October 12, 2020

Exacerbating the Energy Crisis

Nicholas Institute for Environmental Policy Solutions

By Scott Bechler and Jennifer Weiss

More than 20 million people in the United States lost their jobs as a result of COVID-19-imposed economic shutdowns, and less than half of those jobs have returned in the ensuing months. As a result, the pre-pandemic, pervasive struggle of low- and middle-income families to pay utility bills has been exacerbated by job losses and reductions in income.

Absent a federal moratorium on utility shut-offs due to non-payment or general federal guidance on how to address the growing residential energy crisis, states have pursued different paths regarding how to reduce energy burden—the percent of household income that goes to energy costs—or whether to ensure that all households maintain access to electricity regardless of non-payment. The result has been a patchwork of moratoria implemented by states and/or utility commissions. According to an estimate by the National Energy Assistance Directors’ Association, 55% of the nation’s population was not covered by a state-ordered moratorium. As of September 8, 28 states either let their moratoria expire or never had one at all.

In North Carolina, Governor Roy Cooper implemented a statewide moratorium on utility shutoffs in late March that lasted through July 29. The North Carolina Utility Commission issued an order on July 29 extending the moratorium until September 1, but this now-expired order covered customers of regulated utilities only, leaving customers of rural electric cooperatives and municipal utilities without protection from disconnection and increasing late fees.

Of course, even with moratoria in place, the growing energy debt for families is not forgiven. As of late August, arrearages were conservatively estimated to be a cumulative $225 million among 1 million customers in North Carolina alone. Many utility customers have been offered flexible 6-12-month repayment plans that preclude late fees or disconnection. It is unclear, however, how families that were already energy burdened prior to COVID-19 will manage to repay these debts given that these are often the same families who have been hardest hit by the pandemic—both in terms of lost jobs and impacts to health.

In an attempt to provide relief, Cooper committed $175 million of federal CARES Act funds toward rental and utility bill assistance on August 25. Advocates applauded this as a step in the right direction, but caution that it is not enough, as the energy crisis is only growing in scope and magnitude and will continue to disproportionately impact minority and low-income residents.

In an effort to address these concerns, 33 social justice, environmental, labor, and community groups sent a letter to the North Carolina General Assembly on September 1 requesting the allocation of an additional $400 million from the CARES Act and other sources to "eliminate residential arrearages of qualified low-income people"—regardless of whether their energy comes from a regulated utility, municipal utility, or co-op. This would not only relieve stress on families who are struggling to make ends meet during this crisis, but also provide financial stability to utilities that require cash flow to continue their vital services.

Though providing immediate relief to families is and should be the immediate concern, there is an opportunity to build on the renewed attention to this crisis and address the chronic problem of energy insecurity and energy burden—in North Carolina and nationally. Investing in clean energy infrastructure, energy efficiency, and distributed energy solutions will be a crucial step toward decreasing energy burden, while also addressing high unemployment levels induced by the pandemic. Federal proposals to address energy burden and widespread unemployment include the Green New Deal and Democratic presidential nominee Joe Biden’s $2 trillion climate plan, but the futures of these initiatives are uncertain given their political dependencies. Meanwhile, some states are trying to repurpose and boost investment in programs that can reduce energy burden. New York, for example, announced $1 billion in clean energy investments for more than 350,000 low-to-moderate income households this past July.

As efforts to address high energy burden across the United States remain inconsistent and unreliable, the pandemic has further exposed and compounded its detrimental impacts in marginalized communities. Regardless of the results of the federal election in November, there are fundamental questions that must be addressed in the coming months:

  • How do we ensure vulnerable families and communities maintain access to electricity during the pandemic and its aftermath?
  • Which parties should pay for utility arrearages, and how much should each be responsible for?
  • What long-term policies can be implemented to reduce chronic energy burden issues across North Carolina and the nation?
  • How will we know if these policies are working?

About the Authors
Scott Bechler is a graduate student in the Master of Environmental Management program at Duke University’s Nicholas School of the Environment.

Jennifer Weiss is a senior policy associate in the Climate and Energy Program at Duke University’s Nicholas Institute for Environmental Policy Solutions.


"Policy in the Pandemic" is a weekly email featuring insights from the Nicholas Institute on how the COVID-19 pandemic is affecting environmental and energy policy. Click here to subscribe.