The truth about Utility Shutoffs

Utility shutoffs: Who profits?

published by CAUS on March 24, 2010

Posted below is one of several investigative reports presented at the March 20 inquiry into the Dexter Avenue fire. In coming days, World Socialist Web Site will post other reports and testimony from the Citizens Inquiry.

With this report I want to explore the question of who benefits from DTE’s shut-off policy. In approaching this question, one must immediately confront a strange fact. Even though the area it serves has been devastated by the current economic crisis—southeast Michigan is arguably the hardest hit metropolitan area in the US—DTE’s profits have risen substantially.

DTE is a private monopoly. Residents in southeast Michigan have little choice but to pay the rates it demands, if they wish to have electricity, and for much of the region, gas. By the same token, DTE’s customer base is limited to southeast Michigan and its 5.5 million residents.

With 20 to 25 percent real unemployment in the region, 50 percent real unemployment in Detroit, and a massive scaling back of industrial production owing to the collapse of the auto industry, it would stand to reason that this would impact DTE’s operations.

And indeed, DTE has disconnected utilities to nearly 400,000 households over the past two years. It cut services to 221,000 homes in 2009, a 50 percent increase over 2008, when 142,000 homes were cut off. Numbers for 2010 are not yet available, but by all indications the growth in shutoffs has continued. This is part of a larger national trend. About 4.3 million households had utilities shut off in 2009, up by 200,000 from the previous year.

Taking the average US household size of 2.6, this would mean that at least 575,000 people in southeast Michigan had utilities cut in 2009. This would be over 10 percent of the regional population and it does not count cutoffs carried out by other utilities.

Yet in spite of the rapid erosion of its customer base—both factories and households—DTE has weathered the storm with strong profits. In a recent earnings statement, DTE boasted of 14 percent growth in year-over-year profit and $532 million in total earnings. DTE’s subsidiary for Detroit, Detroit Edison Company, had revenue of $1.53 billion, up from $1.35 billion in 2008. On March 11 its shares were declared to be “high yield and high momentum” by the business journal Seeking Alpha.

“We exited the year with a strong balance sheet in place, actually stronger than we entered,” DTE president Gerard Anderson said of 2009, a year of job losses, wage cuts, and general devastation for DTE’s customers.

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The deadly consequences of utility shutoffs

published by CAUS on March 16, 2010

Since the start of this year, at least eight people in Detroit have died in fires that occurred in houses where the heat and electricity had been shut off by DTE Energy, the local utility provider. The residents of these homes were too poor to pay for these services. They were forced to turn to unsafe methods in order to try to stay warm as temperatures dropped, and they paid for this with their lives.

There is a clear link between utility shutoffs and house fires, particularly in the wintertime. It is driven by the fact that people resort to electric and kerosene space heaters once they have lost the use of their central heating systems, or turn to candles for illumination when their electricity has been disconnected.

It is a well-established fact that using space heaters increases the risk of fire death. According to a report by the National Fire Protection Agency (NFPA) released earlier this year, in the period from 2003 to 2007, nationwide 72 percent of home heating fire deaths and 62 percent of home heating injuries “involved stationary or portable space heaters.”

The risk of death posed by using space heaters is 18 to 25 times higher than that associated with central heating systems. Additionally, those heaters that rely on gas, the report notes, “pose a higher risk of death due to non-fire carbon monoxide poisoning.”

As might be expected, incidences of home heating fires increase significantly during cold months, with 49 percent of all such events having occurred between December and February during the years 2003 to 2007.

In the South, where both fire-death rates and poverty are the highest, there is a greater use of space heaters. This is due to a combination of “affordability” problems and a lack of central heating systems in many homes.

The relationship between the use of space heaters and financial hardship is also well known. For example, the NFPA notes that people rely on kerosene-fueled space heaters because of “the opportunity for savings from compartmentalized heating, i.e., savings from heating only the spaces that are in use.”

David Fox of the National Low-Income Energy Consortium (NLIEC) underscored these points in an interview with the World Socialist Web Site.

“Regardless of whether it’s shut off or simply that bills are so high that people voluntarily limit usage, several things happen,” Fox noted. “People use space heaters, kerosene heaters, that increase risk of fire and carbon monoxide poisoning. And people limit use of electricity. They light the home with candles, which are often too close to something combustible.”

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Detroiters speak out on DTE’s phony “customer assistance”

published by CAUS on February 22, 2011

In the weeks after DTE Energy’s December Customer Assistance Day, members of the Committee Against Utility Shutoffs spoke to several Detroiters who had sought assistance. Far from being “assisted”, these Detroiters faced a perpetual run-around, lies, misinformation and arrogance.

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DTE Energy 2010 profits soar as utility shutoffs increase

published by CAUS on February 22, 2011

Last week the Detroit-based utility giant, DTE Energy, reported a staggering level of profit for 2010. The $630 million figure beat Wall Street expectations, and meant a year over year profit increase of nearly $100 million.