Disconnection Data Is Finally Available. What Does It Tell Us?

For decades, the utility industry measured affordability using two simple metrics: rates ($/kWh) and bills ($/month). But neither directly measures whether customers can actually afford their energy. Affordability is about whether households can pay for essential energy services without sacrificing health or safety, Utility disconnections due to nonpayment represent the extremes of unaffordability, with severe consequences for a household’s health, finances, and safety.

Until recently, data on the frequency of disconnections was scarce and difficult to access due to limited regulatory requirements. But we’ve made a major step in the right direction with the release of the US Energy Information Administration’s Residential Disconnections Survey, EIA Form 112. Form 112 collects and publishes, for the first time ever, state-level utility disconnections, reconnections, and final notices data. Previously, estimates suggested utilities disconnected fewer than 4 million customers annually. EIA Form 112 indicates the true number is more than three times that amount — closer to 13 million customers.

When looking at the new state-level data, comparing California or Texas to Delaware or Rhode Island requires normalization. In order to compare disconnections across states, disconnection rates — the share of customers disconnected — is a useful metric.

And once normalized, a surprising pattern emerges.

If rates and bills were equally good indicators of affordability, both would be positively correlated with disconnections. But they are not. High bills are associated with higher disconnection rates. That makes intuitive sense: larger monthly obligations are harder for households to absorb. Rates tell a different story. States with lower electricity rates often experience higher disconnection rates, while many high-rate states experience fewer disconnections. In other words, low rates do not necessarily translate into affordable energy, because affordability is measured by whether or not you can pay something, not how expensive something is.

Affordability is measured by whether or not you can pay something, not how expensive something is.

Affordability can’t be boiled down to a single metric. It requires the careful examination of the legacy of energy poverty, disconnection protections, and other social safety net policies, when trying to explain variations in the data. Stronger disconnection protections and targeted affordability programs such as those in RMI’s Energy Poverty Policy Simulator can help reduce energy poverty and, in turn, disconnections.

When evaluating affordability metrics, it is important to remember the human impacts of not being able to afford energy and the actions decision makers can make to support households facing that difficult reality. Residential customers do not experience affordability in cents per kilowatt-hour. They experience it by whether they can keep their homes warm in the winter or cool in the summer, and still put food on the table.