Last winter, we heard a story of a family in Vermont burning antique furniture to stay warm. Even before the economy turned decisively south, payment stress was high, and even if we have mild winter (this week is not an encouraging harbinger), more customers will fall behind.
From the Wall Street Journal:
One in five U.S. households was behind on its utility bills coming out of last winter, a new survey concludes, raising fears that the current heating season could be even worse. One in 20 households had its utility service terminated in 2007.
Electric customers who were overdue owed an average of $157 in May 2008, when prohibitions on most wintertime service shutoffs ended, while overdue natural-gas customers owed an average of $360.
Gas companies suffered an increase in losses:
Higher delinquencies hurt utilities as well as consumers. Gas-distribution companies wrote off 4.3% of their revenues in 2007 because customers didn’t pay their bills, the survey found, significantly more than the 2.6% written off in 2005, according to a prior survey by the organization. Electric companies wrote off 1.3% of their revenue in 2007, about the same as in 2005, the survey found.
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Hi Yves, what I’d like to know is why I’m still paying about the same as I was last year on my gas bills (I’m in Seattle), when the price of gasoline has collapsed. Puget Sound energy should be ashamed of itself
And pity those who “locked in” their gas/heating oil rates in the recent commodity surge. They are now wondering why the utilities were pushing the “savings” program just before peak.
And now my electricity co wants me to sign up for their “green” real time rate program. They can charge me spot price for power (with their markup), but will send me a warning when they “expect” there to be a higher demand so that I can mitigate my costs and switch usage to “off peak” hours. Hmm, my wife had heatstroke, so high temps=good ac; no/low ac=hospital trip. High heat = high peak. Not the best program for us.
That’s a good point, Fraud Guy. Interesting how well the energy peak and lock-in dates coincide, isn’t it?
Anyway, 20% is such an unfathomably large number that I instinctively question their methodology. The article goes into detail on the survey, which seems sound, but how can 20% of the households in America be behind on utility bills, which are among the most critical?
That’s not consumer stress, nor retrenchment in buying habits. That’s widespread brokeness.
And that widespread brokeness was evident long before equities and commodities peaked, and real job losses began. I can’t wait to see what the numbers look like this winter. Will the decline in energy pricing counterbalance the loss of wealth? I suspect not close…
Suggestions for links today, from Bloomberg: “AIG Writedowns May Rise $30 Billion on Swaps Not in U.S. Rescue.”
ndk, i do agree that there is widespread brokeness, but there is also a cultural shift. The news that the electric company will let you get 3 months behind before they turn you off (for example) travels like wildfire. There’s widespread simmering anger (mostly at the banks). Everyone is holding on to every dollar until somebody takes it out of their clenched fist.
OTOH, lower gas prices are making a slow but steady difference in attitudes. If people believed that they could count on them staying this low, it would be a powerful stimulus package all by itself.
m
For purposes of full disclosure, I have to advise that I lost a previous home to foreclosure after 18 months on the market. I stayed current with all other payments until about 7 months ago, when I got a sewer bill. I asked the water department if I would qualify for a reduced rate, since the home was vacant, and I was advised that since I was on a well, they could not monitor use, and so I would be charged a flat fee based on property size–there were no alternatives. I asked if I could shut off service, and was told there would be a $450 fee to do so (on a $35/month bill).
The next month, due to unemployment and other issues, we decided to keep up with our current home, and let the bills at the old home lapse (as it was already in the foreclosure process). 60 days later, the sewer bill came with the warning that, unless paid, service would be disconnected and that there would be a $100 fee to reconnect. I've done the math, though I think they haven't.
And as to the gas & electric at the foreclosed home; I was unable to pay them, either, and just got shut off notices last month, after the bank took over–so about 7 months in my case (luckily for my already devastated finances, the foreclosure buyer is responsible for all back taxes and utilities on the property).
After years of gluttony the U.S. has become a fat giant that is out of food. Fatso is starting to eat its own fat. But eventually there will be nothing left to eat and Fatso will starve to death. If Fatso is to survive there is no alternative but to search the world for the food of others and eat it. That is called common sense and Imperialism.