More People Falling Behind on Utility Payments

According to a recent report, more people are falling behind on paying their utility bills, such as electric and natural gas. Past due balances to utility companies jumped 9.7% annually to an average of $789. The increase is the result of a 12% jump in monthly energy bills during the same period. It will only get worse, especially in areas where data centers are being built. Studies show that when data centers arrive, so do higher utility costs – sometimes two-fold.

Most consumers, as they should, prioritize their utility bills, along with their mortgages and auto debt. We all need a home for shelter and transportation to earn a living. Most other things can usually be compromised to some extent, or completely.

Troubles paying utility bills reflect something of an economic quandary for Trump, who is promoting the artificial intelligence industry with an ever increasing number of data centers. It’s a part of an economic boom he has promised for America. Personally, I believe data centers are an economic bust for America that will do far more harm than good, putting many out of work. AI data centers use massive amounts of electricity. The obvious escalation of demand will only result in an escalation of consumer costs... barring equal escalation of supply, which isn’t happening.

Americans are already fed up with the high cost of living. The havoc that visited us during the insane response to the pandemic created higher prices due to mass shortages. The shortages may have eased, but consumer costs still outpace normal inflation levels.

Trump has been trying to convince the public that prices are falling, and some are. Eggs and gas aren’t nearly as expensive, however, they fall into the exception category. Fast-rising electricity bills could be an issue in some congressional battlegrounds next year as savings from gasoline are likely to be overrun by higher heating bills and electricity costs.

Nearly 6 million households (about 1 in every 21) have utility debt “so severe” that it will soon be reported to collection agencies. That’s an increase of 3.8% since Trump took office. However, the administration has said it has no responsibility for any increases in electricity prices. Those prices are often regulated by state utility boards. Treasury Secretary, Scott Bessent, stated, “Electricity prices are a state problem. There are things that the federal government can control. Local electricity prices are not one of them.” That’s a half-truth.

The Trump administration has been accused of impeding renewable energy generation such as solar and wind. One needs to be careful on how they define impeding. Eliminating subsidies is not the same as eliminating projects. Both have happened. I explained in a previous blog how subsidies actually increase prices rather than lowering them.

Despite the delinquencies, the New York Federal Reserve declares delinquency rates of 90 days or more are low for most categories of debt. In addition, an analysis of debit and credit card spending by the Bank of America Institute showed that consumers’ “overall financial health looks sound.” What do you say?

Source used: Associated Press