BETA
This is a BETA experience. You may opt-out by clicking here

More From Forbes

Edit Story

Past Due Electric Bills An Undue Burden On Americans

This article is more than 2 years old.

As the people of Texas continue to recover from the debacle of the recent cold snap, they have received another insult on top of their injuries - huge energy bills. In unregulated markets, utilities can gouge customers, customers who never knew they could be gouged.

During Polar Vortexes in 2015 and 2018, New Yorkers paid almost ten times as much for electricity than just a month before. Even worse, during the winter storm in February that caused Texas' grid to all but shut down, the wholesale price of electricity skyrocketed.

According to the U.S. Energy Information Administration, the average price in winter for electricity in Texas is about 12¢ per kilowatt-hour. Texas utility regulators allowed that price to rise to 900¢ per kilowatt-hour during this cold snap. And now many working people are facing past due amounts that they can hardly afford.

Enter Arcadia, an energy company that integrates with 125 utilities in all 50 states and manages 4.5 terawatt-hours of residential energy demand. Just last month, Arcadia acquired Real Simple Energy of Texas. Real Simple Energy provides a free search engine to customers, allowing users to get a comparison of thousands of fixed-rate electricity plans in their area. Search results can be used to sign up on their own or become a Real Simple Energy customer.

According to the Texas Coalition for Affordable Power, the majority of the state’s consumers live in a deregulated market, and as a result, most of those consumers have consistently paid higher prices for electricity than those buying from utilities in regulated markets, like the one we have here in Washington State.

These customers need help maneuvering through the shark-infested waters of unregulated energy markets, and do not generally take advantage of the electricity bill assistance programs available to them.

Now Arcadia’s even more extensive database, and nationwide billing platform, can show how much debt customers have with their electric bills and missing payments, and has a unique way of determining this burden. They pulled data from across 1/3 of American households, using 14 states, from a sample of 120,000 Arcadia customers using 2.3 million monthly utility statements. The analysis assumes 2.62 persons per household. Arcadia customers are fairly representative of the U.S. population with respect to age, gender and location.

Using this data, Arcadia estimates that there are 30% higher average past due balances in people’s electricity bills in 2020 than in 2019. Arcadia estimates nearly $8B in total past due for those 14 states as of January 2021, with an average past due per household of almost $800 (see figure above).

The increase in Americans electricity bills from 2019 to 2020 was between about 23% and 40% (see figure below for those 14 states). Americans already owed this amount before the Texas power crisis. Some customers carry balances over years and Arcadia estimates the additional balance increased about $3B from just 2020.

The average home uses about 10,000 kWh of electricity annually. To reduce the impact of outliers, homes using more than 30,000 kWh annually were excluded from the analysis. As of January 2021, 1 in 4 households have a past due bill amount on their electric service. This does not necessarily include water or gas electricity utilities which are typically billed separately. The past due balances have increased each month since April 2020.

Negligence by utilities, such as Texas not winterizing their systems when they were warned 10 years ago, should not be allowed to increase people’s already stretched financial burdens just because they can.

Follow me on Twitter or LinkedIn