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As states reopen after coronavirus shutdowns, consumers' unpaid utility bills loom as costly problem

Sarah D. Wire and Anna M. Phillips, Los Angeles Times on

Published in Business News

WASHINGTON -- As states begin to reopen from coronavirus-related shutdowns, a wave of unpaid utility bills coming due will not only saddle Americans still out of work with new debt, it could also drive up rates for everyone.

And the $900 million that Congress provided in the CARES Act to help low-income households pay their utility bills won't be nearly enough to ease the problem, advocates and experts say.

When states began issuing stay-at-home orders and millions of Americans lost their job due to COVID-19, governors in dozens of states temporarily barred utility companies from shutting off gas, water, electricity and even internet. In other states, utility companies voluntarily agreed not to shut off utilities.

But as states move to reopen, those moratoriums will end, and advocates are already warning that many households won't have enough money to resume paying their utility bills, much less repay their deferred bill.

"It will become a problem," said Mark Wolfe, executive director of National Energy Assistance Directors' Assn., which represents state directors participating in the federal Low-Income Home Energy Assistance Program to help struggling Americans pay their utility bills. "We know it's coming."

Nearly 39 million Americans have sought jobless aid since the coronavirus struck.

 

The association estimates that as many as 36% of households nationwide may now fall into the income bracket that qualifies them for help through the program. Before the pandemic about 28% qualified, though far fewer actually received help, largely due to a shortage of funds.

The federal program, created in 1981, provides $3.74 billion nationwide annually. How and where that money is spent largely depends on state rules. Consumers can qualify if they earn less than 150% of the federal poverty rate, or 60% of the state median income.

Californians must earn less than 60% of the state's median income of $88,343 to qualify. So a family of four with an income of $53,006 or less qualifies. The state also considers other factors including the age of people in the family and existing medical needs.

Wolfe said the program normally reaches about 20% of the 32 million eligible households across the U.S. The CARES Act provided another $900 million to the program, enough to subsidize another 2 million homes, Wolfe estimated.

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