Investing in Diversity & Inclusion

The Right to Electricity: Stopping Shutoffs from Hurting Low-Income Populations

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Electricity is a central part of American life. It drives commerce, protects food from spoilage, and is necessary for many home-heating systems to work. It’s so crucial that some groups, like the NAACP, believe that people fundamentally have a right to electricity.

Yet, electricity is often controlled by private utility companies who may not have transparency and consumer protection as core values. Hidden fees, lack of payment plan options, and an inattention to consumer rights lead to electricity shutoffs for low-income populations. This, in turn, reinforces economic inequality.

In a paper for the United Nations, Adrian Bradbrook of the University of Adelaide made the case for thinking about energy access through a human rights framework. “The conclusion that access to energy services is integral to overcoming poverty is nowadays widely accepted in the international community. However, to date this recognition has not assumed a legal dimension at the international level,” said Bradbrook. Although the UN’s Universal Declaration of Human Rights does state that everyone has a right to “a standard of living adequate for the health and well-being of himself and his family,” it does not specify (for now) that this includes access to electricity.

While international legal bodies catch up, investors are in a unique position to push for energy policies that will aid the fight against poverty and inequality. Investors can affect the issue in two ways: by using their positions as shareholders to drive ethical shutoff policies and by investing in the development of solar technology, which doesn’t need to rely on third-party grid delivery.

How Low-Income Communities Are Affected

Losing electricity can disrupt crucial daily activities. People may cope by turning to unsafe alternatives like candles, kerosene, gas ovens, or generators. As some companies charge high reconnection fees, restarting service may be unaffordable. Others struggle to reconnect due to disabilities or language barriers.

Although most states offer some protections against electricity shutoffs in specific situations or for vulnerable groups, like the elderly, protections are sometimes inadequate and vary widely between states. For example, the NAACP notes that nine states don’t prohibit shutoffs during the winter, and eight states don’t have standard protections for the elderly or other groups.

How Investors Can Help

Many utility companies are investor-owned. Members of the Edison Electric Institute, an association of investor-owned electric companies, serve 220 million Americans. That’s a lot of lives that can be affected if investors use their influence to urge disconnection policies that are equitable and respectful of human rights.

The NAACP recommends several policies to protect people from the worst effects of losing power. These include prohibiting utilities from charging disconnection and reconnection fees, prohibiting utilities from taking deposits before reconnecting electricity, and requiring utilities to complete shutoffs before 2:00 p.m. to allow customers to get their power reconnected the same day.

Inclusion is another area where utility companies sometimes fall short. Policies should be put in place that provide additional support for vulnerable populations, prevent shutoffs during extreme weather, and provide disconnection notices in multiple languages. These policies wouldn’t ban utility shutoffs completely, but they would extend protections to people who are most in danger and limit shutoffs to times when they will be less harmful.

Solar: An Alternative for People and Planet

Home solar power systems don’t rely on third-party grids to get electricity. Solar power can break the damaging cycle of electricity shutoffs and expensive reconnections. However, while the upfront costs of solar have tumbled in recent years due to advancing technology and policy shifts, it can still be prohibitively high. Investors can fund companies creating innovations that will make solar even more affordable. According to Bloomberg, British firm Oxford Photovoltaics is working on a spray-on solar panel that could change the game.

Although there is still much work to be done, advocates for a right to electricity hope that their efforts will one day lead to continuous and safe power access for all. Investors can promote a more equitable society by using capital to push for better utility policies and technology that can disrupt the system.

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