As extreme weather hits, Americans are struggling to keep the lights on
Rising utility bills are making it harder for low-income households to keep the lights on, and the problem is getting worse after an Arctic cold front swept the U.S. in January.
As The New York Times recently reported, low-income Americans say that gas and electric bills have “kept going up and up,” making it harder to save on energy bills.
Families on a strict monthly budget have tried to use less hot water and have even changed their eating habits because of rising utility costs.
According to the Bureau of Labor Statistics, electricity prices are up 27% from pre-pandemic levels and are currently hovering near all-time highs.
Americans now spend an average of 16.9 cents per kWh, just below September’s record rate of 17.1 cents. Before the pandemic, the average rate was 13.3 cents.
Power companies recently issued extreme cold warnings across several states. Energy providers say extreme temperatures typically lead to much higher energy usage.
According to Entergy, an integrated energy company serving three million customers, “cooling and heating costs make up about 55% of an average customer’s electric bill.”
The “bigger the difference between inside and outside temperatures, the more energy is used, which affects your bill,” the company said.
In some parts of the Midwest, wind chills made the temperature feel like -20 degrees Fahrenheit earlier this month. Families in these states are likely to get a hefty energy bill in a few weeks—further straining their budgets.
Extreme weather is an extreme problem
According to a recent Bankrate survey, 81% of Americans said that extreme weather has increased their energy bills and negatively impacted their wallets.
“Unfortunately, extreme weather events are a significant drain on Americans’ finances, and they seem to be getting more common,” said senior industry analyst Ted Rossman.
As utility bills add up, consumers have been forced to cut back on other expenses just to make ends meet.
According to LendingTree, over the last 12 months, 32.2% of Americans reported cutting back or skipping other necessary bills at least once to pay for utilities.
“[T]he average household’s financial margin for error is getting smaller and smaller. When that happens, bigger-than-expected monthly bills can cause a major issue,” said LengingTree chief credit analyst Matt Schulz.
“For example, sky-high utility bills in the scorching heat of the summer or the frigid cold of the winter can cause families to make some tough decisions,” he said.
These findings are consistent with another report by HOP Energy, a New England-based energy provider, which found that one in three consumers find it difficult to pay for their energy bills.
Jorgan Hofeling, a communications adviser for the Utah-based Dominion Energy, also acknowledged the sharp rise in energy prices because of inclement weather.
“I think that there were quite a few factors that caused that, that makes for some unusually high bills,” Hofeling told KSL NewsRadio in Utah. “Especially last year when we had that really long cold winter, and then the natural gas rates were pretty high.”
Low-income households are at a disadvantage
According to the Energy Department, low-income households spend a much bigger share of their income on utilities than higher-income Americans and are more likely to keep their homes at unsafe temperatures,
The Biden administration is making a big push toward clean energy systems and efficient appliances, which experts say can help lower energy costs.
But the problem is that low-income households are the last to adopt these products because they can’t afford them.
“To me, the problems for folks in Baltimore and inner cities everywhere, they’re identical: ‘We struggle to pay our bills now,’” Kristal Hartsfield, the chief executive of the National Alliance for Equity in Energy and Infrastructure, told The New York Times.
“We can’t flip the switch to clean energy tomorrow,” she said.
The Biden administration is offering rebates to help people buy energy-efficient appliances and has also increased funding for energy efficiency upgrades.
Biden’s Treasury Secretary, Janet Yellen, said these policies should help make clean energy more affordable “right away.”