Analysis: Some Detroiters find heat, utilities unaffordable

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Across the nation, during the pandemic, Black and Latino respondents were four and seven times more likely than white people to have had their utilities disconnected. (Shutterstock photo)

Eli Gold graduated from the Gerald R. Ford School of Public Policy at the University of Michigan. (Courtesy photo)

In 2004, Eban Morales was painting motivational slogans on the interior of an auto shop when he fell off his ladder and hit the concrete floor. The cascade of injuries, rehab and medication that followed left him on federal disability, which has him living on $783 a month. 

By last year, he had recovered a bit. He no longer needs a wheelchair, but at 56, he still walks with a cane. His work as a sign painter is over. 

He owns his house in Highland Park outright. It was built in the early 1900s, a large, tan stucco on brick foundation. The first-floor picture window is double-paned and insulated vinyl, but upstairs, everything is original. In the winter, heat leaks out;  in the summer, it leaks in.  

In winter, his energy bills can top $1,000 a month. In the summer, they are better,  around $200. He tries to lower his winter energy bill with alternative heat sources, and his summer bill with fans rather than air-conditioning, and he has become an expert at navigating the programs that help low-income residents keep their gas and power connected. He appreciates the assistance, but the process of maintaining it is laborious and stressful. He says he is often just a day away from losing electricity service. 


Good times for DTE, bad ones for others

Like everyone in Southeast Michigan, Morales gets his gas and electricity from DTE Energy, the largest regulated utility in Michigan. DTE is an investor-owned utility (IOU) — a for-profit business with a monopoly on delivering energy to ratepayers (an industry term for energy customers) in a certain area.

Unlike many businesses, DTE has done well during the pandemic. In 2020, DTE made $1.4 billion in net income, up from $1.2 billion in 2019

Meanwhile, COVID-19 is exacerbating energy insecurity nationwide. A September 2020 study of Americans at or below 200 percent of the federal poverty level (FPL) — $25,520 for a single person — found that between May and August, 20 percent of this population said they could not pay their energy bill. Seven percent had their service disconnected. The data is even starker when controlled for race. Respectively, Black and Latino respondents were four and seven times more likely than white people to have been disconnected during this period. 

Energy is an acknowledged necessity in what remains of America’s depleted social safety net. Extra ratepayer support and precautionary measures were rolled out during the pandemic. These supports kept a lot of Michiganders, including Morales, from losing power at least temporarily, but questions remain about what will happen when temporary assistance drops off. Moreover, even with these extra supports, many low-income Michiganders are unable to pay their energy bills. 

In Michigan, energy assistance comes primarily from two sources: the federally funded Low-Income Home Energy Assistance Program (LIHEAP) and the ratepayer-funded Low Income Energy Assistance Fund (LIEAF). Morales has benefited from both over the years.

Michigan LIHEAP totaled over $165 million in 2019, while receiving an extra $35 million  in 2020 to support Michigan ratepayers through the pandemic. LIHEAP funds several energy assistance measures, including weatherization and self-sufficiency programs. The largest LIHEAP-funded program is State Emergency Relief (SER), which is distributed by the Michigan Department of Health and Human Services (MDHHS) and is primarily used to help ratepayers who are in danger of being disconnected to pay down their energy bills. 

Morales has received SER on multiple occasions, and LIHEAP dollars, through the nonprofit Wayne Metro Community Action Agency. Morales appreciates the help, which partially weatherized his house, causing his gas bill to go down.  But the difference between $1,000 and $800, with his fixed income, doesn’t go far. 

LIEAF is a $50-million fund paid by ratepayers via their monthly energy bills. In 2020, all Michigan ratepayers paid 91 cents each month to support this program. Most LIEAF funding supports the Low-Income Self-Sufficiency Plan (LSP) — a 24-month program that sets up low-income customers with fixed rates ranging, in 2020, from $90 to $130 a month. 

The portion of the energy bill not covered by the fixed rate is paid out of LIEAF funds.

Recently, the LSP program was linked to SER to streamline the assistance process and reduce the administrative burden on the nonprofits that administer LSP. Mostly, this is working out well and has made the assistance process faster.

However, there is one downside to these recent changes. Now, eligibility for LSP is tied to SER’s cutoff poverty level of 150% of the Federal Poverty Line (FPL), which can be a dangerously rigid threshold. 

In 2021, 150% of FPL amounts to $19,320 for an individual, or $39,750 for a family of four. A young Detroiter in good health with no debt and few financial responsibilities can survive on $19,320 a year. For others, this is not the case. Such a rigid threshold fails to account for individual circumstances, meaning that some who need energy assistance don’t receive it. 

With under $10,000 in yearly income, Morales is well below FPL and has benefitted from LSP over the last several years. However, it has flaws — a customer who doesn’t make timely payments can fall off the program. This is both logical and counterproductive — logical to incentivize compliance but counterproductive to force someone to pay a higher bill when they are unable to pay a lower one. Furthermore, LSP does a poor job dealing with fixed-income customers like Morales. After making LSP payments consistently for a year, he was told he no longer needed the program and was temporarily dropped, to which he responded, “Wait a minute, the only way I was able to pay the bill is because you put me on this program.” 

Baba Baxter’s income is above the cutoff for utility assistance but he still struggles. Baxter is a paraplegic senior citizen living in Detroit’s Cass Corridor. A disability activist, he is battling his landlord over compliance with accessibility laws, taking issue especially with the DTE gas meters on the ramp to his apartment, which he says once caused him to flip his wheelchair.

Baxter was a public-school teacher in Detroit from 1983 until 2010, but a car accident in 2005 left him substantially paralyzed and in a wheelchair. After a period of recovery, he returned to teaching but was fired when the school system was under emergency management. Unable to collect his teacher’s pension and denied a disability retirement, Baxter’s anger at the institutions that kept him from a comfortable old age is caustic.

Today, Baxter lives alone on federal Social Security totaling more than federal poverty guidelines. As a result, he is ineligible for the programs that have benefited Morales. Yet, his cost of living is going up by more than the negligible yearly increases to his income. Both his age and his disability status prevent DTE from terminating his service during colder months. Still, it’s not easy for him to pay his bills. 

“I’m in a unique situation” Baxter explains, “because as a senior they won’t shut me off during the fall and winter months. But in the meantime, your bill keeps accumulating, it’s not going to go away: Come March you still owe.”

The orange line shows restoration data. It’s important to keep in mind that customers who were restored are customers who at some point were disconnected, forced to go without energy for an unknown amount of time. The data was made available by DTE and does not show when the customer was originally disconnected.

Help not designed for those who need it

Baxter and Morales live on either side of the cutoff line for utility assistance, and both struggle with their energy bills. Existing assistance programs are not well-designed to support people with fixed incomes. They are based on a paradigm of supporting people through hard times without recognizing that, for some, the hard times are constant. 

To the energy justice community — activists who fight utilities and lawmakers on behalf of low-income communities and communities of color — the problems with the status quo are clear. 

In a formally submitted comment on the Michigan Public Service Commission’s (MPSC’s) COVID-19 response docket, the Michigan Environmental Justice Coalition and the National Housing Trust, along with eight other co-signatories, state:

Despite the best efforts of customer service departments and community action agencies, energy assistance programs are inadequate. This is evidenced by the sheer quantity of arrears and the number of annual shut-offs by Michigan’s largest utilities, and by the litany of time, energy and emotional strain endured by customers with low incomes and advocates in seeking assistance dollars that often do not fully meet their needs. 

They go on to propose a percentage of income payment plan (PIPP), targeted energy-efficiency measures, and a suite of other proposals to simplify access to assistance and codify energy affordability and racial justice into the MPSC’s mission. A PIPP limits utility payments to a percentage of the ratepayer’s income; activists advocate for a 6 percent cap. 

Sharonda Williams-Tack, the associate director for Environmental Justice and Community Partnerships at Sierra Club, said a lot of Detroiters would qualify for an income-based plan. For Black census tracts in Detroit (those with over 50% Black population — most Detroit tracts) the average energy burden is 7.5 percent.  

There is precedent for PIPPs and income-based plans. Illinois and Ohio both mandated that their regulated utilities develop them. The Illinois PIPP is funded by a combination of utility and LIHEAP dollars. Ohio’s was created with state funding, leaving their LIHEAP dollars available for other energy assistance programs.

DTE has voluntarily planned an approximately 2,000[-]person pilot PIPP beginning in 2022. If it goes well, they say they will make it permanent and roll it out across their customer base. But if DTE does not like the pilot, two years are lost, and things are back where they started. 

Michigan could mandate the adoption of PIPPs through legislation, but there is currently no evidence that they will.

In November 2020, DTE’s total unpaid utility bills were around $230 million.  According to DTE’s energy assistance director Tamara Johnson, that is only 10%-15% more than they would normally expect — their early pandemic estimates for customer defaults were much higher. The utility attributed this to the success of energy-assistance programs, outreach campaigns, flexible payment plans, and other assistance measures.

Morales had a less charitable view of the successes of assistance programs: “You gotta look at … who does it really help? … They’re trying to spin it like we’re working for you, we’re trying to help you. No, you’re trying to make sure that you get paid. That’s all you care about.”

Hope

Unable to work his trade, Morales went back to school with the support of Michigan Rehabilitation Services. He has nearly completed coursework for two degrees in creative Illustration and web media design, and he sometimes sells paintings at Detroit’s Eastern  Market.

In May 2021, after making it through the winter on LSP, Morales fell behind on his DTE payments and was dropped from the program. Morales said he owes DTE $959.71. A few months ago, he lost his Supplemental Nutritional Aid Program (SNAP) benefits and spent money he would normally put toward his energy bill on food. After going back and forth with DHHS, his SNAP benefits were recently reapproved. He is trying to get SER again, so he can pay down his DTE bill and get back on LSP, but he could have his power cut at any time.

However, Morales is hopeful. He has been working with Global Detroit, a Midtown nonprofit that, among many services, implements some of DTE’s energy-efficiency funding for residential retrofits. Global says they can repair his roof, install new windows and replace his boiler with an efficient forced-air system. Yet, Morales worries that being behind on his DTE bill may make him ineligible. 

Early in the pandemic, the MPSC mandated that Michigan’s regulated utilities report their disconnection rates. These data reveal that, as the pandemic starts to ease, DTE is reverting to a more aggressive campaign of disconnections (see graph). Between January and April 2021, an additional 1,000 customers are being left without power at the end of each month, with many more temporarily disconnected during each reporting period. At the same time, DTE reported higher than expected earnings for the first quarter of 2021, with a net income of $473 million, up over $150 million from $320 million in the same period last year.

COVID-19 may soon be in the past, but many of Michigan’s most vulnerable residents are still fighting to keep their lights on. 

Correction: An earlier version of the story stated that Baxter is a quadriplegic senior citizen. Baxter is paraplegic.

Eli Gold is a graduate from the Gerald R. Ford School of Public Policy at the University of Michigan. This story was written with the support of a collaboration between BridgeDetroit and the Ford School.

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