Low-income households more likely to have power disconnected after hot summers

Low-income homes in California are more likely to have their power disconnected about two to three months after days when the temperature exceeds 95 degrees Fahrenheit than they are at any other time of year. That’s because that’s when customers receive overdue notices for bills related to their utility use during those hot days.

The findings are from a new UCLA-led study published in Nature Energy.

“For low-income households, having just one hot day during the August billing period can lead to a 1.2% increase in the chance of being disconnected in October,” said Alan Barreca, a UCLA economist and lead author of the study.

Low-income households have unique difficulties adjusting to extreme heat events. Higher energy usage—for example, from heavier use of air conditioning—leads to higher bills, which forces some families into difficult decisions. Paying energy bills might mean forfeiting food or other necessities, but avoiding paying energy bills could mean that utilities are disconnected.

At the same time, forgoing the use of air conditioning during a heat wave could lead to heat-related illnesses; and many low-income homes in Southern California don’t have air conditioning at all. (According to a Brookings Institution report, 20% of households in the city of Los Angeles lack air conditioning.)

“We don’t want people to stop using energy, because we need them to be adapting and protecting themselves,” Barreca said. “And we simultaneously want there to be little financial distress later on when they get their bill.”

For the study, researchers reviewed the account histories of 300,000 low-income households between January 2012 and August 2017, using data from Southern California Edison, which serves more than 15 million Southern Californians. The study focused on families whose household incomes below 200% of the federal poverty level.

The average summer electricity bill for households in the study was $101.66. But researchers found that for each additional day with temperatures of at least 95 degrees Fahrenheit, electricity bills increased by $1.60. For each subsequent day that the temperature exceeded 100 degrees Fahrenheit, the increase was $2.92 per day.

Those increases could easily add up to an additional $20 to $30 per bill. That might not seem like a dramatic increase for some Californians, but for low-income families, the additional expense can be devastating.

Various studies suggest that between 60% and 70% of Americans in 2022 are living paycheck to paycheck, which can make it impossible to cope with unexpected expenses. Barreca said the study was intended to examine how climate change might make that problem even worse, as the number of high-temperature days increases.

By the last two decades of the 21st century, if today’s climate projections hold true, the study estimates, low-income households would have a 12% greater risk than they do today of having their power disconnected.

Public policy solutions that could help address the problem will be complex, Barreca said. For example, policies could be enacted that require landlords to provide air conditioning for their tenants, and that mandate better insulation when homes are built or renovated.

Other approaches could include providing subsidies to low-income households to defray costs they incur on extreme heat days, or tailoring utility companies’ existing financial assistance programs to provide extra funding after hot weather events, Barreca said.

“The benefit we’ll have in terms of avoiding financial distress and having people protect themselves vastly outweigh any small increase in energy consumption,” Barreca said. “Especially for this population, energy consumption is inelastic. It is a necessity.”

He added that beyond the day-to-day financial challenges it can cause, being disconnected by utility providers can have lingering effects, ranging from psychological distress to reduced credit scores, health implications and a perpetuation of poverty.

Low-income homes in California are more likely to have their power disconnected about two to three months after days when the temperature exceeds 95 degrees Fahrenheit than they are at any other time of year. That’s because that’s when customers receive overdue notices for bills related to their utility use during those hot days.

The findings are from a new UCLA-led study published in Nature Energy.

“For low-income households, having just one hot day during the August billing period can lead to a 1.2% increase in the chance of being disconnected in October,” said Alan Barreca, a UCLA economist and lead author of the study.

Low-income households have unique difficulties adjusting to extreme heat events. Higher energy usage—for example, from heavier use of air conditioning—leads to higher bills, which forces some families into difficult decisions. Paying energy bills might mean forfeiting food or other necessities, but avoiding paying energy bills could mean that utilities are disconnected.

At the same time, forgoing the use of air conditioning during a heat wave could lead to heat-related illnesses; and many low-income homes in Southern California don’t have air conditioning at all. (According to a Brookings Institution report, 20% of households in the city of Los Angeles lack air conditioning.)

“We don’t want people to stop using energy, because we need them to be adapting and protecting themselves,” Barreca said. “And we simultaneously want there to be little financial distress later on when they get their bill.”

For the study, researchers reviewed the account histories of 300,000 low-income households between January 2012 and August 2017, using data from Southern California Edison, which serves more than 15 million Southern Californians. The study focused on families whose household incomes below 200% of the federal poverty level.

The average summer electricity bill for households in the study was $101.66. But researchers found that for each additional day with temperatures of at least 95 degrees Fahrenheit, electricity bills increased by $1.60. For each subsequent day that the temperature exceeded 100 degrees Fahrenheit, the increase was $2.92 per day.

Those increases could easily add up to an additional $20 to $30 per bill. That might not seem like a dramatic increase for some Californians, but for low-income families, the additional expense can be devastating.

Various studies suggest that between 60% and 70% of Americans in 2022 are living paycheck to paycheck, which can make it impossible to cope with unexpected expenses. Barreca said the study was intended to examine how climate change might make that problem even worse, as the number of high-temperature days increases.

By the last two decades of the 21st century, if today’s climate projections hold true, the study estimates, low-income households would have a 12% greater risk than they do today of having their power disconnected.

Public policy solutions that could help address the problem will be complex, Barreca said. For example, policies could be enacted that require landlords to provide air conditioning for their tenants, and that mandate better insulation when homes are built or renovated.

Other approaches could include providing subsidies to low-income households to defray costs they incur on extreme heat days, or tailoring utility companies’ existing financial assistance programs to provide extra funding after hot weather events, Barreca said.

“The benefit we’ll have in terms of avoiding financial distress and having people protect themselves vastly outweigh any small increase in energy consumption,” Barreca said. “Especially for this population, energy consumption is inelastic. It is a necessity.”

He added that beyond the day-to-day financial challenges it can cause, being disconnected by utility providers can have lingering effects, ranging from psychological distress to reduced credit scores, health implications and a perpetuation of poverty.