Reno Gazette Journal, May 5, 2008: Utilities harder to pay

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By Jason Hidalgo

The nation is on pace for a record number of unpaid utility bills this year, with state agencies facing shortages to maintain assistance programs.

In Northern Nevada, many residents said they have been shocked after opening their electric bills in the past few months. Lauren Williams, a clerk for a textile company in Reno, recently got a 10-day notice for a $121 bill.

“I live in a small apartment, and you would think that (my electric bill) wouldn’t be that high,” said Williams, who has done everything from adjusting her thermostat to turning off her lights. “I have no idea on how to pay this bill. I will be calling and making arrangements like I have the last couple of times.”

Stead resident Lisa Jordan’s electric bills have passed $300 but said her latest was “only $250.” Jordan has experienced having her utilities cut off after prioritizing payments to other bills.

“I’m a single mom, and I pay $1,200 a month for rent and $100 a week for gas,” Jordan said. “And I still have to pay for garbage disposal, water, car insurance and food.”

The rise in the number of people falling behind on their utility bills is the result of a slowing economy marked by rising fuel prices and a struggling housing market, said the Washington, D.C.-based National Energy Assistance Directors’ Association. In its latest report, the association of directors who oversee state energy assistance programs also found an increase in the number of families receiving energy assistance nationwide.

Nevada reported the largest jump in households receiving energy assistance, up 79.8 percent in fiscal year 2008 compared with fiscal year 2007. Nationwide, the number of households receiving help from the Low Income Home Energy Assistance Program was 5.8 million for fiscal year 2007-08, the highest in 16 years.

Based on preliminary data, the nation is on pace for a record number of past due payments for utilities this year, the association found.

Residents in Nevada, a national leader in foreclosures, also have a high rate of unpaid utility bills, said Mark Wolfe, executive director of the National Energy Assistance Directors Association.

“What the utility sector is concerned about is that more and more people are struggling with high food costs, high gas prices and high energy bills, and they’re falling behind with their payments,” Wolfe said. “Nevada has had a lot of growth, but now it’s dealing with the fallout from subprime mortgage problem. The high number of foreclosures is leading to a rising amount of unpaid bills that utilities have to cope with.”

The state welfare division projects that spending for the energy assistance program will reach $19.1 million in 2007-08. But the program will receive only $13.8 million from federal funding and the Universal Energy Charge collected by power companies.

To cover this year’s shortfall, the program will use most of a $7.4 million reserve account. Officials are discussing reducing the amount of assistance and focusing on key groups such as the elderly, disabled and families with young children to cope with the lack of money, Gary Stagliano, deputy administrator for programs and field operations for the Nevada Division of Welfare and Supportive Services, said.

Program cutbacks would be tough for Nevada, which does not get much federal energy assistance money to begin with, Wolfe said. Even before any cutback to the program, the state already has a potentially large underserved population based on the discrepancy between the number of families eligible for food stamps — about 64,000 — and the 11,400 families who get energy assistance.

“It’s likely that everyone who gets food stamps also need assistance with their energy bill,” Wolfe said. “The worry is that you have thousands of families getting food stamps out there who could end up in arrears with their utility bills because energy assistance isn’t funded enough to cover all those households.”

Falling behind

The huge jump in the percentage of people receiving energy assistance in Nevada can be explained partly by the state’s relatively small energy assistance program, making the state susceptible to large percentage swings compared with states with larger programs such as New York and Illinois, Wolfe said.

But more people are seeking energy assistance in Nevada, Wolfe said. Last year, the number of applicants for energy assistance increased by 12 percent, according to the Nevada Division of Welfare and Supportive Services.

“The 12 percent increase (in applicants) year-over-year suggests it’s part of an economic downturn,” said Gary Stagliano, deputy administrator for programs and field operations for the Nevada Division of Welfare and Supportive Services.

For the fiscal year that ends June 30, the welfare division has processed 19,875 applications, Stagliano said. So far, assistance has been given to 9,672 households while 5,682 have been denied for failing to meet eligibility requirements.

From November to February, Sierra Pacific had a 17 percent increase in the number of accounts disconnected for failure to pay compared with the same period in 2007 and a 16 percent jump in the number of customers making payment arrangements. Sierra Pacific estimates that disconnects for failure to pay amount to about 1.5 percent of its customers, while about 9 percent of its customers make payment arrangments.

The company provides electricity to nearly 366,000 customers in Nevada and California, 315,000 of them residential.

“We have seen an increase in the number of customers having difficulty paying their bills,” said Bruce Bullock, a customer service executive with Sierra Pacific. “Given the state of the economy, people are just having difficulty. We’ve also had a colder winter compared to the previous season, so people have had higher bills from increased energy consumption.”

Gauging impact

For Sierra Pacific, accounts in arrears have not affected rates.

“Certainly, we’re watching these increases carefully,” Bullock said. “We are seeing bills generally that are getting a little older — meaning customers are owing us money for longer periods of time. We’re seeing an uptick in the amounts owed as well, but nothing that causes us alarm right now. We just try to manage our collection process and so far we’re doing OK.”

Tough choices

With her average monthly bill up $40 this year compared with last year, Williams said she often finds herself having to prioritize which bills to pay.

“With the way things are, I have to choose between paying my rent, which is the No. 1 choice, then food and then the power,” Williams said.

To help struggling customers, Sierra Pacific offers payment plans that allow bills to be paid in installments. But the process isn’t always smooth.

Williams said she had to use money budgeted for food to pay her electric bill once because her payment plan had not registered yet and she was told that she had to pay her bill. Williams paid the bill but managed to get money back after demanding to talk to a supervisor.

Jordan had her power cut off recently after also experiencing problems with her payment plan. The plan required Jordan to pay $100 installments.

“I had received some overtime, and so instead of paying the $100 I owed, I paid $300,” Jordan said. “They shut me off the following Friday because I didn’t send them another $100 that week. The power company is very hard to work with and does not take making payment arrangements very well. I had to come up with money I did not have just because I made a larger payment the week before.”

Faye Andersen, a spokesperson for Sierra Pacific, said the company is serious about working with customers who are having difficulties paying their bills. She said the company takes proactive approaches to help lower energy costs, such as offering consumers advice on weatherization and energy conservation, and the creation of power plants. The 541-megawatt Tracy Generating Station is 30 percent more energy efficient than previous plants, Andersen said.

But Andersen also admitted that energy conservation efforts won’t be enough if fuel costs continue to increase at a fast clip.

“Rising energy prices and purchase power costs are affecting utilities nationwide, and we’re not immune,” Andersen said. “Two-thirds of the cost for a unit of electricity revolves around fuel. Energy costs have been spiraling upwards, and those are passed on, dollar for dollar, to the customer. That’s what drives a lot of the utility bills.”

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