The Disaster in Texas Shows Why We Need to Cancel Utility Debt

After enduring heat and energy shortages, Texans are now facing sky-high utility bills. It’s time to cancel this debt—and implement a national moratorium on utility shutoffs.

Johanna Bozuwa

Marie Maybou melts snow on her kitchen stove on February 19, in Austin, Texas to flush the toilets in her home after the water stopped running. (Photo by Joe Raedle/Getty Images)

In February, millions of people fought to survive freezing conditions without heat or power after a winter storm wreaked havoc on the Texas energy grid. Now, Texans are being hit again by the skyrocketing energy prices that resulted from the crisis. My savings is gone,” one Texas resident told the New York Times after his energy provider debited a whopping $16,752 bill from his account. These massive bills threaten a new blackout wave as many families struggle to pay, fall into utility debt and have their energy shut off for nonpayment. 

Millions of Texans who were scrambling amidst the pandemic from layoffs and other economic stressors are now confronted with extreme energy bills. Already disproportionately left longer in the dark, communities of color will likely bear the brunt of Texas’s brewing energy debt crisis. While the situation in Texas is an extreme example, it sheds light on the United States’ larger utility debt crisis that has been accelerated due to the pandemic, with residential and small business customers owing up to $40 billion in debt to utility companies. 

The situation in Texas illustrates the dangers of a broken system, and shows why we need to immediately cancel all utility debt and implement a national moratorium on utility shutoffs. We also need to confront the underlying causes of utility poverty that existed prior to the pandemic, reorganizing our utility system to prioritize access to clean, affordable energy. 

On Wednesday, Sen. Jeff Merkley (D-OR) released a letter calling for utility bill debt relief to be included in the upcoming round of federal COVID relief. And over the past year, the #NoShutoffs coalition of over 600 faith, climate, water, broadband, racial justice, union and housing organizations has relentlessly organized to implement a national moratorium and cancel utility debt. These are the types of actions that will be necessary to address this untenable situation. 

The twin crises of utility debt and shutoffs impact millions of households. While some states have implemented moratoriums on utility shutoffs, many are lifting these temporary measures and leaving families unprotected from the removal of basic necessities — and from a crushing debt burden. According to a study released in January by Duke University, if a national moratorium on utility shutoffs had been in place since the beginning of the pandemic in March 2020, the United States could have reduced Covid-19 infections by 8.7% and deaths by 14.8%.

Utility debt can reverberate for a person’s financial life, downgrading credit scores that are often key to opening a bank account or renting an apartment. Utilities are even bundling customers’ debt and selling it to third-party debt collectors, allowing the companies to profit twice from the debt by deeming it bad debt” and then raising rates to cover losses.” 

Communities across the country have jumped into action. We Power DC, a local grassroots group in Washington, D.C., has launched an energy justice campaign to cancel utility debt after monitoring the severe inequities wrought upon families in the District. Ninety-eight thousand D.C. residents — including 84% of low-income households — hold over $30 million in debt with local energy utilities, while the CEO of local utility Pepco’s parent company makes nearly $15 million each year. In Massachusetts, State Rep. Erika Uyterhoeven introduced a utility debt cancellation bill to relieve residents who cumulatively hold over $351 million in arrears. 

An immediate national moratorium on shutoffs and a cancellation of utility debt are critical, but they won’t fix a problem with a history that extends much further back than the pandemic. Thirty-one percent of families reported having trouble paying their energy bills in 2018. In an open display of racial segregation and systemic inequities, Black, Latinx and Native households pay almost 40% more than white families on their energy utility bills relative to income. 

Utilities like energy, broadband and water are foundational human rights. They should be treated as a public good accessible to all. Permanent utility moratoriums should be implemented, eliminating life-threatening events like losing access to water. This isn’t a fanciful proposal — water shutoffs for nonpayment are illegal in New York City, and Detroit’s water shutoff ban is in place until at least 2022

Communities of color experience higher utility bills in part due to a racist history of redlining and housing segregation. Families of color live in old, disinvested housing at much higher rates, paying higher utility bills for their inefficient homes. Investing public dollars to increase access to clean, efficient, and affordable housing is a clear first step. We also need to invest in public utility infrastructure, eliminating dirty gas plants that damage the health of Black communities and replacing old pipes that taint water. 

We should ultimately go further and decommodify utility access altogether. All homes could be guaranteed basic access to water, internet and energy, much like organizers and policymakers are increasingly discussing fare-free ridership for public transit. Any worry over inefficient use could be resolved with a basic allotment provided to every household at no fee, with increasing cost for additional use. 

Demands for a permanent moratorium on shutoffs, heavy infrastructure investment and decommodification may be hard to swallow for private, for-profit utilities. But that’s exactly the point. Nobody loves their private utility. Utility infrastructure held in private hands exists to enrich shareholders rather than care for residents. That is why many campaigns fighting to end utility debt see the longer-term goal as building a system based on publicly-owned, democratic institutions run for and by the people. 

The disaster in Texas disaster and the ongoing pandemic have spotlighted the racial and economic inequities of our utility system. We need quick relief in the form of cancelled utility debt and a moratorium on utility shutoffs — but we also need to fight for a vision of utility justice that repairs past harm and fulfills basic human rights.

Johanna Bozuwa is a research associate with The Next System Project at the Democracy Collaborative. Her work focuses on transitioning away from the extractive, fossil fuel economy and toward energy democracy.
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