How To Help Older Americans Avoid Loss Of Utility
Services
Maintaining
utility service is a crucial issue for older Americans. While these consumers may not be able to afford
to pay their utility bills, they cannot afford to go without service
either. For older consumers
it may be particularly difficult to cut back on their use of basic utilities,
especially during the winter or summer months, because of the serious
threat that extreme temperatures can pose to their health.
For retired or disabled seniors, reducing their basic electric,
gas, or water bills will be even harder because they may spend more
time at home. Significant savings in utility bills normally
require major investments in insulation, home repairs, and energy-efficient
appliances, which may be beyond the reach of financially limited consumers.
Unable to reduce utility costs and unable to cover the cost of utility
bills, many older Americans accrue substantial debts to their utility
companies. Unpaid utility bills can mean loss of water,
electric, or gas service which can have dire consequences for seniors,
particularly in the winter or summer months.
Moreover, for seniors who may be tenants, loss of utility service
may pose the possibility of eviction since landlords view loss of utility
service as a potential hazard for the rental unit (for example, frozen
pipes burst and cause extensive damage, use of alternative sources of
heat or light can cause fires).
This issue of Consumer Concerns for Older Americans offers practical
advice on how to prevent a utility termination before it is threatened
and how to challenge a pending utility termination.
Key Sources of
Assistance
Seniors with utility problems should consult someone experienced in utility
law or practice. Lawyers and paralegals at local legal services offices
have suggestions on how to protect consumers. A local community action
program (CAP) can be another good source for advice, especially if the CAP administers
an energy assistance or weatherization program. Area Agencies on Aging
(AAAs) or other state, local, or nonprofit advocacy groups that work with seniors
may also be able to offer suggestions.
A variety of useful handbooks are also available, the most
helpful of which will be state specific. For example, The Right to Light (and Heat) Handbook,
published by the Massachusetts Poverty Law Center, is an excellent consumer
guide to utility service in Massachusetts. Similar guides are available in
several other states.
Strategies for Becoming Current on Utility Bills
1. Level Payment Plans.A level payment plan
may help customers who are current on their utility bills, but who may have
trouble paying their utility bills at certain times of the year, especially
in the winter, when heating bills are high. To avoid running up debts during
these months, customers can establish level payment plans with utility companies.
Many states require utilities to provide these plans.In a level payment plan,
a customer's projected yearly bill is divided into equal monthly installments;
monthly bills reflect this amount rather than each month's actual costs. For
example, a customer whose total gas bill for a year is $1200, would pay $100
each month instead of $200 to $300 a month in the winter, and $30 to $40 a month
in the summer. At some point during the year, the average bill and the actual
usage are reconciled.
2. Budget Payment Plans. Households in financial distress
can quickly get so far into the hole with their utility bills that a level payment
plan is not enough. The household cannot catch up on back due payments (called
arrears) and also keep up current utility bills. One solution is for the consumer
and utility to negotiate a budget payment plan whereby the consumer makes a
fixed monthly payment and the utility promises not to shut off service. State
utility commissions often require utilities to offer such a plan.The
plan may be designed so that the customer pays current usage, but only slowly
catches up on the amount in arrears. Sometimes the consumer can negotiate
a plan whereby the monthly payments do not even completely cover current bills,
and there is no requirement to catch up on arrears. To make a successful payment
plan, the customer, preferably with the help of a counselor, must develop a
simple budget that the household can reasonably meet, and must not be hesitant
to push that plan with the utility company employee who negotiates the agreement.
Payment plans need not require payments to be made in equal monthly installments.The
utility company is likely to want a payment plan that requires larger payments
than the customer can afford. Large payments are in the company's short-term
interest, because they recover past debts more quickly. Too many customers,
believing they have no choice, agree to these payments. Unrealistic
plans, however, harm both customers and utility companies in the long run.
The customer is unable to make the payments, and may lose the service, and the
company does not collect its debt. In some states, utilities are not required
to enter into a second payment plan with consumers who have defaulted on a first
payment plan. If a company should refuse to agree to a reasonable payment plan,
help can be obtained from the consumer division of the local utility commission.
Some utilities also are more willing to negotiate with consumer counselors than
with consumers themselves.
3. Federal
Energy Assistance. The federal Low Income Home Energy Assistance
Program (LIHEAP), administered by the states, helps low-income households (families
or individuals) pay their winter heating bills. Some states also use
LIHEAP funds to assist with summer cooling expenses. All states set aside some
of these funds to help out in times of crisis. LIHEAP benefits can also go
to renters and even to some public and subsidized housing tenants, with the
energy assistance payments usually going directly to the landlord's fuel supplier
and the amount being credited against the family or individual's rent.Guidelines
for LIHEAP eligibility vary by state, but most states require that family income
over the past three or twelve months be below 150% of the federal poverty guidelines.
(In some states, income must be even less.) Under federal law, the
household income for LIHEAP recipients cannot exceed 150 percent of the federal
poverty guidelines or 60 percent of the State median income. The size of a
household's LIHEAP benefits generally depends on its income and the number of
household members, and may also depend on housing type, fuel type, fuel prices,
weather conditions, or actual energy consumption.To
apply for LIHEAP benefits, the individual or family should contact the local
agency in its community administering the program. This is usually a
nonprofit agency, such as the local community action program (CAP), or a state
welfare office. LIHEAP requires special outreach to senior households so many
AAAs or other local agencies working with older consumers may be able to provide
information about LIHEAP and how to apply for it. Benefits are usually paid
directly to the utility company or fuel vendor, and the household's utility
or fuel obligation is reduced accordingly.
4. Utility Fuel Funds.
Many utility companies participate in special funds, sometimes directly subsidized
by other customer contributions, to give loans or grants to those who cannot
pay their utility bills. To determine the availability of these funds, contact
the utility company or the local agency that administers the LIHEAP program.
Many of these fuel funds focus specific attention on helping seniors or low-income
consumers.5.PIP, EAP and Other Special Payment Plans. A growing number of
utilities and state utility commissions are experimenting with plans by which
individuals or families pay only a certain percentage of their income instead
of the amount called for by their normal utility bills. Typically, if a low
income household regularly pays this lower payment schedule, it is rewarded
by gradual forgiveness of its back bills, or arrears. These plans are sometimes
called Percentage of Income Plans (PIPs) or Energy Assurance Plans (EAP's),
but each utility seems to have its own unique name for the program. The best
way to determine if a utility has such a program is to contact that particular
utility or the public utility commission.6.Discounted Rates. Some electric,
gas and water utilities have special discounted rates for low-income, elderly
and/or disabled households. Ask your utility company or the state public
utilities commission if there is a special, lower rate for seniors.
7. Energy
Conservation Programs. Some states provide homeowners and tenants with
funds to weatherize their homes, thereby reducing heating and cooling costs.
Many utility companies provide low cost loans or outright grants for home weatherization,
and some have sizeable programs targeting seniors and/or low-income customers,
providing weatherization services directly to customers. More information on
weatherization programs is usually available through local energy assistance
offices. Ask your local AAA or other local government or private agencies that
help seniors about these programs.Most
agencies maintain waiting lists for weatherization assistance, and give priority
to households that most need the help; seniors are usually given such priority.
Separate from such programs, individuals and families in many states
can obtain assistance from utility companies to save on energy bills in other
ways, such as replacing light bulbs with energy-efficient bulbs, insulating
hot water tanks, and providing "low-flow" efficient faucets or shower
heads. Again, many of these programs give special attention to seniors and/or
to low-income households.
8. Other Government Programs.
Other state agencies, such as welfare departments, may also run small energy
assistance programs. In particular, federally funded Emergency Assistance provides
aid to households that within the past six months have had or currently have
a member under age twenty-one. Emergency Assistance can be provided
only once in a twelve month period. States may restrict the emergencies for
which aid is provided, requiring, for example, that the emergency be unforeseen
or out of the household's control. Utility shut-offs should be among the emergencies
covered by general relief. This assistance could be helpful to seniors whose
grandchildren or other young children may be living with them. Since
1996, Emergency Assistance has been incorporated into the TANF block grant.
You should check to see if your state has chosen to provide emergency
utility service assistance under its block grant.
9. Charities
and Other Private Sources. Many charities, churches, and other
private organizations help people pay their utility bills. These groups provide
assistance only when they have funds available, and sometimes only at certain
times of the year. In some areas, AAAs, community action programs or agencies
or organizations that work with seniors maintain referral lists of such private
energy assistance programs.
Fighting
a Termination of Service
The threat of immediate termination of service, and the need to restore service
that has already been terminated, are the two most urgent problems faced by
utility customers. In many states, statutes and public utility commission
regulations provide a variety of significant protection against utility terminations.
These protections include:
1. Financial Hardship. Public utility
commission regulations in some states prohibit or restrict termination of
service for households whose income falls below certain levels, or whose income
is restricted to certain government benefits, or who can otherwise demonstrate
financial hardship.
2. Serious
Illness. Similarly, state law or public utility commission regulations
often restrict termination of service for households whose members face a serious
illness, are threatened with serious illness, or depend upon life support systems.
Often, a doctor must certify the illness. A household with very young children
may also be able to use the health risk to the children as grounds to stop utility
termination - - again, this issue may be helpful for those seniors who have
become caregivers for their young grandchildren or other young children.
3. Winter Protection Rules.
Many states and cities have
enacted legislation that prevents termination of utility service during certain
times of the year, chiefly termination of heat‑related services during
the heating months. To qualify for the protection, financial hardship may have
to be demonstrated.
4. Special Rules for Senior Households. Some states offer general protection for older
customers, while others protect them against termination if a winter storm is
forecast or if the temperature is expected to drop below a certain level. Similar
protection may be offered to households with children.
5. Tenant Protection. It is all too common, particularly in difficult
economic times, for a landlord to fail to pay for utility service, putting tenants
at risk of losing the utility service. Tenants in this situation sometimes have
special protection. In some states, tenants must receive a special shutoff notice
if the landlord is delinquent (behind on his or her payment). Then, tenants
make utility payments directly to the utility, and deduct those payments from
their rent.
6. Advance Notice of Utility Termination. All customers are protected against surprise
termination of service. Utility companies cannot legally terminate service without
first providing customers with requests for payment and notices of termination.
Many utilities must also provide customers with an opportunity to dispute or
contest the reasons for the shutoff.
7. Contesting
the Termination. A utility commission's consumer division responds
to phone calls, letters, and visits by residential customers. Many of their
complaints are resolved informally, by consultation between the consumer division
and the utility. Consumer divisions also hold hearings on complaints that cannot
be resolved informally. In large states, several hundred of these hearings are
held each year. Consumers generally have a legal right to a hearing whenever
they have grounds to dispute a utility termination. Simply request the utility
commission to provide a hearing before service is terminated. While municipal
utilities are generally not regulated by the utility commission, customers of
municipal utilities have a constitutional right to a hearing before termination.
Consumers need not have a lawyer represent them at the hearing. However, it
may be helpful to have a paralegal or experienced utility counselor assist with
the hearing. To support their claim, it is important for consumers to bring
all relevant documentary evidence, such as a physician's affidavit or past bills.
It may also be helpful to have witnesses such as friends and neighbors present.
8. Bankruptcy Protection. The mere filing of a bankruptcy petition
automatically requires the utility to restore service or cease a threatened
termination. The bankruptcy filing creates a twenty day period where the consumer
is has a right to service from all applicable utilities. The utility can only
terminate service after that twenty day period if the consumer fails
to pay future bills, even if the consumer never pays another penny on past due
bills. The utility, though, can require that the consumer provide adequate assurance
that future bills will be paid, such as the consumer providing a new deposit
or requiring a co-signer to such an agreement. Additional Resources on Access
to Utility Services The National Consumer Law Center (NCLC) has published a
manual, entitled Access
to Utility Service (1996) and a 1998 Cumulative Supplement, which provides
a current utility and energy law developments, including customer service and
utility termination issues, special utility payment plans and rates for low-income
consumers, and federal LIHEAP and weatherization developments. For more information,
contact NCLC’s Boston Office at 617/542-8010. For additional information on
where to turn with questions on utility problems, contact NCLC’s DC office at
202/986-6060 or Boston office at 617/542-8010.
About NCLC
Since 1992, NCLC has received funding from Administration on Aging to conduct
the National Legal Resource Initiative for Financially Distressed Older Americans,
intended to improve access to and the quality of consumer representation for
older Americans. Founded in 1969, NCLC provides legal advocates with technical
and expert assistance, training and publications that cover all major topics
in consumer law. NCLC has established itself as the nation’s consumer law specialist,
making its legal expertise available to the attorneys for low income clients.
These services are now available to advocates representing older Americans.
March 2000
A publication of NCLC’s National Legal Resource Initiative for Financially
Distressed Older Americans
