Utilities Took Public Money, Gave CEOs Millions, and Then Turned People’s Lights Off During the Pandemic

Utilities Took Public Money, Gave CEOs Millions, and Then Turned People’s Lights Off During the Pandemic
Photo: David J. Phillip, AP

A new report finds that some of the country’s most powerful utilities raked in millions of dollars in taxpayer bailout funds last year — while continuing to shut off service for households across the U.S. during the pandemic.

The report, released Thursday from the Centre for Biological Diversity and BailoutWatch, takes a look at states with publicly available data on utility shutoffs. In the 17 states where there was available data on shutoffs, the report found that the 16 utilities operating in those states cut off electric services for their customers nearly 1 million times between February 2020 and June 2021. (For some context on shutoffs during a normal, non-pandemic year, the U.S. Census found that 1.2 million households in 50 states reported experiencing shutoffs within a three-month period of taking the survey in 2017, the latest Census Bureau data available on disconnections.)

The offences here are not shared by the utility industry equally; there are especially bad actors. The report highlights six utilities that were responsible for a jaw-dropping 94% of all shutoffs last year. NextEra, Duke Energy, Southern Company, Dominion Energy, Exelon, and DTE Energy make up what the authors call a “Hall of Shame.” NextEra alone, the report found, accounted for more than half of all shutoffs.

The analysis also examined financial documents, including proxy statements filed with the Securities and Exchange Commission before a company’s shareholder meeting, to calculate how much money these 16 utilities received from the government as part of relief efforts during the pandemic. The CARES Act was originally designed to help struggling businesses pay workers, but utilities took advantage of corporate loopholes within the act that changed how big businesses could report taxes. (The CARES Act also disproportionately benefited oil and gas producers: BailoutWatch, one of the authors of this report, has also used financial documents to show how oil companies laid off thousands of people and yet still gave their CEOs raises during the pandemic, all the while taking handouts from the government.)

The Federal Reserve bought corporate bonds on the secondary market at the beginning of the pandemic — something that the utilities in this analysis were also able to profit from. “They did this to basically prop up the debt market and facilitate lending, so these companies could keep accessing capital to weather the pandemic, which they did extremely successfully,” said Christopher Kuveke, a researcher at BailoutWatch and coauthor of the report.

The results are pretty shocking. Nine of the 16 companies surveyed got a total of $US1.25 ($2) billion in tax bailouts from the federal government; it would have cost just 8.5% of that, the report found, to prevent shutoffs for all the customers who experienced them last year. All of the utilities except NextEra could have paid for all their customers’ shutoffs with the money they got. In some cases, the analysis found they could’ve done so “hundreds of times over.”

Duke Energy, for instance, disconnected nearly 183,000 households during the analysis’ timeline. Preventing those shutoffs would have totaled around $US19.4 ($27) million. Not exactly small change if you’re sympathetic to utilities’ bottom line, but Duke the report shows the company got a staggering $US633.5 ($882) million in CARES Act benefits. The utility’s CEO received a compensation package in 2020 worth $US14.5 ($20) million even as residents had no electricity in the middle of the economically crushing pandemic.

Southern Company, another Hall of Shame member, cut off power to more than 187,000 households. Not doing so would have cost almost $US19.9 ($28) million to prevent. The company earned a comparatively paltry $US35 ($49) million in CARES Act benefits — but still found the cash to pay its CEO a compensation package worth $US22.4 ($31) million last year.

Utility shutoffs can be unforgiving and extreme, hitting lower-income families suddenly and without warning if they’re even a few cents overdue. An advocate Earther spoke to recently said he’d heard of a family getting their power cut off in the middle of winter for being 37 cents ($0.52) behind on their bill. Shutoffs can have real public health ramifications, too, especially during a pandemic where staying inside was the order of the day. Research from the nonprofit National Bureau for Economic Research estimated that if a nationwide ban on utility shutoffs had been enacted at the start of the pandemic, covid-19 infections would have been reduced by 8.7%, while deaths would have been reduced by a shocking 14.7% over the next nine months.

“The most heartbreaking part about this data is that [the utilities] could have saved so many households from the terror of shutoffs during covid, if they had directed a measly portion of their dividends and CEO payouts towards families and saving them during this pandemic,” said Jean Su, a senior attorney at the Centre for Biological Diversity and coauthor of the report.

Some governments tried to extend aid to vulnerable people: at the start of the pandemic, 32 states and Washington, DC, enacted forms of a moratorium that would prevent utility shutoffs during the pandemic. However, state governments eventually let those holds expire. As of this September, New York is the only state that has a moratorium still in effect. To their (minimal) credit, many big utilities got together to implement voluntary shutoffs at the start of the pandemic. However, big utility lobbying groups successfully convinced Congress to not enact a nationwide ban on shutoffs, which exempted them from any federal action.

All of this is maddening, but it’s extra incensing when you think about the data we don’t have on utility shutoffs. Even though they provide vital services to Americans — many of whom are captive customers who, due to the way utilities work in this country, often don’t have another choice of provider — utilities’ reporting requirements are murky. As the report notes, there’s no federal mandate for utility companies to provide information on shutoffs.

The information in this analysis excludes 23 states that don’t mandate shutoff information be made public (it also excludes 10 states that had shutoff moratoriums in place and had no shutoff data to report). This report adds to the growing pile of evidence that the way we go about providing power in this country and the way utilities are overseen needs a serious overhaul — and fast as the country and the world race to electrify everything.

“Utilities are basically a public service,” said Su. “They were given taxpayer dollars, and they didn’t even divert that to a public purpose.”