Moratorium on utility disconnections ends Monday, as past-due bills accumulate

As a ban on electricity and gas disconnections because of the pandemic ends Monday, past-due bills have climbed steeply — hitting an average of over $500 for the state's largest utility, Xcel Energy.

It's another indicator of the nation's uneven economic recovery.

As the deadline has loomed, ratepayer advocacy groups, utility regulators and utilities themselves have been working on a plan to minimize possible disconnections.

Earlier this year state got an extra dollop of federal money to assist lower-income residents with overdue utility bills. Now, the residents must be matched with the programs.

Whether a wave of disconnections will take place in August is uncertain. "But would it be far worse if this plan was not in place? Absolutely," said Pam Marshall, executive director of Energy Cents Coalition, a nonprofit advocacy group for low-income utility customers.

Minnesota utilities say disconnections are a last resort. In a normal year, Xcel says fewer than 3,600 of its 1.2 million residential customers get disconnected.

Xcel and other utilities have been notifying customers since May about the end of the disconnection, and Chris Cardenas, Xcel's vice president of customer care, said there will not be a "wave" of shut-offs Monday.

"The threat of disconnection is a driver of customer behavior," Cardenas said. "There has been a sharp increase in people calling and making payment arrangements."

Pati and Ashley Galligan, a mother and daughter who live together in St. Paul, have been in an Xcel repayment program since spring and have also gotten help from the state's energy-assistance program.

Their old, drafty house in St. Paul has so many leaks that their winter and spring energy bills totaled over $3,000 — an exorbitant sum that Pati could not fathom how to pay.

"We couldn't pay it because of COVID and because of not having a job," she said.

Pati is retired, but she still works part time at local theaters and at the Minnesota State Fair to bring in extra income. When the pandemic shut down theaters and canceled the fair in 2020, she lost that work.

Similarly, Ashley's primary work as a waitress and a flight attendant for Delta Airlines was cut back during the past year and a half, so she lost a large portion of her regular income.

They're both representative of the legions of service workers who lost work as companies tried to make it through an economic downturn caused by the pandemic. Many of those hit by job loss piled up big bills — including for rent and utilities.

In March 2020, the state's largest utilities — including Xcel, CenterPoint and Minnesota Power — announced they would voluntarily cease disconnections as COVID spread. The Minnesota Public Utilities Commission (PUC) later passed a moratorium on service cut-offs.

As the economy withered in 2020, the number of delinquent customers rose, with Xcel peaking at 182,000 in October and CenterPoint Energy at 117,803 in February, according to PUC filings.

Many overdue customers have fallen further behind in 2021.

Xcel's average past-due amount (which includes electricity and gas customers) peaked at $571 in March, up from $337 a year earlier. It was $505 in June.

CenterPoint's peaked at $275 in April — up from $188 a year ago — and was $252 in June.

"I think the economic recovery has not been even across the board," said Michael Schmitz, energy assistance program director for the Minnesota Department of Commerce. "A lot of people have dropped out of the workforce and not come back."

The Commerce Department's energy-assistance program is funded by the federal Low Income Home Energy Assistance Program (LIHEAP). The state usually gets $115 million through an annual appropriation, but this year received an extra $167 million through the American Rescue Plan Act, a massive COVID-19 recovery measure.

Plus, the eligibility ceiling for energy assistance in Minnesota has been raised from 50% of the state median household income to 60 % ($65,228 for a four-person household).

The bottom line: Eligible households can now receive up to $1,600 for energy bills and can qualify for up to an additional $1,200 to specifically cover past-due bills.

The state's energy-assistance program is delivered to those in need by 24 community action partnerships, including the Community Action Partnership of Ramsey and Washington Counties.

Keich Hepburn, that group's outreach and media coordinator, spent Wednesday afternoon handing out energy-assistance information to people waiting in line at the Neighborhood House food shelf in St. Paul.

His message: "You don't have to wait for a disconnection."

Yolanda Jones, a 52-year-old St. Paul resident waiting in line at Neighborhood House, said she has participated in the energy-assistance program for the past four or five years. An extension of the program has been particularly helpful during this summer's intense heat.

Since air conditioners use a lot of power, Jones feels like she can't use hers as much as she wants during the summer for fear of raising her bill too much. "With my age, and with me having asthma and all that, I need it," she said.

The PUC and community action partnerships communicate with utilities to help set up assistance and payment programs. Payment plans vary depending on individual circumstances.

"There is no cookie-cutter or one-size-fits-all payment plan," CenterPoint said in a statement.

Xcel this year launched a special $17.5 million repayment program for its most indebted customers — those with balances between $1,000 and $4,000. The plan will provide bill credits to Xcel's customers, either for electricity bills alone or electricity plus gas.

Customers would get an upfront 25% credit on their past-due bills. Another 50% of their balances would be issued in equal monthly credits for the remaining period of the repayment plan. A customer who drops out of a plan doesn't have to repay credits.

Originally, Xcel targeted 11,000 customers, but because the average past-due amount has climbed so much, the program will now accommodate only 7,500. Response has been strong: The company has already committed the full $17.5 million, Cardenas said.

Xcel shareholders will pick up the $17.5 million tab, not ratepayers as the company originally proposed in September.

The state's utilities have conducted a disconnection-information drive since May. Working with Energy Cents Coalition and the Citizens Utility Board of Minnesota, they agreed on a PUC-approved uniform process to get the word out.

"It was rare and refreshing to have all of the utilities in alignment to help customers respond to the economic circumstances we are in," said Marshall of Energy Cents.

For instance, CenterPoint in May sent letters, e-mails and automated calls to customers with at least $50 overdue. In early June, the company mailed a "warning letter" to customers with more than $500 in arrears, explaining that they risked disconnection in August.

On July 19, actual disconnection notices — accompanied by phone calls — were mailed to those same customers, along with information about energy assistance and how to sign up for a payment plan.

On Monday, the company will issue disconnection orders to field staff and cut-offs will begin for customers with more than $500 past due. "We are taking a phased-in approach," CenterPoint said.