Energy is essential for modern life—heating homes, lighting communities, and powering vital devices. Yet recent economic strains and global fuel price fluctuations have made it increasingly difficult for many households to keep up with their monthly utility bills. National utility bill debt in the United States doubled from 2019 to 2022, and one in six households are currently behind on their payments. Low-income families face difficult decisions between paying for essentials like food and medicine or paying their energy bills.
Soaring energy costs are no longer a temporary hurdle. They reflect deeper issues in market volatility, wage stagnation, and inflation. The typical consumer, especially those at lower income levels, is left grappling with higher power and heating bills even as personal finances remain tight.
Falling behind on utility bills sparks a chain of harmful impacts: households risk disconnection, lack of refrigeration for medications, and unsafe living conditions in extreme temperatures. Many states are seeing record numbers of people seeking help from local energy assistance agencies. Although data from national sources capture a snapshot of this crisis, utility-level figures tell a similar story: mounting arrears and a growing share of delinquent accounts.
Recognizing that traditional payment plans and blanket assistance programs are not enough, utilities are adopting more nuanced models to help consumers manage costs. Some utilities provide flexible billing options, such as “pick-your-due-date” programs, letting customers align payments with payday schedules. This small change can help families with variable or limited income avoid late fees and budgeting pitfalls.
Community donation and round-up programs also leverage the generosity of local residents and businesses. Utilities like Xcel Energy in Colorado add a minimal Energy Assistance Charge to bills or allow customers to donate demand-response rebates to help low-income households. MidAmerican Energy’s I CARE program similarly pools customer donations and adds a 25% utility match to fund heating bill assistance and efficiency upgrades, while Idaho Power’s Project Share, in partnership with the Salvation Army, supplies up to $300 per household to address past-due bills or repair costs.
Budget billing and prepay plans offer another lifeline. Budget billing spreads costs evenly across the year, allowing customers to avoid price spikes in extreme weather months. Prepay programs require an up-front balance but typically provide usage alerts in real time. These alerts can drive energy savings of 5–14%, partly because households tend to respond by trimming energy use. Many utilities also allow customers in arrears to join these programs, giving them a structured path to reduce past debts while staying current on future bills.
Percentage-of-Income Payment Plans (PIPPs) let households pay a set, manageable share of their income toward monthly utility bills. Any charges beyond that are subsidized by the utility or by state funds. Ohio’s PIPP Plus program is among the largest, with around 386,000 participants as of 2015. By capping monthly utility costs relative to what a family earns, these plans aim to prevent households from slipping deeper into debt.
Arrearage Management Programs (AMPs) take on the accumulated debt itself. Utilities forgive portions of a customer’s overdue balance each time they make an on-time payment over a designated period. This structure creates a strong incentive for consumers to keep up with new bills, reducing disconnections. Massachusetts saw about 17,300 customers enroll in its utility-run AMP in 2012, with $17.8 million paid on current bills and $15.9 million in old debt forgiven. California is piloting an AMP that forgives up to $8,000 of debt for those who stay on track with payments.
Some states require utilities to provide ongoing bill discounts or universal service tariffs to lower-income customers. California’s CARE program offers a 30–35% discount on electricity and 20% off gas, reaching over one million customers (CARE/FERA Program). For households that just miss CARE eligibility, the Family Electric Rate Assistance (FERA) program applies a lower-level discount. About 20 states have similar programs in place, offering some form of bill reduction or fixed credit for qualifying customers (Source: 5 creative approaches to utility payment assistance programs). New York’s Energy Affordability Program mandates standardized low-income discounts across major utilities, ensuring consistent support for consumers in need.
Utility-driven measures gain strength when backed by supportive policy. The California Public Utilities Commission (CPUC) has played a major role, rolling out pilot PIPPs that cap bills at 4–6% of income and launching AMP initiatives that forgive debt when payments are made on time.
Beyond the programs themselves, proactive outreach is making a difference. The CPUC’s 2024 case management pilot partners utilities with local community organizations, reaching out to at-risk households to enroll them in assistance programs and set them up with payment plans. This kind of direct engagement helps close the gap between customers who need relief and those who sign up.
Better communication channels—from email alerts to SMS notifications to live chat options—can empower customers to make timely and informed decisions about their energy usage. A text message warning about high consumption or an upcoming payment deadline can prompt immediate corrective actions, such as switching off unnecessary lights or adjusting the thermostat. Proactive, personalized messaging also helps utilities engage with customers before they fall behind, bridging information gaps and directing them toward existing assistance or efficiency programs.
Energy affordability is not just an abstract concept; it affects basic well-being and community resilience. Utility-based solutions have multiplied in recent years, from flexible billing and round-up donation programs to comprehensive approaches such as Percentage-of-Income Payment Plans and Arrearage Management. Discounted rates, paired with evolving regulatory support, point toward a future where energy insecurity is less likely to upend lives. Even as economic uncertainties persist, these innovations offer a roadmap for balancing reliable service with consumers’ ability to pay. Utilities and nonprofits have an opportunity to build on these efforts to ensure more households stay powered and safe through every season.
Read other insights and news from the Convey team.
Convey, formerly Message Broadcast, has acquired Powerley. By combining Convey’s expertise in large-scale, compliant communication with Powerley’s advanced energy analytics…
CLIENT: Hawaiian Electric USE CASE: Outage management THE CHALLENGE Hawaiian Electric, serving 95% of Hawaii’s 1.4 million residents, sought to…
For years, businesses have invested in building omnichannel experiences that meet customers where they are. Email, SMS, mobile apps, and…
