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Arizona Sees More Shutoffs, Higher Rates, More LIHEAP Applications

July 28 - Phoenix-area utilities cut off power to 54 percent more homes in June of this year than in June 2008, as hot weather, a bad economy and rate increases combined to cause more people to fall behind on their bills.

Salt River Project and Arizona Public Service Co., which both raised their rates in 2008, disconnected a total of 11,368 homes in June, compared with 7,396 customers in the same month last year.

At SRP, 86 percent more customers were disconnected, while APS cut off 21 percent more customers this June compared with last.

 With mild weather and lower electricity usage for the first half of the year, the number of people disconnected had been trending lower than last year until June.

When the summer heat arrived and AC use went up, the number of unpaid bills spiked, leading to an increase in disconnections.

The utilities said the reason they disconnected more people this year than last June was because there were six to seven extremely hot days in 2008 when they didn't cut people off to protect customers' health.

"This June was much cooler than last June," said Michael Lowe, customer services executive for SRP. "Last June, we had a number of days where we did not disconnect because of extreme temperatures. We did not have those temperatures this June, and that's why there's more disconnect activity."

But welfare advocates say rising costs and the recession have contributed to the increase. "Every time the rates increase, especially in this down economy, families are negatively impacted. And what that means is they're unable to pay their bills," said Cynthia Zwick, executive director of the Arizona Community Action Association.

APS raised average household monthly rates about $4.50 in December, and SRP raised its average bill about $4.70 in October. People feel those increases more in summer when they use more electricity to run air-conditioners.

Zwick's organization uses funds from the state, utilities and federal government to help people pay their electric bills and weatherize their homes.  She said her organization has seen requests for electric assistance surge in recent months and has helped more than 40,483 households. Financial problems stemming from unemployment, foreclosure and illness were the main reasons people cited for seeking help.

"We have seen an increase in the request for assistance anywhere from 40 to 300 percent, depending on the community," she said.

The ACAA has not been able to provide relief for everyone that has sought assistance, placing many people on waiting lists.

"The need far exceeds anything any of us have ever seen before," Zwick said. "

The average bill assistance the ACAA has provided per household to pay utilities has grown substantially, going from $241 in 2007 to $304 in 2008 to $413 this year, she said.

Zwick said she believes that June through September will bring more families her way due to higher temperatures, growing unemployment and the impact of the last round of rate increases.

Even with increased funds, the ACAA will be able to serve only 8 percent of the people who meet income guidelines making them eligible for assistance, she said.

"I'm very concerned about what's going to happen with families, and I just don't know what we're going to do about it," she said.

Requests for payment extensions also spiked for both companies, with 160,251 people applying for more time to pay during the first six months of this year, an increase of over 18 percent over the same period last year.

Neither of the utilities tracks how many of the disconnected homes are vacant because of foreclosures, but even those customers eventually must pay their bills to start electrical service when they move to a new residence.

Both APS and SRP have policies not to cut power from customers' homes if the weather is hot enough to threaten their health, usually when the temperature reaches 110 degrees. When SRP disconnects customers for not paying a bill, it provides them with a load controller that leaves them enough electricity to power a refrigerator and a few lights, but not air-conditioning.

Although the utilities say disconnects are a measure of last resort, many people struggling to cope in the recession end up with no AC for a day or two until they pay their bills. Utility officials said nearly everyone pays, sooner or later.

Both companies are attempting to implement new rate hikes later this year. APS is seeking regulatory approval for an average increase of about $9 a month for residential customers. SRP wants to raise rates by about $12 a month and has scheduled a decision by fall.

Both companies offer special payment plans to help ease electricity costs. The utilities have also contributed to state assistance programs and lobbied to increase state funding from the federal Low Income Home Energy Assistance Program to provide more avenues for people to receive financial aid.

Source: Arizona Republic