas, are the same states where families are most at risk of seeing a spike in electric bills.

What else is particularly striking is just how little it would cost the federal government to step in and alleviate the issue for the households least equipped to handle these extra costs.

A few billion dollars is not small change, certainly, but in the context of the economy, the emergency, and the relief funding approved by Congress to date, it is certainly manageable—and the right thing to do.  Encouraging people to stay home when possible is going to continue to be important guidance for protecting public health, and, during heat waves, that’s only possible if people can confidently use whatever air conditioning or other means of cooling they have safe access to. Millions of US households have plenty to worry about without having to think about how they’re going to cover the extra electricity costs from staying safer at home.