Why the Poor in Baltimore Face Such Crushing ‘Energy Burdens’

In early January, Darlene Jenkins took her power shutoff notice to the Fuel Fund of Maryland, a nonprofit organization that helps residents navigate utility crises. She owed a little over $2,500—more than a quarter of her yearly income.

Jenkins, 54, supports her adult disabled daughter, Latia, and her young grandson, Khiare, who started living with her early last year, on food stamp benefits and about $800 a month in disability assistance.

The cascade of misfortunes that brought her to the parking lot of the Fuel Fund office on York Road in North Baltimore, where she stood outside in the cold because of Covid-19 restrictions, had begun two years earlier when nothing more significant than a lost money order receipt caused her to fall behind on her rent, which soon triggered compounding late fees.

Next her gas and electric bills shot up, putting more strain on her pocketbook. And then the pandemic hit, costing Jenkins her part-time job as a caterer.

Had she not gone to apply for assistance, her unpaid $2,500 debt is the sort of calamity that could grease the track toward homelessness, as landlords in Maryland can cite power shutoffs as a breach of lease and possible grounds for eviction. But as dire as Jenkins’ situation is, she’s far from alone. 

Nationwide, low-income individuals like Jenkins—defined as those making less than 200 percent of the federal poverty level, or $25,760 per year before taxes in 2021—can put anywhere from 10 to 20 percent of their earnings toward energy costs and sometimes far more, according to a recent report by the American Council for an Energy-Efficient Economy, a Washington, D.C.-based think tank.

This exceedingly common, but often overlooked, reality can perpetuate cycles of poverty and lead to personal or familial ruin.

By contrast the average household spends just 3.1 percent of its income on energy, although that ratio ranges widely depending on geographic location and the type of fuel used, the ACEEE study found. Researchers typically consider anything over 6 percent to be an unaffordable energy burden regardless of income. 

The report also found that energy burdens in Baltimore can be especially heavy, as 25 percent of low-income residents there spent more than 21.7 percent of their 2017 income on energy. Along with San Antonio, Texas, this was the greatest portion of income spent by any quarter of low-income earners among the 25 metro areas studied. Furthermore, half of Baltimore’s low-income residents spent more than 10.5 percent of their earnings on energy, the highest median spending behind only Birmingham, Alabama.

The report did not explain why energy burdens were so high in Baltimore. But as coincidence would have it, Laurel Peltier—the Fuel Fund volunteer who greeted Jenkins in the parking lot and helped her apply for assistance—just happened to be an energy advocate who probably knew as much as anyone in Maryland about why those loads were so hefty.

Peltier was even working on a piece of legislation that would slash them.

A Rent Problem Sent Jenkins’ Finances Spiraling Downward

Remembering that frigid day in North Baltimore, Peltier said she found Jenkins well prepared for an application process the seasoned advocate called “tricky, bordering on dysfunctional.” It required applying for assistance from Maryland’s Office of Home Energy Programs, a first step before the Fuel Fund can help pay bills. Now, Jenkins awaits funding from that agency while the 55-day hold it placed on her utility account winds down.

Laurel Peltier stands outside the entrance to the CARES Food Pantry, which houses the Fuel Fund of Maryland on Jan. 16, 2021. Throughout the pandemic she has volunteered by helping residents to apply for financial assistance for their electricity and gas bills. Credit: Agya K. Aning/Inside Climate News

The rent problem that sent Jenkins’ finances spiraling began two years ago, when she moved into an income-based row house in the Frankford section of Northeast Baltimore. After about seven months in her new home, Jenkins was at Walmart buying a money order to pay her landlord, as she always did. But on this occasion her mind was elsewhere and, without realizing it, she forgot to detach her receipt—proof of the $600 she had spent—and sent off her rent payment.

Her landlord said he never got it.

When Jenkins went back to Walmart to sort things out, there was nothing the cashier could do without her receipt. And thus, a simple slip of the mind not only led to her current financial problems, but soured her relationship with her landlord, who she said continues to demand  $1,000 in back rent and fees.

“For a good while I was doing so good with, you know, paying my gas and electric bill,” Jenkins said.

For low-income families, high energy burdens are a function of much more than just scant earnings, according to the ACEEE report. Multigenerational households, which are more common among minority groups, require greater energy, the report said, and low-income houses with leaky insulation, cheap construction or old appliances use 50 percent more energy per square foot than non-low-income ones.

More efficient appliances, even when they are available in poor neighborhoods, can be cost-prohibitive, the report said, and many renters rely on landlords that might not want to foot the bill for upgrades and renovations that reduce energy costs paid by their tenants. Jenkins employs her own methods of energy efficiency by plugging leaks with cork and taping the gaps around her windows.

Food, rent, healthcare—the poor will sometimes forgo such necessities if it means conserving enough cash to keep the lights on and homes warm in winter. Having energy means food and medicines stay refrigerated, clothes get washed and kids can learn online.

Energy-saving programs administered by utility companies often do a lousy job of reaching the financially distressed, and those that do usually have high upfront costs. A report from the Consortium of Energy Efficiency, a nonprofit organization that promotes energy-efficient products and services, found that only 6 percent of all energy-efficiency spending in 2015 was directed toward programs for people with low incomes.

And when state governments provide financial assistance for paying off utility bills, the programs can be difficult to access because of clogged, confusing or non-existent phone lines, or an applicant’s poor English ability, lack of internet access or illiteracy.

But in Baltimore, when it came to what Jenkins was paying for gas and electricity, something else was going on. 

Falling Prey to Energy Retailers

Years before Jenkins moved to Frankford, a saleswoman arrived at her home in Middle River with assurances of lower costs if she enrolled with her company, one of about 70 third-party energy retailers to emerge since Maryland deregulated its energy market with the hope that more competition would drive prices down.

So Jenkins agreed to switch from Baltimore Gas & Electric to this new retailer. But soon, she recalled, her new bills became too expensive and, eventually, her power was cut off. Family and friends of hers signed up, too, and suffered the same fate when they couldn’t pay.

“I didn’t never, never do that again,” Jenkins said.

But then last summer, Latia, her 23-year-old daughter, was leaving a Walmart in nearby Rosedale when a marketer promoting NRG Energy, another third-party supplier, approached her, offering a $30 discount card, Jenkins said. 

While the family had gone back to being BG&E customers, Latia was convinced to enroll, just as her mother was several years prior. Even though Latia was not the account holder, NRG was able to become the Jenkins’ energy supplier.

Darlene Jenkins shows her letter from BGE stating NRG Energy has been removed from her account on Feb. 3, 2021. Last summer, NRG began charging Jenkins for its services without her knowledge. Credit: by Agya K. Aning/Inside Climate News

Latia never told her mother she signed up for NRG. And except for some minor additions, the new consolidated billing statement looked identical to the old one. So, for months, her bills were increased by nearly 30 percent. 

It was Peltier, after she started working with Jenkins at the Fuel Fund office, who explained to her what had happened and that NRG was costing her more money. Jenkins, who had been oblivious to the change, was confused and then furious.

“I don’t know what it’s called,” Jenkins said. “But I know that it’s not right.”

Asked about Jenkins’ case, an NRG spokesman said that the company “only enrolls customers who represent themselves as authorized to make decisions for the account in question. … Nevertheless, we credited Ms. Jenkins the difference in charges for the time served by NRG.”

Deregulation Gone Awry

While in 1999 Maryland law prompted the creation of the retail energy suppliers as a means of lowering energy costs, Peltier said, a regulation change a decade later shifted the risk of nonpayment away from the third-party suppliers over to utilities from which they purchased the power they sold. This guarantee that the retailers would be paid even when their customers defaulted gave them great incentive to charge higher rates, according to a 2018 study Peltier co-authored.

Peltier said in an interview that she analyzed the bills of 110 low-income Baltimore households using third-party suppliers and found they paid a 64 percent premium for electricity and an 88 percent premium for natural gas when compared with standard BG&E rates.

Potential third-party buyers are often enticed with incentives like discounts, smart thermostats and low introductory fixed rates that become variable, and more expensive, upon automatic renewal, she said. And those sold with fixed rates often have costly termination fees, although Peltier said they are unenforceable in Maryland and are used to get low-income people to think twice about canceling. Regardless, contracts are confusing, especially given the target market—of 110 people Peltier gathered data on, the median age was 63.  

In related research, Peltier found that from 2014 to 2017 Maryland households paid an additional $255 million to retail suppliers. She believes there is a strong possibility higher third-party rates are part of the reason why Baltimore is such a national outlier in how much low-income people pay for energy. But the lack of energy billing data broken down by the state’s geographic regions makes this difficult to prove.

‘You Find Yourself Struggling’

Peltier volunteers at the Fuel Fund office twice a week, and over the last several months she has learned the ins and outs of getting energy assistance in Maryland. Even for an educated and computer-savvy person, she said it can sometimes be confusing. For low-income residents, the challenge can be daunting: 40 percent of homes in Baltimore lack internet service, and 33 percent do not have a laptop or desktop computer, a recent report found.

“Have you ever done a six-PDF load up on your phone?” Peltier asked.

Applicants need an array of documents that can be hard to discern. Peltier is constantly reminding her clients to bring official forms of ID, pay stubs, social security cards for everyone in their family, energy bills and applications. Because these and other verification documents can be hard to find when needed—further delaying an already tedious process occurring in the midst of crisis—Peltier advises people to save them all in a shoebox.

Those applying for assistance from the Office of Home Energy Programs can be denied financial relief if their application is incomplete or if documents aren’t received on time. Therefore, the Fuel Fund also strives to educate people about the complexities involved.

“This process,” Peltier said while holding up a stack of forms, “is not designed for the resident.”

Debbie Brown, the Fuel Fund’s director, said that before the pandemic, people asked for help in paying off debts of $1,100 to $1,200, about three or four months’ worth of bills. Now, that number is more like $1,500 to $1,700. Peltier said the clientele at the organization’s York Road office consists primarily of elderly Black women.

For those who were destitute before Covid-19, the endeavor to pay for energy has only become more strenuous—money is harder to earn, energy efficiency and weatherization programs are on hold, and people spend far more time at home, sending energy bills higher, according to the ACEEE report.

“I think a lot of people don’t think it could happen to them,” Brown said. “You don’t realize a pandemic can hit, a job loss, a furlough, a death in the family, and all of a sudden you find yourself struggling.”

Hiding Her Worry

Jenkins recently canceled her contract with NRG Energy, and with Peltier’s help she filed a “dispute” against the company for authorizing enrollment through her daughter Latia. They expect to hear a verdict from Maryland’s Public Service Commission, the agency which regulates electric and gas utilities, within the next two weeks. 

As the pandemic barges on, Jenkins continues looking after Latia and helping her 6-year-old grandson with school. He’s supposed to be learning online, with the rest of his classmates, but the internet has been out for two weeks. So, Jenkins teaches him while she tries to get it turned back on.

She doesn’t want Latia or her grandson to see her worry—about getting her part-time catering job back after Covid-19 finally recedes or about the eye infection she’s harbored for months.

“I want my health to get better,” she said with longing in her voice. 

She also wants to take online CPR classes, just because.

“I believe that everything starts at home,” Jenkins said.

Meanwhile, just last week, the bill Peltier co-wrote aimed at granting relief to people in Jenkins’ predicament gained traction in the Maryland General Assembly. If passed, it would become illegal for third-party suppliers to charge their customers receiving state energy assistance higher rates than the utilities they buy their power from, like BG&E.

Please follow and like us: