As Profits Soar, US Utilities Lavish Shareholders While Shutting Off Power for Millions
"The utility industry's custom of shutting off power punishes people for being poor," said the authors of a new report.
Energy justice campaigners on Monday called for "a permanent ban" on energy shutoffs by utilities as they released a report showing that major power companies have shut off millions of struggling customers' electricity and heat due to missed payments—while raking in record profits and spending billions of dollars on executive compensation, shareholder dividends, and stock buybacks.
"The utility industry's custom of shutting off power punishes people for being poor," reads a new report by the Center for Biological Diversity (CBD), the Energy and Policy Institute, and BailoutWatch. "This barbaric practice—and related punitive measures, like resale of debt to predatory private companies—must end."
The authors of the report, titled Powerless in the United States, analyzed shutoff data from 30 states between January and October 2022, finding that utilities cut power to households more than 1.5 million times. Based on the rate of shutoffs recorded, 4.2 million households suffered utility shutoffs across the country in the first 10 months of 2022.
Combined with data gathered in the groups' earlier energy justice reports, they found "a staggering 5.7 million electricity shutoffs against U.S. households from January 2020 through October 2022."
\u201cNEW RELEASE: Utilities shutoff power to families over 5.7 million times since 2020 while raking in billions. #NoShutoffs\nRead our new report @CenterforBioDiv @EnergyandPolicy @bailoutwatchorg: https://t.co/oS4Rc5cZ28\u201d— Jean Su \u8607\u5b89\u541b (@Jean Su \u8607\u5b89\u541b) 1675088291
The vast majority of shutoffs between 2020 and 2022 were perpetrated by just a dozen companies, the groups said, including NextEra Energy Inc., Duke Energy Corporation, Exelon Corporation, FirstEnergy Corporation, and Ameren Corporation.
The 12 "Hall of Shame corporations," as the report calls them, were on average less profitable than other utilities profiled in the report, but were still "prone to rewarding executives with lavish pay." They were behind 37% of the dividends paid out to shareholders and 32% of disclosed CEO pay between 2019 and 2021.
They collectively paid their top 70 executives $1.2 billion—about $5.9 million per executive each year.
On average the 12 worst-offending companies spent about $4 billion on dividends each, but the customer debt they were owed by households struggling to pay accounted for about 1% of that amount.
"These 12 companies could have forgiven all 4.9 million documented shutoffs 90 times over using their dividends from 2020 through the third quarter of 2022."
"These 12 companies could have forgiven all 4.9 million documented shutoffs 90 times over using their dividends from 2020 through the third quarter of 2022," reads the report.
Selah Goodson Bell, an energy justice campaigner with CBD who co-authored the study, toldThe Guardian that the research shows how "a small scrape of the amount of money that utilities are shelling out to shareholders... could really change lives in millions of households."
FirstEnergy, which serves customers in Maryland, Pennsylvania, and Ohio, shut off power nearly 240,000 times between 2020 and October 2022, punishing households for their inability to pay bills totaling about $25 million. Meanwhile, the company was able to afford spending $2.3 billion on dividends for its shareholders.
Similarly, Duke Energy cut power more than 600,000 times over that period. Customers owed them about $63 million, while shareholders were lavished with $8.3 billion.
As utility companies have enjoyed record profits, rising fossil fuel prices have driven inflation and have resulted in higher heating and electricity bills as household budgets have been stretched thin. Extreme weather like the winter storm that plunged millions of Texans into darkness in 2021 and the deadly heat wave in the Pacific Northwest that same year could also increase "energy insecurity among poor households and communities of color, which are 'less able to prepare for, respond to, and recover
from disaster events,'" the report reads.
"Heating a house with fossil gas this winter is expected to cost 66% more than it did two years ago," reads the report. "Electricity prices have also risen approximately 12% compared to 2020. The average family could pay more than $1,200 to heat their home this winter—$175 more than last winter and $300 more than the 2020 winter."
As households continue to struggle to afford necessities, utilities' punitive shutoffs and rewards for executives and investors show no sign of slowing down, according to the report. Researchers found a 29% increase in power disconnections and a 76% rise in gas shutoffs between January and October 2022, compared to the same period in 2021.
To address the shutoffs crisis, said the authors, the U.S. Energy Information Administration and Congress could require reporting on utility disconnections, while Congress "should vastly increase" funding for energy assistance programs for low-income households. Addressing the "underlying conditions"—reliance on fossil fuels for energy—and phasing out the use of oil, gas, and coal is also key to stopping punitive shutoffs.
Congress must also "enact a nationwide ban on utility shutoffs and other punitive collection practices for unpaid household utility bills for households meeting poverty criteria," said the authors, expanding on pandemic-era legislation.
"Access to electricity is a basic human right," reads the analysis. "People rely on electricity for water, physical safety, food security, medical care, and telecommunications. When these essentials are taken away, the harm spreads like ripples across a pond."
"The preventable practice of disconnections keeps millions of Americans in poverty and narrows their avenues of escape," the authors added. "By giving utility companies the power to penalize poverty, we license them to perpetuate it."