Gas, electric companies cut off 270,000 Ohioans amid pandemic and billions in profit
The American Electric Power building in downtown Columbus. Photo by Jake Zuckerman, OCJ.
Seven gas and electric companies in Ohio shut off service due to nonpayment more than 270,000 times over one year during the pandemic as their corporate parents reported billions in profits, according to an analysis of regulatory and financial flings.
After prohibiting gas and electric shutoffs for the early months of the pandemic, the Public Utilities Commission of Ohio began to allow utilities to cut off service due to their customers’ nonpayment in fall of 2020 as COVID-19 ravaged the state and upturned the economy. As some faced winters without heat or summers without air conditioning, the investor-owned utilities and their shareholders thrived.
The shutoffs don’t necessarily equate to a unique number of people who faced the shutoffs — some customers could have been shut off more than once. While a specific number of how many people faced shutoffs is not available, what’s clear is those left powerless were the most vulnerable members of the population.
“I think, as a fundamental, the consequence of being poor shouldn’t be enough to get your power shutoff,” said Jean Su, an attorney at the Center for Biological Diversity, who has researched pandemic shutoffs at the national level.
Take American Electric Power, which provides electricity to 1.3 million central Ohioans via its Ohio subsidiary, AEP Ohio. Between June 2020 and May 2021, AEP Ohio cut off power to its customers on 124,157 occasions with their unpaid bills collectively totaling about $60 million.
That same year, AEP (the parent company) made $2.49 billion in net income, thanks in part to $106 million in CARES Act benefits. It paid its common stock shareholders $1.5 billion in dividends. Company CEO Nick Akins made $15 million.
Meanwhile, Vectren Gas, a subsidiary of CenterPoint Energy that serves about 303,000 Ohioans, cut off service for 9,477 customers who owed a collective $5.3 million.
Those arrearages comprise a mere fraction of the $38 million earned by CenterPoint CEO David Lesar. That figure includes benefits like purchasing him a new home (“to minimize our executives’ exposure to COVID-19”), a security detail, and chartered flights for personal trips (“to minimize executives’ potential exposure to COVID-19”), according to the company’s proxy statement.
AES CEO Andrés Gluski's 2021 earnings also eclipsed the arrearages owed by Ohio customers who the company cut off from power. AES Ohio (formerly Dayton Power and Light) serves 473,000 people in the Dayton area. It cut off electric service for 13,727 people over $880,000 in arrearages.
Though the company reported a $409 million net loss in 2021, it paid its common stock shareholders $401 million in dividends as Gluski took home $14.4 million on the year.
What utilities said
The Ohio Capital Journal reached out to utilities to ask, given corporate profits, optional dividend payments to shareholders, and CEO salaries — why cut off power during a health crisis?
Most companies emphasized that disconnection of service is a last resort that usually comes after repeated notices and despite assistance programs through the company or outside groups. Likewise, most said they reconnect customers quickly.
AEP, via its “smart meter” technology, can disconnect and reconnect customers remotely. Company spokesman Scott Blake said nearly 73% of customers disconnected were reconnected within the same day. Unpaid bills, he said, can harm other customers’ rates; and the money AEP received via the CARES Act likewise “ultimately benefits customers through infrastructure investment or reduced rates.”
FirstEnergy, which last summer admitted in a criminal case to a $64 million political bribery operation in exchange for a massive bailout, said it was quick to voluntarily pause shutoffs during the early months of the pandemic. Spokeswoman Jennifer Young said the company has promoted an array of financial assistance options for customers facing financial hardships like determining if they’re available for federal or state assistance, or putting them on a payment plan.
“Then as now, the last thing we want to do is disconnect a customer’s electric service when it can be avoided by contacting our Customer Service team and explaining their situation,” she said.
AES extended the length of its payment plans to 12 months, up from the usually offered six to nine months, it said through a spokeswoman. Its residential bills, she said, are among the lowest served by investor-owned utilities
“AES Ohio supports efforts and initiatives that focus on the goal of helping Ohioans remain comfortably and safely in their homes, particularly our most vulnerable neighbors,” said spokeswoman Mary Ann Kabel.
CenterPoint Energy, in a statement, defended paying its CEO $38 million in 2021, noting that one of his “top priorities” is to reduce customers’ energy expenses by 1% to 2% annually through 2030.
NiSource, which owns Columbia Gas of Ohio, said about $20.4 million in bill payment assistance was distributed to roughly 100,000 Ohio customers in 2021. Spokesman Eric Hardgrove said while most comes from state and federal programs, “some” came from the company itself. In most cases, he said the company works with its customers who fall behind on bills.
Hargrove also said Columbia Gas only disconnected service to 27,000 Ohioans, as opposed to the nearly 40,000 it disclosed to the PUCO, after adjusting for disconnects avoided at the last minute. This could not be independently confirmed.
Duke Energy’s Ohio subsidiary cut off gas and electric (mostly the latter) service on more than 29,500 occasions during the time frame over about $15.6 million in arrearages. It reported $3.6 billion in net income in 2021, after paying $3.1 billion to shareholders and $16.4 million in compensation to CEO Lynn Good. This comes alongside more than $633 million it received in CARES Act benefits.
Upon enacting normal billing practices in the fall of 2020, the company instituted a “robust” outreach program to provide for interest-free payment plans and connecting customers to available aid programs to low-income earners, according to spokeswoman Sally Thelen.
“We have gone above and beyond to assist customers struggling to pay their utility bills due to the impacts of COVID-19,” she said. “Of the customers who had fallen behind on their bill between October and December 2020, 93.5% took action to get assistance or on a payment plan.”
What PUCO said
Ohio, like many states, quickly banned utility shutoffs as the pandemic emerged in March of 2020.
By September and October of 2020, however, the Public Utilities Commission of Ohio began approving utilities’ plans to resume disconnections, albeit with heightened customer protections. For instance, certain low-income customers could be reconnected without immediately paying down their full bill.
PUCO spokesman Matt Schilling said utility customers are legally liable for their overdue balances or arrearages. While disconnections for nonpayment are suspended, bills are not forgiven, and overdue balances continue to grow. If unpaid bills accumulate, he said, costs for all customers of a utility will rise.
He noted there are important differences between parent companies and their subsidiaries. For instance, AEP Ohio or Toledo Edison (a FirstEnergy company) do not trade on their own common stock — their corporate parents do.
“Ohio law regarding service disconnections is not related to corporate earnings or employee compensations in any way,” he said.
State law requires the PUCO to track customer disconnections on an annual basis. Given AEP outpacing all other utilities in terms of shutoffs, a state watchdog agency that represents residential ratepayers led a coalition of advocates that requested an investigation into AEP’s disconnection practices.
“Electric utility service is essential to consumers, particularly when more families needed to be at home in the Fall and Winter months due to job loss, health issues, or school closures as a result of the pandemic,” lawyers with the Ohio Consumers' Counsel argued.
“Access to utility service can literally be a matter of life or death.”
The PUCO, comprised of gubernatorial appointees, denied the agency’s requests on multiple grounds. The commissioners said they were “mindful” of the health and financial consequences of the pandemic. However, they determined that a suspension of gas and electric disconnections would lead to customers accruing larger debts and possibly not taking up available state and federal aid.
On AEP specifically, the commissioners ruled that the number of disconnections alone, without any allegation of a significant and persistent noncompliance, does not justify a full investigation of the company’s disconnection, credit, and collections policies.
The PUCO also denied a request to require the utility companies to assess the impact of their disconnections.
“It is not incumbent on the energy companies to assess and analyze the impact of disconnections on any segment of their service territories, including at-risk populations, minority communities, and the working poor,” the commissioners wrote.
The national picture
When the Democratic-controlled U.S. House passed the CARES Act in 2020, the legislation provided for a nationwide utility shutoff moratorium. However, the provision lacked support in the Republican-controlled Senate and fell out from the package. It was replaced with billions in funding for utility bill assistance, Su said.
Chris Kuveke, a data analyst with Bailout Watch, and Su took a national look at the issue in two reports analyzing utility profits and disconnection rates. They found American families have had their power shut off more than 3.6 million times during the pandemic.
The figure is a lowball. Because there’s no central repository for the data, they went state by state to compile an estimate. Only 32 states (and Washington D.C.) even track the data in the first place.
Their analysis also compiled CARES Act benefits by utilities, which are cited in this report.
“Looking at these companies profitability, the revenue, the dividends, the executive comp, it’s really clear that they are all extremely profitable," Kuveke said in an interview. "And they’re making profit off the ratepayers expense. The fact that they are allowed to disconnect someone without government involvement or oversight is inherently a problem.”
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