Rising Utility Costs Compound California's Housing Crisis

Michael Yamamura shares an apartment in Fresno with his brother and their ailing mother. This summer, as they ran the air conditioning to keep the scorching heat at bay, their monthly utility bills topped $500, which made it hard to keep up on rent.

“Sometimes, I don’t pay it until they give me the three-day [eviction] notice,” said the 20-year-old, whose family was homeless a few years ago when he was in junior high. “I’ve been pretty behind and pretty terrified of ending up out on the street again.”

Utility costs will swallow an even bigger portion of the family’s budget when PG&E’s latest rate hikes go into effect next month, raising average gas and electricity bills by an estimated $28-$42 per month.

The increases come after the state’s three major suppliers, PG&E, Southern California Edison and San Diego Gas & Electric, have nearly doubled electricity rates over the last decade.

Wildfire-related expenses, inflation, solar subsidies and the growing energy demands that come with extreme weather are driving the higher costs. As they go up, they’re colliding with California’s housing crisis, pushing families already at the margins to the brink of homelessness.

A quarter of California households reported being unable to pay their utility bills in October, according to a Census survey, resulting in what Columbia University public health professor Diana Hernández and others call energy insecurity, or the “heat or eat dilemma.”

“It’s almost like a game of Russian roulette,” she said, describing the monthly juggle low-income families face. “Today’s unpaid energy bill is tomorrow’s eviction notice. And that cycle is a very real one.”

Yamamura finished high school last year and takes whatever work he can get — typically a few hours a week at a fast food restaurant and odd jobs on Craigslist.

The money he and his 23-year-old brother can patch together isn’t enough to cover all the family’s expenses, even with Section 8 paying the bulk of their rent.

More and more, it’s utilities that are straining their budget. The family’s June PG&E bill was $100 more than the previous year. But rising utility rates aren’t the only reason their bill is so high.

“The AC there doesn’t work the best, and it’s not the most insulated apartment, so it’s harder for us to actually keep the temperature inside,” Yamamura said.

Energy-insecure families like his are more likely to report their homes are drafty or poorly insulated, making them less energy efficient. That’s a key reason they spend about 25 cents more per square foot on electricity and gas than households that can afford energy-saving appliances and upgrades.

In the winter, Yamamura’s family can keep their bills down. “Worst comes to worst, we’re cold. It’s not that bad,” he said.

But his family can’t forgo the AC in the summer. Keeping the house cool is essential because of his mom’s chronic health problems and her many medications, Yamamura said. It was a health crisis that left her unable to work and plunged the family into homelessness a few years ago.

“We have so many people who [are] making this impossible choice,” said Dr. Margot Kushel, a UCSF professor who runs the Benioff Homelessness and Housing Initiative. “Do I keep my air conditioning on, run up my energy bills so I can’t pay my rent, and then be evicted and have neither? Or do I sit here in this stifling heat and risk death?”

Not being able to heat or cool your home can worsen existing physical and mental health problems or cause new ones, she said. “Energy insecurity is a threat to health, and it’s a threat, therefore, to housing.”

Kushel led an expansive survey of unhoused Californians this year that found a complex interplay of factors precipitated homelessness, including medical expenses and lost work.

“I think recognizing energy insecurity as a contributor to this crisis, this is the next frontier that we need to really worry about,” she said.

A statement from PG&E said higher rates reflect investments in system upgrades needed to make systems safer and more resilient to climate change.

“PG&E recognizes our responsibility to serve our customers safely and reliably, and we are aggressively focused on how to deliver work safely at a lower cost. We are working to keep customer costs at or below assumed inflation for the long-term, between an average of 2 and 4% a year.”

The upcoming rate increase, approved by the California Public Utilities Commission, will pay for PG&E to bury over 1,200 miles of power lines for wildfire prevention. Like other utilities across the West, the company has been sued for starting fires with its equipment, including the Camp Fire, the deadliest and most destructive in state history.

The company has paid out billions in settlements (which shareholders ponied up, according to PG&E) and spent billions more on upgrades, costs that get passed along to customers.

During the pandemic, the state mandated a moratorium on utility shutoffs, but that has expired. PG&E’s latest report to the CPUC shows more than 162,600 customers had their service disconnected between January and October of this year.

Many people who lose access to utilities end up moving in with others, restarting their utilities under someone else’s name, or leaving the state, said Mark Toney, executive director of the consumer advocacy group The Utility Reform Network. “But some of those people absolutely do end up homeless,” he said.

By this fall, Yamamura’s family was $1,300 in debt to PG&E.

Californians currently owe the state’s biggest utility companies upwards of $2 billion, according to records submitted to the CPUC in November. Much of this accrued during the pandemic. About half of indebted customers owe more than $2,000.

This staggering debt has piled up despite the more than $1.6 billion federal and state government provided Californians to pay past-due residential utility bills as part of pandemic relief efforts.

All of the investor-owned utilities run a state-mandated debt forgiveness program. As long as customers stay current on their monthly bills, their debt is gradually forgiven.

Yamamura and his mother said they were enrolled but flunked out because they couldn’t keep up with payments. They regularly get disconnection notices, he said, and have had their service cut in the past despite getting a 30% monthly discount for low-income customers.

In addition to the debt relief program, a patchwork of federal, state and nonprofit programs are available to help customers manage bills and debt. They range from subsidies to payment plans to help installing insulation and energy-efficient appliances.

Some of these programs are well-used, but others are underutilized.

Even for many customers who take advantage of them, like Yamamura and his family, they’re simply not enough.

About 85,000 PG&E customers were kicked out of the debt forgiveness program during six months earlier this year for failing to stay current on their payments or maintain other eligibility requirements.

Still, 362,000 PG&E customers were enrolled as of October.

With rates due to rise again, some are calling for reforms that would ease the burden on low-income consumers.

“The subsidy programs that we have in place are becoming more and more obsolete every day as the cost of utilities, as well as just the overall cost of living, continues to rise,” said Benito Delgado-Olson, chair of the CPUC’s Low Income Oversight Board. “These rate hikes are going to be very difficult for a lot of hardworking people.”

This summer, Yamamura picked up another part-time job with a nonprofit, Power California, canvassing for rent control in Fresno. The cause felt personal, and he loved talking to people like Melody Erdmann, a 57-year-old who opened her apartment door to him one Saturday.

Clipboard in hand, Yamamura launched into his pitch, but Erdmann cut him off.

“I was homeless, so yeah, I know,” she said.

“Oh, yeah, me too,” Yamamura said.

“I barely make my rent,” she said.

Standing in her doorway, Erdmann told Yamamura her subsidized rent and PG&E bill consume half of her Social Security income. And it was an unpaid utility bill that almost prevented her from getting housed when she was homeless.

“They turned us away because of a PG&E bill,” she said. “I had a bill in collections.”

She eventually got help taking care of the debt and was able to move into the apartment where she lives now.

But stability feels tenuous for her and Yamamura.

“I consistently worry about ending up homeless again,” he said. “I’d like to pay rent on time and have bills paid and not be hours away from getting an eviction notice, but that’s where I’ve been the past few years.”

He doesn’t see that changing anytime soon.