By Nathalie Voit
A growing number of American families are facing energy insecurity.
In a statement from the National Energy Assistance Directors’ Association (NEADA), executive director Mark Wolfe said that millions of U.S. households are drowning in utility debt.
By the end of February 2022, a NEADA analysis found that more than 20 million families were behind on their utility bills, owing a collective $23 billion in arrearages, up from $10.5 billion at the end of 2019. Wolfe said that utility arrearages have more than doubled since the beginning of the COVID-19 pandemic due to rising energy prices and pandemic-related layoffs.
Wolfe isolated energy inflation as the primary culprit for rising utility debt. Wolfe said that price increases across all energy categories–from electricity to fuel oil to gasoline–contributed to the record national arrearage balance we see today.
Indeed, the Department of Labor data showed that overall energy costs rose 34.6% over the past twelve months in May. The index for natural gas, for instance, rose a record 8.0% last month. The department said this was the fastest monthly gain since October 2005. The electricity index also increased in May, rising by 1.3%.
Year-over-year, natural gas prices surged more than 30%, while the cost of gasoline climbed by almost 50%. Meanwhile, the index for fuel oil in May more than doubled, rising an astounding 106.7% over the year. The government said this represents the fastest 12-month increase in the history of the series, which dates back to 1935.
Americans’ growing energy burden does not stop there. Electricity costs also took a hit in May–soaring 12.0% over the year– the largest annual increase since the period ending August 2006.
NEADA said annual home energy costs for the poorest American households in 2021 soared to $3,399, up from $2,511 in 2019. If current trends continue, lower-income households are looking at an estimated $3,957 in utility bills this year. The figure represents a 58% growth in energy prices from 2019.
According to the American Council for an Energy-Efficient Economy, households should spend no more than six percent of their total income on energy costs.