$241. That’s how much one customer overpaid on a single electricity bill last month. No, this wasn’t a billing error or the result of a surge in their family’s energy usage. This household was on a third-party retail electricity plan that was charging them 20¢ per kWh — or 13¢ more than the 7¢ standard utility rate in their area.
Unfortunately, this customer is not an anomaly. Running the numbers, we uncovered that many retail energy providers were overcharging a portion of their customers anywhere from $5 to $640 a month. Of the accounts we sampled, 40% were paying more than they needed to.
Of the accounts we sampled, 40% were paying more than they needed to.
These overcharges by third-party providers have come amid unprecedented economic uncertainty for millions of Americans, as many across the country have grappled with social distancing, working from home and observing stay-at-home orders to curb the spread of COVID-19.
Overcharges have been exacerbated by a drastic increase in energy consumption
This trend is troubling enough on its own. But these rate hikes have been coupled with a drastic increase in energy usage over the last 14+ months. Our analysis of 13 U.S. metropolitan areas revealed energy bills spiked by as much as 17% from pre-COVID levels, as many workplaces shifted to remote models, externalizing overhead costs associated with powering offices onto employees.
Cities on the west coast, like San Francisco and Riverside, California, saw some of the highest spikes in electric bills last year as unprecedented wildfires ravaged the region, with average electric bill costs climbing by $258 and $136, respectively. On the east coast, Boston and New York residents saw their utility costs increase by $244 and $148 annually compared to pre-COVID levels, for an increase of 11% and 8%, respectively.
Unpaid energy bills grew 66% from 2019 to January 2021
Meanwhile, one in four American households is grappling with unpaid energy bills, according to Arcadia data. In March, Arcadia peered into two years of historical energy bill data from 120,000 members across 13 states and the District of Columbia and found higher-than-typical past-due balances in bills. Average past-due balances grew 66% from 2019 to January 2021, amounting to an estimated $8-billion in unpaid energy balances accumulated over the years.
We see three compounding energy trends facing households nation-wide: 1) Energy consumption has increased during COVID-19; 2) Unpaid energy bills are on the rise; and 3) Many customers are paying more than they need to for energy. These trends point to a troubling picture: amid unprecedented unemployment and economic uncertainty, increased rates of home energy usage, and skyrocketing amounts of unpaid electric bills, many customers were also paying more than they needed to for their home’s electricity. And, with warmer temperatures on the horizon, many may soon see their bills climb even further, just as they did in 2020, when the workforce moved home for the very first time.
What to do
If you’re using a third-party energy provider, take a closer look at your electric bill to compare your current rate with the standard utility rate in your area. If your rate is higher than the utility, call your supplier and cancel the service. That will return you to the standard offer service with your local utility. For Texas residents, consider using a service like Real Simple Energy to keep an eye on your energy rate for you, so you’re always saving.
Amid unprecedented unemployment and economic uncertainty, increased rates of home energy usage, and skyrocketing amounts of unpaid electric bills, many customers were also paying more than they needed to for their home’s electricity.
For those looking for assistance in paying their electric bills, many states and utility companies offer under utilize payment assistance programs. The Low-Income Home Energy Assistance Program has resources to check state and utility energy assistance programs. We’ve also compiled a list of utility companies’ payment policies under COVID-19, as well as tips for conserving energy while spending more time at home.
At Arcadia, we recognize the challenges homeowners and renters have historically faced in the energy-buying process. Removing these confusing barriers and serving as a relentless advocate for the everyday energy consumer remain among our top priorities. So whether you’re a current Arcadia member or not, our team of energy advisors is always available to answer your questions, offer advice, and help demystify your energy concerns.