Utility disconnections reach new high in 2024
Published December 4, 2024
Since prohibitions on utility disconnections during the COVID-19 pandemic were lifted, Minnesota has experienced an unsettling increase in the number of customers involuntarily disconnected from utility service for the non-payment of bills. More Minnesotans have experienced a gas or electric disconnection in 2024 than in any of the previous 10 years for which we’ve compiled data.
Investor-owned utilities (and Dakota Electric, a cooperative utility that has opted to be regulated by the Public Utilities Commission) report customer metrics every month. From January through October 2024, these utilities disconnected more than 85,000 residential households from either gas or electric service: more than any full year going back to at least 2015.
Utilities’ constant requests to raise rates are placing even more financial strain on households already burdened by inflation and the rising cost of living. Too often, increases to customers’ energy bills are spread out across multiple different proceedings, making it difficult for customers, regulators, and advocates like CUB to understand the real impacts on Minnesotans’ day-to-day lives. But the overall effect of mounting utility costs is apparent: customers are having trouble affording utility services and are being disconnected at an elevated rate across Minnesota.
Utilities and the Public Utilities Commission should take action to ensure all families can keep their lights on and their homes comfortable.
All Minnesotans are entitled to affordable payment plans
Increasing disconnections are not merely the result of more customers being past-due on their utility bills. Some utilities are also becoming more aggressive in pursuing payments and are shutting off customers if they are not able to keep up with steep repayment requirements.
By law, every Minnesotan is entitled to an agreement for the repayment of past-due utility bills that takes into account the household’s financial position and any extenuating circumstances they face. A utility must negotiate the terms of a payment agreement with each customer on an individual basis.
Concerns related to these requirements recently led us to work together with Xcel to negotiate significant improvements to their payment agreement practices.
We will continue to work with utilities to ensure ratepayers are provided with the protections guaranteed to all Minnesotans – and will advocate at the PUC to enforce these legal protections when needed.
Avoid rate increases to the maximum extent possible
When determining whether to allow rate increases, the PUC must weigh the interests of utilities and their shareholders against the interests of ratepayers. This balancing act requires careful consideration of a wide range of factors, including customers’ ability to afford utility service. The shocking rise in disconnections over the past several years calls into question this fundamental element of reasonable rates.
Residential customers cannot withstand constant rate increases. Utility requests for higher revenues, greater shareholder profits, and exorbitant executive salaries are particularly jarring when so many customers cannot afford their bills. As always, the PUC should resolve any doubt about reasonableness in favor of the customer and limit rate increases to the extent possible.
Xcel’s electric rate case is a prime example of a proceeding where affordability should take center stage. The company’s request to raise rates comes on the heels of an increase approved just last year. Their latest request includes yet another ask to increase returns for the company and its shareholders. We’re intervening in this case to fight for affordable bills and fairness for Xcel ratepayers.
Eliminate or reduce residential customer late fees, or require those revenues be used to fund affordability programs
When customers are behind on their bills, utilities typically impose a monthly late fee equal to 1.5 percent of the delinquent amount – a penalty comparable to the interest on some credit cards. These charges can constitute a substantial portion of customers’ past due balances, and make it more difficult to catch up on payments and avoid disconnection.
The PUC recently required Xcel Energy to propose a process for either eliminating interest payments or donating those funds to customer assistance programs. CUB will be pushing for this in their upcoming rate case, and will be seeking to expand this approach to other utilities.
Strengthen and expand access to successful affordability programs
All regulated gas and electric companies in Minnesota offer “affordability programs” for qualified customers. The details vary across programs, but typically income-qualified participants have their monthly bills capped at an affordable percentage of their household income, and any past-due amounts are gradually forgiven.
In recent years, utilities have improved their outreach, reduced barriers to participation, and even started automatically enrolling qualified participants into these programs. Participation is up as a result – and program budgets are stressed. Minnesota Power’s CARE program is closed to new enrollees, and Xcel’s Gas Affordability Program budget is expected to be spent down by August of next year.
Affordability programs are effective at reducing energy burden, increasing the frequency of customer payments, and decreasing or eliminating past-due bills. These programs should be fully funded and open to accepting new participants.
Expand Energy Assistance
The need for more robust affordability offerings isn’t confined to utility programs. The Energy Assistance program, too, provides vital relief from winter energy costs – but assistance falls short and is not available during summer months, when the majority of utility disconnections occur. Because receiving Energy Assistance is a prerequisite for enrolling in utility affordability programs, those avenues for obtaining help are also closed off to new customers.
CUB, together with a coalition of utilities, service agencies, and advocacy groups, is requesting that the state supplement Energy Assistance funding to serve more qualified households and make the program available during the summer months.
Conclusion
CUB is extremely concerned about the rising trend in disconnections faced by Minnesota customers. We will continue to advocate for actions that improve the affordability and accessibility of utility service.
If you or someone you know is at risk of utility disconnection, please reach out to us at info@cubminnesota.org or by calling 651-300-4701, ext. 2. Receiving a disconnection notice can be scary, but CUB can help you navigate the options available and point you towards resources and assistance.