As A/C whirs, consumer budgets tighten
Utilities and advocacy groups are trying to help consumers with double-digit increases in electric bills.
The temperature's not the only thing rising: So is the cost of keeping cool.
Across the sunbaked nation, utility companies, which are churning out a record amount of electricity as they try to keep up with the heightened demand for air conditioning, are watching their own fuel bills rise – an economic event that is likely to blow right into consumers' wallets.
In some cases, homeowners trying to escape triple-digit heat can expect their electric bills to rise by double digits in the weeks ahead. Consumer groups are trying to get President Bush to free up money to help the poor and seniors pay such costs. And utilities in parched parts of the nation are planning to offer their customers the opportunity to pay higher bills over an extended period of time.
"We anticipate some sticker shock for sure," says David Eisenhauer, a spokesman for Pacific Gas and Electric, which is giving its customers an additional six months to pay bills that are expected to rise from 15 to 20 percent. "Customers are going to know the price is going to be higher because they used the air conditioner more, but they are definitely going to see a pretty big increase."
Even before the heat wave, the National Energy Assistance Directors' Association (NEADA) estimated that a consumer would see an increase in his or her electric bill anywhere from $100 to $300 annually. This is reflecting the higher cost of coal and oil. The cost of natural gas, which is also used for generating electricity, has declined compared with last year, but still, it has spiked up during the heat wave.
Even more important, rate caps are coming off for an increasing number of utilities because of the deregulation process. For example, 1 million customers of Baltimore Gas & Electric will see their rates increase by 72 percent, 1.1 million customers at Connecticut Light & Power will experience 22.4 percent rate increases, and Xcel Energy in Colorado will hike rates by 20 percent for 1.3 million users, according to NEADA.
Polls indicate higher energy prices are causing hardship. Late last month, an Experian-Gallup survey found that half of all consumers say high gasoline prices are causing them financial difficulties. In that poll, 68 percent of people making less than $40,000 per year said they are cutting back on air conditioning or heating.
Even before the heat wave, some consumer groups called for states to ask utility companies for rate relief. Now, the need is even more urgent, says Tyson Slocum of the consumer advocacy group Public Citizen, based in Washington.
"The unfortunate thing here is that at the same time people have to use a lot of energy to keep cool and stay alive, they are going to be charged record high rates because of deregulation," Mr. Slocum says.
Many people are now more careful about their electric usage. Duane Berrong of Henderson, Ky., says he's turned the thermostat up. "I read in the paper this morning that it would help delay a power outage if everybody turned the A/C up to 78 degrees, so I did that," says Mr. Berrong.
The increase in temperatures and the rise in bills have forced low-income families and seniors to prioritize. For Nelida Merced of Brooklyn, N.Y., whose only income is Social Security, that means choosing to pay rent and medical bills instead of using air conditioning.
"If I can't afford air conditioning, I can't afford it," Ms. Merced says. "I have to pay rent or I'm on the street." She spends her days at the Borinquen Plaza Center where she can play bingo with other seniors, but mainly, she enjoys the cool air there.
NEADA, which receives some of its funding from utilities, and state energy directors are asking Mr. Bush to use $102 million in emergency funds to help low-income families and senior citizens pay their utility bills.
"We've gone from a period of cheap energy to an era where that is over, and our programs, our legal systems, and our regulatory systems are not set up to handle that," says Mark Wolfe, executive director of NEADA. He notes that the federal Low Income Home Energy Assistance Program is helping 900,000 more people this year compared with last year.
"We have to look at developing both assistance programs and programs [that help protect consumers against shut-offs]," says Mr. Wolfe. "There are 20 states that have shut-off protection laws during the winter. Now, we are looking at protections for the summer, and we've never had to do that before."