Companies in the accounts receivable management industry that collect on unpaid utility debts should be preparing for a “tsunami of shutoffs” and those that do not collect this type of debt may want to consider doing so, following a series of published reports that spotlight just how many people are behind on their payments and just how much is owed.
As of June, one-in-six households across the United States were behind on their utility payments, representing 20 million households nationwide. Combined, those households owed more than $16 billion in unpaid utility debt, according to data released by the National Energy Assistance Directors Association. That figure is just slightly less than the high-water mark that was set this past March at $16.5 billion. Before the COVID-19 pandemic, the average amount owed nationwide was about $8 billion at any given point, according to the NEADA. The average unpaid amount owed by households is $792, up from $403.
The main reason why the amount of unpaid utility debt has exploded during the pandemic has been the increase in energy costs. The price of natural gas, for example, has increased 30% in the past year, and those prices are being passed along to consumers. As winter approaches, and the demand for natural gas increases, consumers are going to feel the pinch of higher energy bills even more, according to experts.
“Utility arrears can be viewed as an economic indicator, they are very sensitive to changes of the economy and people in the bottom 40% of the population fall behind on these bills when the economy trends down,” said Mark Wolfe, the NEADA’s executive director, in a published report.