Xcel proposes program to help folks who can't pay their utility bills

As the COVID-19 recession lingers, Minnesotans' past-due utility bills are swelling, state data show.

Indeed, Minnesota's largest utility, Xcel Energy, recently proposed $17.5 million in bill credits for its most indebted customers, a novel approach.

Meanwhile, the state is preparing for a surge in demand for heating assistance as the cold arrives.

"I could see this as a being a pretty long and hard winter for a lot of people," said Michael Schmitz, energy assistance program director for the Minnesota Department of Commerce.

The economic havoc from COVID-19 has translated into a sharp increase in joblessness, with Minnesota's unemployment rate hovering at 7.4 % in August — down from a historic high of 9.9% in May but more than double the rate before the pandemic and at a level not seen since 2011.

"The increase in unemployment directly increases the need for programs like ours," Schmitz said. The state's energy-assistance program directs federal money to community-action organizations that serve low-income residents.

The unemployed had a potential utility-bill cushion from late March through July: $600 extra per week in jobless benefits granted by Congress. Minnesota's unemployed received another $300 per week from a temporary federal program through mid-September.

But Congress and the White House were still in negotiations Friday over another stimulus package. Even with the extra aid this summer, the dollar amount of past-due utility bills in Minnesota has been growing in recent months.

"Those who are behind are further behind," said Pam Marshall, executive director of Energy Cents Coalition, a nonprofit advocacy and assistance group for low-income utility customers, particularly those served by Xcel and CenterPoint Energy.

The average past-due bill for residential customers of CenterPoint, the state's largest natural gas provider, jumped from $149 during the first quarter to $186 over the past five months — even as heating demand waned in the summer, according to data filed with the Minnesota Public Utilities Commission (PUC).

At Xcel Energy, the average past-due bill rose steadily from $295 in January to $389 in August. Xcel is the state's largest electricity provider and its second-largest gas utility.

Two weeks ago, Xcel filed a plan with the PUC aimed at customers with the largest past-due amounts: It would provide bill credits of up to 75% of their liability.

Eligible for the program would be about 11,600 Xcel residential customers, those with a current average balance between $1,000 to $4,000 — either for electricity bills alone or for electricity plus gas. The credit would range between $750 and $3,000, depending on the customer's balance, according to a PUC filing.

Customers would get an upfront 25% credit on their arrearage. Another 50% of their balance would be issued in equal monthly credits for the remaining period of the repayment plan. A customer who drops out of a plan doesn't have to repay credits.

Energy advocates for low-income consumers lauded Xcel's initiative, which must be approved by the PUC. "This is a creative way to acknowledge there will be an even bigger problem if we ignore it," Marshall said.

The program's $17.5 million price tag would be paid for by all Xcel ratepayers over two years, adding 51 cents per month to the average residential customers' electricity bill. Currently, customers pay 98 cents per month for assistance to low-income consumers and senior citizens.

State law requires utilities to work through repayment programs for customers behind on their bills. Delinquent customers, on the other hand, must participate in such repayment programs or risk getting their service shut off, even when the state's "cold weather rule" is in effect from Oct. 15 through April 15 (which generally prohibits curtailments).

Cooperatively owned utilities, which are for the most part unregulated, don't have to follow the ban. The PUC has received 13 cutoff complaints from co-op customers since May 1.

The disconnection ban has in one way added to the uncertainty about the resiliency of unemployed and low-income customers.

"The disconnect notice is the motivator to seek assistance," Marshall said. It prompts people to enter repayment plans or in the case of gas service, request heating assistance.

Now, the number of applications coming in for heating assistance is roughly the same for a normal year. But both Schmitz and Grant — whose agencies administer the state's heating-assistance aid — expect that number to climb soon.

Heating assistance for qualifying low-income Minnesotans typically averages $500 to $550 per heating season, Schmitz said. Money comes from the federal Low Income Home Energy Assistance Program (LIHEAP), and the state usually gets $110 million to $120 million through an annual Congressional appropriation.

Last week, Congress approved the bulk of this year's LIHEAP allocation for Minnesota and the rest of the country. The state also currently is tapping an additional $8.9 million for heating assistance allocated earlier this year through the federal CARES Act.

Demand for heating assistance, as always, will partly depend on thermal variables: The length and depth of Minnesota's winter.

"But this economy is the other variable that will probably drive up the numbers substantially," Grant said.