Social Benefit Recipients and Indebted Households Most Likely to Be Affected by Power Cut-Offs

According to official statistics, in 2016 around 330,000 households in Germany had their power cut off because of unpaid energy bills. In this respect, families with children are much more likely to be affected than other consumers. This also holds for recipients of basic unemployment benefits since they have an increased risk of falling behind with their payments. As a consequence, the probability of receiving disconnection notices and facing electricity cut-offs is higher for these households than for others. Individuals with a low level of education as well as single-person households have a small chance of averting impending power cut-offs. Furthermore, the probability of a disconnection is particularly high among households who are in debt.

These are the key findings of a study conducted by the Centre for European Economic Research (ZEW), Mannheim, in collaboration with the German Caritas Association (Deutscher Caritasverband e. V.).

As part of the study, researchers investigated the reasons why electric utility customers fall behind with their energy payments, which eventually result in power cut-offs for particularly vulnerable households. The findings of the study indicate that household income is indeed an important factor; there are, however, also other reasons why some households are more likely to face payment problems and power cut-offs than others. In this regard, the level of household debt plays a particularly important role as the likelihood of getting into arrears with one’s electricity bills and suffering a power cut-off has turned out to be higher for persons who are already struggling with debts.

According to the study, individuals with a low level of education and single-person households have little chance of averting power cut-offs. “A lack of support from other family members and poor education play a significant role,” explains Peter Heindl, senior researcher in the ZEW Research Department “Environmental and Resource Economics, Environmental Management” and co-author of the study.

"The best way to avert cut-offs is to seek social or debt counselling"

The fact that warning letters from electricity providers are disproportionately often sent out to families with children is down to the fact that “bigger households are more likely to accumulate outstanding payments that exceed the legal threshold amount of 100 euros,” says Heindl. By contrast, individuals who have been receiving social benefits for a longer period of time and consumers with a migration background have a slightly reduced likelihood of being affected by power cut-offs.

“The best way to avert cut-offs is to seek individual social or debt counselling, which provides affected households with specific guidance on how to prevent or reverse a disconnection,” concludes Peter Heindl.

2,621 questionnaires were evaluated for the study. The data was gathered as part of a nationwide survey conducted in counselling centres of the social service department of the German Caritas Association. These counselling centres are part of a low-threshold programme offered to people in need.

For reasons of consumer protection, disconnecting the power supply is a measure of last resort and only possible if electricity providers strictly adhere to certain rules. As defined in the German Act on Basic Electricity Supply (StromGVV § 19, Abs. 2) power providers are only allowed to send out a letter containing a turn-off warning if the amount of arrears exceeds at least 100 euros. After receiving a first warning, households have four weeks to repay the outstanding sum to their energy supplier. Only if they fail to pay the due amount may suppliers send out an official turn-off notice and cut off the power supply after a period of three days.

For more information please contact

Dr. Peter Heindl, Phone +49 (0)621/1235-206, E-mail:peter.heindl@zew.de