Call your utility's customer service line and ask for four things: a deferred payment arrangement for your past-due balance, the company's low-income discount rate or percentage-of-income payment plan, budget billing to level your monthly payments, and its hardship or customer assistance fund. Many states require regulated utilities to offer payment arrangements before disconnecting, and receiving Medicaid, SSI or similar benefits often qualifies you for discounts automatically.
How it works
The short version, before the detail.
A deferred payment arrangement - sometimes called a payment plan or installment agreement - lets you pay your past-due balance over several months while keeping up with current bills. In many states, regulated electric and gas utilities must offer residential customers a reasonable arrangement before they can disconnect, and some must offer a second arrangement if the first fails for good reason. The length and down payment vary by state and company.
Low-income discount rates reduce what you pay for every unit of energy you use, often by a fixed percentage. Some states and utilities instead run percentage-of-income payment plans, where your monthly energy bill is capped at a set share of your household income regardless of how much you use, with the rest covered by the programme. These plans can transform an unaffordable bill into a predictable one.
Arrearage management or forgiveness programmes are another option offered by some utilities: if you make your reduced payments on time each month, a portion of your old debt is forgiven. Over a year, a large balance can be wiped out this way.
Budget billing averages your annual costs into equal monthly payments, so winter heating or summer cooling spikes do not arrive all at once. It does not reduce what you pay over the year, but it makes payments predictable. Hardship funds - often branded with names like Dollar Energy, Neighbor-to-Neighbor or Share the Warmth - are charitable funds administered by the utility or a partner nonprofit that make one-off grants toward bills.
Because these programmes are run by companies rather than government, they are rarely advertised on the bill. The simplest way to find them is to call and ask by name, or to look in the 'assistance' or 'payment help' section of the utility's website.
Who usually qualifies
Factors the agency looks at. Only they make the final decision.
Programme names and rules are set by each utility and its state regulator. If you do not know what your utility offers, your state public utility commission's consumer page lists low-income programmes by company.
How to apply, step by step
Gather your account information
Have your account number, a recent bill, any past-due or shutoff notice, and a rough idea of what you can afford each month. Being realistic about the monthly figure is the key to an arrangement that lasts.
Call the utility and ask about a payment arrangement
Explain that you are behind and want to set up a plan. Ask how many months the balance can be spread over and what down payment is required. If the first offer is unaffordable, say so and ask for a longer plan - many states require reasonable terms based on your ability to pay.
Ask about the low-income discount rate or income-based plan
Ask whether you qualify for a discount rate, a percentage-of-income plan, or an arrearage forgiveness programme. If you receive Medicaid, SSI or other benefits, mention it, as enrolment may be automatic.
Ask about budget billing
If your bills swing widely through the year, ask to switch to budget billing so your payment is the same each month.
Apply to the hardship fund
Ask for the utility's hardship or customer assistance fund and how to apply. These are often administered by a community action agency or charity.
Get everything in writing
Ask for a written confirmation of the arrangement, including amounts and due dates. Note the date and the representative's name.
Keep every payment on time
Missing an arrangement payment can lead to faster disconnection. If you know you will miss one, call before the due date to renegotiate.
What to have ready
Missing one item is rarely a reason to wait - start now.
- Your utility account number and recent bill
- Any past-due or disconnection notice
- Proof of household income
- Proof of Medicaid, SSI or other benefits, if applicable
- A realistic monthly budget
- Photo ID if applying for a hardship fund in person
What happens after you apply
How it compares
Similar programmes, and which one fits which need.
| Programme | What it covers | Best for |
|---|---|---|
| Utility hardship fund / payment plan | Company-run help and arrangements | Spreading a balance you cannot pay at once |
| Percentage-of-income plan | Bill capped at a share of income | Very high bills relative to income |
| Arrearage forgiveness | Old debt forgiven as you pay on time | Large past-due balances |
Real situations
How this plays out for people in common circumstances.
Large winter balance
A family ends winter owing several months of gas bills after a cold season and reduced hours at work.
They call the utility, set up a 12-month arrangement, enrol in the low-income discount rate using their Medicaid award letter, and apply to the hardship fund, which pays part of the balance.
Fixed income, unpredictable bills
A retiree's electric bills are small in spring and very large in summer when the air conditioning runs.
Budget billing evens out the payments, and she checks whether she qualifies for the senior or low-income discount rate.
Broke an arrangement
A man set up a payment plan but missed a payment when his car broke down.
He calls the utility before the next due date, explains the hardship, and asks whether he can re-establish the arrangement. Many states allow a second arrangement for good cause.
High bill despite low use
A household's electric heating bills are huge relative to income even though they keep the thermostat low.
They enrol in a percentage-of-income plan and apply for weatherization to reduce actual usage.
What people miss
True, rarely explained, and it changes the outcome.
Arrangements can be negotiated
The first plan offered is not always the only one. Explain what you can realistically pay and ask for longer terms. Regulators often require plans based on ability to pay.
Forgiveness programmes reward on-time payments
Some utilities forgive part of your old balance each month you pay your reduced bill on time. Ask whether yours has one.
Benefit letters open doors
Many utilities enrol customers on Medicaid or SSI automatically in discount rates or protections. Tell them what you receive.
Discounts can be backdated
Some discount programmes apply retroactively to recent bills once you are approved. Ask.
The public utility commission lists every programme
If the representative is unhelpful, your state regulator's website usually lists each utility's low-income programmes.
Common reasons people get stuck
Agreeing to an unaffordable plan
A plan you cannot keep often leads to faster disconnection. Be realistic.
Paying only the arrangement, not the current bill
Most arrangements require you to pay current charges as well.
Not getting the plan in writing
Ask for confirmation by email or post.
Waiting until after disconnection
Options and leverage are greater before a shutoff.
Overlooking the discount rate
An arrangement handles the past; a discount rate prevents the next crisis.
How it differs by state
State utility commissions set the rules on payment arrangements, discount rates and percentage-of-income plans, so they vary considerably. Some states mandate income-based plans for large utilities; others leave it to companies. Municipal utilities and cooperatives may have their own programmes outside commission oversight.
Key terms explained
The words on forms and letters, in plain English.
- Payment arrangement
- An agreement to pay a past-due balance over several months.
- Discount rate
- A reduced price per unit of energy for qualifying low-income customers.
- Percentage-of-income plan
- A plan capping your bill at a set share of household income.
- Arrearage forgiveness
- Old debt forgiven gradually as you pay current bills on time.
- Budget billing
- Equal monthly payments based on your yearly average use.
Questions people ask
How do I set up a payment plan with my utility company?
Does my utility have to give me a payment plan?
What is a percentage-of-income payment plan?
How do I get a low-income discount on my electric bill?
What is budget billing?
What is an arrearage management programme?
Can I get a second payment arrangement if I missed the first?
What is a utility hardship fund?
Will a payment plan stop a shutoff?
Do payment plans affect my credit?
Can renters get utility discounts?
What if my utility will not work with me?
Can I get help with a water bill payment plan?
Numbers to call
Free lines. We are not affiliated with any of them.
Official sources
Current figures and applications live here.