Tens of thousands of Mainers have struggled to pay their electric bills over the past two years, resulting in thousands of service disconnections, hundreds of thousands of past-due notices issued and tens of millions of dollars in utility revenue lost.
Federal and state financial aid, coupled with seasonal and pandemic-related disconnection moratoriums, have helped keep many Mainers connected to the grid. Both Central Maine Power and Versant Power, the state’s two largest electric utilities, are reporting fewer disconnections and overdue bills through early May compared with the same period a year ago.
But it’s not all good news. With much of the aid running out, pandemic-related moratoriums no longer in effect and utility bills rising to new highs, the struggles to keep the lights on could worsen for many people.
Each fall, the Maine Public Utilities Commission conducts a competitive bid process to lock down the “standard offer” electricity supply for the year ahead. The majority of Mainers buy their power at the standard offer rate, and they were jolted in January when rates shot up from roughly 6 cents per kilowatt-hour to nearly twice that amount in Central Maine Power and Versant Power service areas.
The price increase, driven largely by rising natural gas prices, has added about $30 a month, or $360 a year, to the average Maine household electric bill. CMP, the state’s largest electric utility, serves roughly 640,000 customers across the state, while Versant serves about 160,000 customers in eastern and northern Maine.
While early projections were hopeful that the price increase would be temporary, that expectation has been replaced with the reality that “forward” prices energy traders pay for natural gas and electricity contracts for delivery next winter aren’t easing and are likely to remain high at least into 2023.
At the same time, with inflation at a 40-year high, families are paying more for food, fuel and housing, leaving many with less left over to pay their natural gas, heating oil and electric bills.
A 2019 study by the Maine Office of the Public Advocate in found that low-income households spent, on average, 19 percent of their income on energy costs. With those costs now nearly double the 2019 amount, that 19 percent could be closer to 40 percent now, said state Rep. Seth Berry, D-Bowdoinham.
“That doesn’t leave you much to feed your kids,” Berry said.
STATE AID HAS HELPED
Lawmakers have put some relief measures in place. In February, the PUC approved a one-time bill credit of $90 for roughly 90,000 low-income customers of CMP and Versant to help offset their increased electricity costs.
It was paid for by the Maine State Housing Authority using funds from the Home Energy Assistance Program, or HEAP, for low-income residents.
The Governor’s Energy Office, public advocate office and MaineHousing worked with CMP, Versant and other parties to develop the relief plan. With help from $8 million of federal relief money, it is providing the credit to Maine households at or below 150 percent of federal poverty guidelines.
According to MaineHousing, the 10 community action agencies responsible for the HEAP funds have taken more than 47,000 applications for 2022 and have made payments to over 34,000 households, totaling almost $23 million.
And as a result of the state’s budget surplus, an estimated 858,000 Mainers can expect to receive $850 relief checks beginning next month.
CMP and Versant say the aid seems to be helping – there are fewer customers in arrears this year than at this time last year, and there have been fewer disconnections so far in 2022 than during the same period of 2021.
Under Maine law, utilities are almost never allowed to shut off service to occupied residences between Nov. 15 and April 15.
In 2020, in recognition of the coronavirus pandemic’s widespread financial toll on Mainers, the PUC imposed an emergency moratorium that kept the shutoff ban in place until the usual winter moratorium kicked in again.
But regulators declined to keep the moratorium in place the following year, allowing utilities to deal with people who don’t pay as they usually do.
At CMP, which considers arrears as 60 or more days past due, there were 54,113 customers with overdue balances between Jan. 1 and May 6. During that period last year, there were 54,358 customers in arrears. And the overall balance is lower, too – $44.4 million this year compared with $51.9 million last year.
CMP reported 2,184 disconnections through May 6, compared with 3,377 disconnections during the same period of 2021.
At Versant, it’s a similar story. The number of customers in arrears – which it defines as 30 or more days past due – has fallen from 32,080 last year to 30,107 this year.
Versant representatives couldn’t say how many customers have had their power disconnected this year, as the utility allows a grace period following the annual winter moratorium’s April 15 expiration and the numbers aren’t reported immediately. At this time last year, it had disconnected 153 customers and reconnected 68, they said.
However, relief programs alone won’t solve the long-term problem of energy insecurity in Maine.
The market conditions that caused electric rates to spike at the start of the year are likely to persist into 2023, exacerbated by uncertainty over lingering impacts from Russia’s ongoing invasion of Ukraine.
Today’s electricity supply rates are higher than they’ve been in a decade, according to state figures, and it may not be until 2024 that real relief is in sight.
SIGNS OF A GROWING PROBLEM
Disconnections and arrears are down at both CMP and Versant, but the amount owed and the number of people who need help paying their bills seems to be rising.
At Versant, the average overdue bill has more than doubled, from $251 through April 2021 to $563 through April 2022. There are 12,181 customers on payment plans, up from 10,602 at the end of 2021. The data was not tracked monthly until recently, so a month-to-month comparison was not available.
At CMP, customers with overdue bills still owe less than they did in April 2021 – $820 vs. $955. But CMP spokesperson Catharine Hartnett said that number has been climbing.
“In 2021, the size of past-due balances began to decline steadily through the fall,” Hartnett said. “In 2022, we have no prediction on what may happen – to date the balance amount has been rising sharply as bills are higher because of the supply rate increases.”
There are now 19,708 people on payment plans with CMP, compared with 17,533 people this time last year.
In April 2021 following the end of the emergency shutoff moratorium, CMP offered and encouraged new payment plans, Hartnett said.
There’s no good answer, Berry said.
“The $850 checks (and) the other, federal monies were intended to help offset expenses like these, but the massive spike in fossil fuel prices combined with double-digit electric delivery prices means bills have spiked more than anybody anticipated,” he said. “It’s a world of hurt right now.”
Berry is an organizer of the Our Power campaign, which aims to establish a consumer-owned utility in Maine to replace CMP and Versant through a citizen referendum.
He said the current situation only underscores the “dire need” for serious reform to the state’s electricity system. If Maine is to achieve its climate change goals, it’s crucial that the cleaner option be less expensive than fossil fuels, he said.
Berry said he would have liked to see the emergency shutoff moratorium extended, but he also recognizes that it’s more complicated than blanket bill forgiveness.
“People’s bills will continue to mount,” he said. “If (the utilities) were simply required to forgive unpaid bills, it just means the rest of us (would) need to make it up.”
Both electric utilities are already feeling the impacts of harder-to-pay bills.
Last year, CMP and Versant reported about $26.5 million cumulatively in charge-offs, a more than 58 percent increase from previous years. A charge-off is an unpaid debt that the creditor has given up on trying to collect. In 2019 and 2020, the utilities reported a total of $16.8 million and $16.7 million in charge-offs, respectively.
BAN LIFTED, SHUTOFFS RESUME
Following the 2020 emergency moratorium, disconnections started back up in April 2021.
CMP shut off power to 46,077 Maine businesses and homes last year, and it reconnected 41,670. The other 4,400 were either reconnected in early 2022 or the customer vacated the property. In some cases, power was later reconnected under a new account, Hartnett said.
Versant disconnected 1,397 customers and reconnected 1,006 in 2021. Those numbers were lower than usual, due to both the pandemic-related moratorium and mail delays that slowed warning notices and disconnections, according to Judy Long, the utility’s communications and brand manager. In 2019, she said, Versant shut off power to 4,437 customers and reconnected 3,242.
CMP would not provide historical shutoff data for comparison, saying there have been regulatory processes or pandemic-related issues that have disrupted normal activity for more than the past six years, making any such comparison potentially misleading.
Both CMP and Versant have sent out more overdue balance notices and disconnection warnings this year than in 2021. Between Jan. 1 and May 6, CMP sent out nearly 170,000 notices, compared with 137,000 the year before. Through April, Versant had sent out more than 99,000 shutoff warnings this year, compared with about 56,000 last year.
Both Long and Hartnett stressed that comparing this year to 2021 is not a true apples-to-apples comparison because last year was atypical, coming on the heels of the 2020 emergency moratorium and with widespread mail delays.
“The vast majority of customers who receive a past-due notice where disconnection is mentioned are never disconnected,” Hartnett said. Community action agencies also often need proof of the possibility of disconnection for customers to be considered eligible for certain aid, she added.
Maine isn’t the only state in which utility customers are struggling to pay their bills.
Nationwide, energy utility arrearages stood at $23 billion in February, up from $21 billion a year earlier and $10.5 billion in December 2019, CNN reported late last month. More than 20.1 million households have past-due energy bills.
There was no federal moratorium to protect people from having their utilities disconnected, but like Maine, many other states implemented temporary ones during the pandemic. Other states have their own winter moratoriums, as well.
There’s no clearinghouse collecting data on how many customers are being disconnected from their utilities, but an estimated 3.5 million Americans were disconnected in 2020 and 2021 in 32 states plus the District of Columbia, according to CNN.
NOTICES SPARK LEGAL DISPUTES
After the Maine PUC lifted the emergency moratorium on shutoffs and shutoff warnings in November 2020, a group of customers filed a complaint requesting the freeze be extended through the winter. Regulators denied the request, and the customers took their case to court.
The plaintiffs said CMP acted unreasonably as defined by Maine law when it issued the sternly worded collection notices during Maine’s coldest season and as the pandemic worsened.
CMP, however, argued that the wording of its disconnection notices complied with state regulations. The court ultimately sided with CMP.
Utilities have to get special approval from the PUC to shut off power to homes during the heating season, so customers are generally protected from such action from November through April.
The PUC said ending the moratorium would help customers limit their debts to utilities, which would grow without a repayment plan and would reduce the likelihood that utilities would seek higher rates in the future to recover losses from unpaid customer bills.
Earlier this month, state regulators in Connecticut approved a $3 million settlement with Avangrid, CMP’s parent company. The settlement addresses alleged failures by the company to adequately inform financially vulnerable customers about payment protections during the pandemic in that state.
Connecticut ‘s Public Utilities Regulatory Authority said $2.7 million of the settlement will help pay down overdue balances for at-risk customers. The remaining $300,000 will be split among advocacy organizations that educate low-income customers about utility benefits and bill protection programs.
Send questions/comments to the editors.
