Facing A Crisis of COVID, Evictions, and Utility Shutoffs

Earlier this month, I attended the Low-Income Workgroup of the Energy Waste Reduction Committee of the Michigan Public Service Commission. The periodic convening– all virtual as of this spring, which sadly requires the author to forgo his quarterly pilgrimage to Naing Myanmar– usually features presentations from around the state on energy efficiency and utility issues. The last meeting brought nearly a hundred attendees. And it was a powerful reminder of, well, the State Of Things. As we focus on low-income issues specifically, it’s a good opportunity to get policymakers, community advocates, and nonprofiteers in the same room with the people who actually, for lack of a better description, convert ratepayer dollars into electrons.

A cluttered utility pole in Hamtramck, Michigan.
Stakeholder Meetings: Reconciling Disparate Objectives

In the city planning realm, we hear “stakeholder outreach” so much that the term sounds pretty worn out. But in this case, the meeting is a meaningful opportunity to bring together representatives of multi-billion dollar companies with advocates working on behalf of our state’s most vulnerable populations and most disinvested communities. I often say that the problem is not that more powerful parties are emphatically opposed to doing ‘x’ or ‘y’, but rather that they just haven’t been asked the right questions. This is a big part of the reason why I enjoy wearing the journalist hat.

One time, for example, we went around our table and each explained our personal highest priorities. Ever interested in stirring the pot, I said– what shouldn’t be terribly controversial- that I was interested in policy and technical solutions for resilient power grids and microgrids, distributed generation, and a decarbonized economy. This was pointed, as DTE, a representative of which was sitting at my table, was spending millions of dollars to lobby against standards for grid decarbonization and distributed generation.

“Well, I have no idea what any of those things are,” the DTE representative genially proclaimed in response.

Thus started a conversation about the topic! And this is how things get done. Or, at least it’s how things get started. I tend to pick on DTE a lot, but it’s great to have the opportunity to bring all of these stakeholders into the same room. Now, this representative knows what a microgrid is, knows what distributed generation is, and can tell all of her colleagues about it for the next time around!

(DTE has aggressively lobbied against policy that would allow more distributed generation in the form of small-scale and rooftop solar. The utility scored a major win in 2016 when it overturned the state’s net metering law. Net metering allows utility customers with small solar arrays, for example, to sell power back to the grid at what they’d pay for it. The new policy lowers that price per kilowatt, effectively making rooftop solar unprofitable).

Conventional approaches to managing the power grid involve what I refer to as “monolithic generation,” a.k.a. “building big power plants that produce a lot of power and tend to pollute a lot.” The technical term is “baseload generation,” but that term doesn’t preclude smaller, more local sources of power generation. Distributed generation– at a more local level- generally means more resiliency. But it also requires a modernized transmission infrastructure, something utilities have been loath to invest in. As a result, our rate per kilowatt might be lower, but we have lots of outages and limited consumer options for energy efficency improvements.
Consumer Protection And Corporate Profitability, And Never The Twain Shall Meet?

This particular meeting, however, was focused heavily on the topic of consumer protection. We began with an impassioned plea from Maureen Taylor of the Michigan Welfare Rights Organization to address what she portrayed as an impending crisis of evictions and utility shutoffs as we head into the winter. As COVID has left a double-digit percentage of the workforce functionally unemployed, incomes have plummeted. While pandemic unemployment assistance (PUA) funding reduced rates of poverty and debt for awhile, most of it has run out. And, stuck between a lame duck president and a Senate whose leader is sworn to get as little done as possible, Congress appears unlikely to act.

You know, even in the face of an ongoing and worsening national crisis.

There’s an unfortunate nexus between energy poverty– paying an unusually high percentage of household income to utility bills- and housing instability. The former causes the latter. There’s also the strong correlation between building deterioration and utility bills. Many low-income ratepayers live in deteriorated buildings because those buildings are more affordable. Landlords, accordingly, are less interested in maintenance. And, accordingly, this means that older buildings in worse shape are going to have more drafts, less insulation, etc. Given that the building code is rarely enforced in jurisdictions like Detroit, this makes it hard to imagine better regulating these energy-inefficient housing units.

Roger Colton, a journalist-turned-attorney and expert in utility issues around consumer protection, also presented. (You can see why I relate to this wearing of multiple hats). Colton presented on some questions that many of us had heard, as well as a number that we hadn’t. His main point was that investing in protections for the most vulnerable ratepayers actually delivers a huge return on investment. Ratepayers with more energy-efficient housing are less likely to fall behind on bills. They can then spend more money on other stuff that contributes to the economy instead of, you know, that money literally going up in smoke. They’re also healthier (which is, as they say, a whole ‘nother story!). This is something I’ve become a little bit obsessed with at an academic and practical level– the point at which something ostensibly socialist becomes patently capitalist.

“A utility, in effect, is seeking to purchase an increase in the ability of low-income consumers to consume their utility service while making complete, consistent, timely payments for that service with a minimum of collection intervention.”

While utility shutoffs are largely banned during winter months anyway, a few do happen (usually over emergency connection issues). Still, high utility bills reduce a consumer’s ability to spend money on rent. This will, no doubt, exacerbate a deepening crisis in which more Americans are even putting rent on credit cards.

Eviction Bans & Eviction Diversion Programs (CARES) 

An eviction ban was one of the few attempts at a unified federal regulatory approach to consumer protection when COVID hit earlier in 2020. In Detroit, the 36th District Court suspended most of its hearings— including evictions- through early December. Similar protections have been extended in Chicago. One Metro Detroit attorney, who asked that we not use their name, but who works in eviction defense, says that the court closure is a mixed bag. While this means that evictions aren’t actually happening at a judicial level, it also means that “we are not getting people enrolled in eviction diversion.” During COVID, court dockets had tripled or quadrupled in size, virtually all a product of increased rates of evictions.

“With CARES funding, the states were allowed to do an eviction diversion program, where they are paying off back rent to people who lost their income because of COVID,” the attorney told us. “The state will pay out up to $3500 [in back rent …] the idea is that if you just boot somebody out, you’re not going to get any money out of them.” A model in which supporting vulnerable populations actually involves in money being invested into the private sector? And both parties can potentially go home happy? Another example in which the ostensibly socialist becomes patently capitalist.

The attorney continued: “The utility angle is really interesting because [the CARES program] doesn’t cover utilities.”

Nor does it cover utilities that are paid not by the consumer to the utility but to the landlord. Such is a weird technicality of properties that individually charge, but not sub-meter, things like water, gas, or electric (think about a building that has individual electric meters but a common gas-fired boiler system).

The exclusion of utility bills from such a program is a perhaps understandable, but nonetheless huge, regulatory oversight in heating climates (places where it gets cold in the winter and heating bills are expensive).

But let’s take a step back.

How does Michigan compare to other states? The nerdy, nitty-gritty

Colton’s presentation went into the weeds a bit to explore questions of utility reliability as it relates to consumer protection. The next few paragraphs are entirely relevant to the question of forming meaningful policy around utilities and consumer protection, but will be perhaps less interesting to those with a less arch-nerd level of investment in the topic. You’ve been warned.

To the uninitiated, Michigan’s got a few utilities. While Consumers Energy (CMS) and DTE Energy serve some overlapping territory, other utilities serve specific territories– especially municipal ones, for, well, obvious reasons. Detroit used to have its own municipal utility, the erstwhile progenitor of the once-great Mistersky Power Station, now a spooky, semi-abandoned complex owned by DTE. Knowing our luck with neat historic buildings in Detroit, it will probably be demolished at taxpayer expense to be turned into surface parking lot and then leased out in a shady contract to a Gaspar Fiore-owned-and-maybe-police-department-connected towing company. But I digress.

How do you measure utility reliability? Well, there are various, commonly-used metrics. And, according to the panelists, well, Michigan isn’t doing too well. 5 Lakes Energy also showed us how Michigan stacks up compared to other states in terms of utility expenditures per household. Interestingly, Michigan pays more in utility bills than Minnesota and Maine. The Great Lakes State’s temperatures are moderated to some degree by the high thermal mass of the lakes. Detroit’s heating degree days [chart] are in the low 6000s, while Minnesota’s start in the high 7000’s and go into the 10,000’s (I believe the technical term for this Köppen climate classification is “frigid a.f.”). Maine and Vermont have 7000-9000-some HDD and both pay less than Michigan.

Michigan’s utility costs are comparable to even colder climates (Maine and Minnesota) as well as to slightly warmer ones (New York). The state’s deep-red, pro-austerity legacy means that while less regulation lowers some costs, it also reduces vital resources that can improve efficiency and therefore lower costs.
Considering additional efficiency factors

In other words, we have a milder climate, but we’re still paying more for energy. There’s also an efficiency factor to be considered when looking at this chart. Cold climates are cheaper for space conditioning per degree (heating) than hot climates are (for cooling), because most furnaces are more thermodynamically efficient than most air conditioners. So, even if your ∆T°F is higher, it requires less energy to heat a space from really cold to comfortably warm than it does to cool and dehumidify a space from sweltering and humid to comfortably cool and dry. That’s what accounts for the high costs of energy in cooling climate states like Missouri, Georgia, West Virginia, Mississippi, and South Carolina.

Sound complicated? Add on another layer: politics. New York barely exceeds Michigan’s cost of utilities with a comparable number of HDD. The NYC metro in New York State proper has a far milder climate. In spite of higher electricity costs and a nearly 50% higher cost of living, the actual cost of utility expenditures isn’t much higher. Why is that? Well, because the state invests a lot of money in energy efficiency. So, the costs are a little higher, but they end up actually, well, not being much higher at all. Funny how that works, right? Michigan, in comparison, has both a high rate of energy poverty, a low rate of investment in energy efficiency, and a low rate of regulation.

Finally, Colton said that a utility investing in energy efficiency improvements for its customers “in effect, is seeking to purchase an increase in the ability of low-income consumers to consume their utility service while making complete, consistent, timely payments for that service with a minimum of collection intervention.”

Colton’s presentation cited data showing a huge number of households that had faced even a double-digit percentage increase in bills. The affordability threshold is set at 3% of household income. Detroit’s median household income is around $27,000, so 17% expenditure on utility bills would work out to a whopping $383 per month. I’ve had clients who have utility bills that exceed that in the winter. This is in CMS’s (Consumers Energy) service territory.
What can we do about it?

Big picture? We need to talk about modernizing our utility infrastructure and the policy that governs it. We also need to talk about what we’re doing to make sure people live in homes that are not only affordable to rent, but also affordable to heat and cool. The first one is more of a problem of capital and real estate markets. The second one, however, is a more muddled mixture of factors. The energy efficiency question is aided by a combination of public policy incentives and financing mechanisms but also legal systems that work to protect tenants rather than landlords, thus– once again- facilitating a more economically efficient overall system.

If you’re personally struggling with utility bills, there are resources of which you can avail yourself. Many community action agencies like WMCAA often offer weatherization services and home energy audits. In Detroit, THAW offers assistance. LIHEAP is a related federal program that is locally administered. DTE itself offers free energy audits, but they’re not terribly deep. Detroit organizations like UCHC provide support for housing, and legal aid services provide eviction defense. You can also write to your elected representatives and tell them that you want them to extend eviction diversion and other programs to protect tenants’ rights and keep people in housing over the winter.

We also provide single-family, multi-family, and commercial energy audits, and certain retrofit work on a sliding scale. Get in touch!

Two unconnected electrical panels on a two-family house on Detroit’s west side.

Nat M. Zorach

Nat M. Zorach, AICP is a city planner, community development professional, and MBA candidate at American University's Kogod School of Business, based in Detroit.

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