Challenge

In 2024, 17.4 million households—or about 13% of all U.S. households—had outstanding utility bill balances (arrearages), amounting to $17.4 billion. About 24% of all households also experienced at least one month in which they were unable to pay their energy bill in 2024. Families with children, Black, Indigenous, and People of Color (BIPOC) households, and low-income households earning less than $50,000 annually have been particularly hard hit.¹

Policy Solution

Arrearage management programs, particularly those that include debt forgiveness provisions, can be an important tool to reduce household energy burdens and improve the health and well-being of low- and moderate-income households struggling to pay rising energy costs.

Model Policy Features

• Monthly bill payment plans for low- and moderate-income gas and electric customers (e.g., households with incomes at or below 200% of the Federal Poverty Level) that are capped, for example, at 1/12th of the anticipated annual utility bill.
• Arrearages are forgiven if payment schedule is completed.²
• Debt threshold of no more than $100 required for participation.³
• Dollar for dollar matching of customer payments when payment schedule is maintained.⁴ 
• Reduces participation barriers, such as language access, no-wrong-door approaches, categorical eligibility (whereby participation in other government assistance programs qualifies a household for eligibility in offered programs), simplified applications, robust outreach, bans on application/exit fees and credit score review.
• Prohibition on additional administrative charges or down payments on accrued debt⁵ or referrals to collections while participating.⁶  
• Shutoff protection offered throughout program participation.⁷
• Grace period (e.g., two payment cycles), with re-enrollment available for those who become current on payments.⁸
• Possible re-enrollment after the term of the initial payment plan.⁹  
• Offered to those participating in other bill assistance programs.¹⁰
• Ideally paired with home energy audits and weatherization/electrification assistance to increase energy efficiency and move recipients away from fossil fuel dependence.¹¹ 
• Includes provisions for regular data reporting and public transparency (e.g., public-facing data dashboards, program evaluation, audits to ensure meaningful benefits reach intended populations).

Potential Policy Drawbacks and Pitfalls

• Does not, in itself, address the underlying causes of unaffordable bills.

Complementary Policies

Complementary policies that improve the ability of households with unaffordable energy costs to manage payment of their utility bills include percentage of income payment plans.