OTDA Receives Input at Hearings on Draft HEAP Plan for 2007 - 2008

On July 30, 2007 the New York State Office of Temporary and Disability Assistance (OTDA) held a hearing in Albany to receive public comments on the Draft HEAP plan for 2007 - 08. Approximately 984,910 low income New York households received benefits totaling $227.5 million for the 2006 - 2007 program year which ended May 15, 2007. The majority of New York's HEAP assistance funds are paid to utilities by local officials on behalf of eligible low income households. Except for the furnace repair/replacement element, New York's HEAP program normally closes when federal funds are exhausted.

At the $1.5 billion federal funding level requested by President Bush, New York stands to receive approximately $187.5 million, a $40 million decrease. Taking inflation into account, the real value of the administration's requested national funding level is 39.1% lower than it was in 1982. Efforts are underway in Congress to increase the national funding level in the federal budget bill.

The 2007 - 08 program will begin on November 1, 2007. Due to the reduced funding level requested by the President, the Draft Plan tentatively closes the program on March 31, 2008.

PULP and others previously provided comments in the HEAP needs assessment process, and to the HEAP Block Grant Advisory Committee on aspects of the Plan for 2007 - 2008. See PULP Urges Changes in Furnace Replacement Component of State Home Energy Assistance Program

At the July 30 hearing in Albany, PULP presented testimony making several recommendations regarding the state's Draft HEAP Plan for 2007 - 2008. These include

• Targeting energy assistance payments to households with high energy burdens
  
• Increasing the portion of crisis assistance (and decreasing the portion for regular assistance)
  
• Requiring "Energy Star" certified appliances to be used in the crisis assistance program
  
• Eliminating a restriction that bars furnace repair/replacement for otherwise eligible households buying their homes via a contract for deed, and
  
• Clarifying in vendor agreements that a utility must promptly provide service when an emergency HEAP grant commitment is made by a local social services district.

The last recommendation is particularly important when utility service is off and crisis assistance is urgently needed to alleviate unsafe conditions. See Candle Fires: A Symptom of "Rolling Blackouts" Affecting Low-Income Households.

The Public Service Commission (PSC) in recent years has not been requiring utilities to restore service upon receiving notice from local social services officials that an Emergency HEAP payment will be made. Utilities have taken the position that they can refuse the payment and not restore or continue service.

In response, the PSC has only exhorted utilities to restore service and to minimize the number of cases where they insist on more than a HEAP payment, which may be several hundred dollars. The effect of this is tacitly to authorize the utilities to refuse to restore service despite the proffer of an Emergency HEAP payment

Previously, an Emergency HEAP payment was deemed by the PSC to be a sufficient change of circumstances to require the utility to enter into a new payment agreement for the balance of arrears uncovered by the HEAP grant, even if a prior agreement had been broken by the customer.

As a result, emergency situations with heat and power off may now be prolonged, even after a county social services office awards an Emergency HEAP grant.

The PSC noted this issue in a 2004 order in a case investigating the death of a customer whose service was not turned on, where the agency's staff found that the “County DSS provided [the customer] with a Home Energy Assistance Program (HEAP) grant, [but the utility] refused to accept that grant as the sole basis for turning on gas service because of . . . past arrears.”

In the absence of legislation to address the situation, the problem can be addressed in the vendor payment agreements, under which the utilities receive scores of millions of dollars directly from departments of social services. Utilities, however, have resisted making firm commitments in the vendor agreements with social services officials to restore service when an Emergency HEAP grant is authorized.

As a result of this clash, New York state's compliance with federal statutory time lines for resolving emergencies with 48 hours, or 18 hours in life-threatening situations, is jeopardized.

Further hearings will be held in New York City on July 31, 2007, and written comments will be accepted through August 3, 2007. Eventually, a final plan will be submitted by the Governor to the federal Department of Health and Human Services.

PSC Reviewing Increase in Outage Compensation for Con Edison Customers

As a result of the Queens power outage in July 2006 and subsequent investigation by the PSC, Con Edison proposed an upward adjustment in the amount of compensation for residential customers allowable under its tariffs, to a maximum of $450 for itemized loss of perishables.

A proposal to raise the limits to new amounts was initiated by the City of New York, embraced by Con Edison, and incorporated in a new tariff, which took effect in April 2007, pending further review by the PSC.

The residential customer compensation amount was set at $100 in 1973. It was last adjusted in 2001, after the 1999 Washington Heights outage. Then the amount was raised from $100 to $250 and the eligibility was broadened.

On July 10, 2007, the PSC requested additional public comment before July 24 on the new tariff, listing a number of questions. One indicated the Commission's concern for "the proper balance between the interests of consumers in obtaining reimbursement and avoiding undue increases in rates."

Apparently the PSC assumes that rates will be adjusted upward to account for all future outage compensation payouts, with the result that customers, and not Con Edison shareholders, will ultimately pay all the compensation.

The Commission notice singled out the proposed increase in the maximum residential compensation for itemized losses, from $250 to $450, noting that the increase exceeds an adjustment based on the Gross Domestic Product (GDP) deflator from 2000 to 2006, stating:

In comparison to the GDP 15.69% increase, the compensation amounts in the proposed tariff are approximately 30% higher than the current compensation limits and the compensation limit per event in the proposed tariff is 50% higher than the current limit.

The GDP implicit price deflator is designed to capture price changes in the total economy. A more appropriate adjustment factor than the GDP deflator would be the Consumer Price Index (CPI) for New York urban areas, which measures changes in the cost of household expenditures.

A $100 amount in 1973 adjusted by the CPI would be $493 in 2007. Thus, the amount proposed by Con Ed and the City, $450, is 8.7% less in real household purchasing power than the $100 amount when it was first established in 1973. Wages for low income households in New York have not kept pace with CPI increases since 1973.

Thus, compensation by Con Edison for losses suffered by low income households due to outages will be less, in real terms, than the $100 available 34 years ago, and their ability to offset unreimbursed electricity outage losses from other sources is also reduced.

Con Edison's comments argue that it is the only utility that compensates customers for outage related costs. Their expert's affidavit asserts that that increases in compensation and reimbursement to cover damage to customer equipment due to low voltage are an "insurance" function, the cost of which would increase rates. The apparent assumption is that the PSC would allow the company full recovery of all such expenses through higher rates, rather than expose shareholders to a reasonable level of additional risk if it does not provide adequate service to customers.

The City of New York comments support Con Edison regarding the new compensation limits, and further recommend that

the Commission should: (i) ensure that reimbursement levels are adjusted on a
periodic basis going forward to account for inflation, and (ii) extend the reimbursement provisions to electronic equipment, appliance motors and other voltage sensitive propertythat are damaged as a result of a power outage. Moreover, the Commission should require the Company to define what constitutes a power outage.

The comments of the Western Queens Power for the People Campaign asked the PSC to provide more compensation and broader relief, as did the Attorney General. PULP's comments pointed out that the compensation limit, when adjusted by the CPI, is less than it was in 1973, and asked the Commission to ensure equivalent treatment of customers who are served indirectly in master metered and submetered apartment buildings.

Con Edison Steam Explosion Releases Asbestos, Recalling Con Edison Conviction in 1989 Gramercy Park Explosion

A major explosion of Con Edison steam facilities near Grand Central Station apparently led to the death of one person and injured others. According to today's news reports, asbestos has been found in debris spewed by the explosion. In Asbestos and Aging Pipes Remain Buried Hazards, today's New York Times recalls that in 1989, a Con Edison steam system explosion killed three persons in the Gramercy Park area:

The event yesterday stoked fears not just because of the power of the blast, but because many of the city's oldest steam pipes are covered with asbestos for insulation, and those around the accident could be at risk if they inhale significant amounts of tainted air.

That was the fear back in 1989, when Con Ed was criticized after a major steam pipe explosion near Gramercy Park for waiting four days before notifying residents of the area about possible asbestos contamination.

"Criticized" -- and Indicted for Criminal Violations
Two federal grand jury indictments "criticized" Con Edison for environmental law violations and conspiracy for not giving timely and proper notice of asbestos release. See Con Ed Again Indicted in Release of Asbestos. In Con Edison Goes on Trial in Asbestos Case, the Times reported:

Five years after a steam-pipe explosion rocked the Gramercy Park area in Manhattan, sending a stream of sludge 18 stories into the air, a criminal trial opened yesterday into charges that the Consolidated Edison Company and one of its former executives concealed that large amounts of asbestos were released by the blast.

Eight women and eight men, four of whom will be alternates, were selected as jurors yesterday after Federal District Judge John S. Martin Jr. posed a series of questions. "You will be asked to judge whether the defendants failed to report, in certain instances, the fact that the explosion had released asbestos into the area," Judge Martin said. * * * *

The blast on Aug. 19, 1989, which killed 3 people and injured 24, shot scalding mud and debris 18 stories into the air and coated apartment buildings in the area with a layer of brown sludge as steam spewed from a manhole with a thunderous roar that lasted nearly four hours.

After the explosion, Con Edison offered assurances that the blast did not release asbestos, and some residents moved back into their apartments. But within four days, after residents hired laboratories to perform their own tests, the city's Health Department ordered that two buildings in the East Side neighborhood be evacuated because of the heavy presence of asbestos.

Asbestos can cause cancer or lung disease if it is inhaled in large amounts over a long period, experts say.

In December 1993, a Federal grand jury charged that Con Edison did not tell Federal officials for four days that the blast had caused the release of 200 pounds of asbestos. When they did tell the officials, the notification gave false or misleading information, to save the cost of a cleanup and relocation of tenants, the indictment asserted.

Not Just "Criticized," Con Edison was Convicted
While the trial was underway, Con Edison pleaded guilty and was convicted. The Times reported that "[t]he company pleaded guilty to four counts charging conspiracy, failure to notify authorities of the asbestos threat, making false and fraudulent statements, and deceiving the Environmental Protection Agency and the National Recovery Center." Con Ed Admits to Conspiracy To Cover Up Asbestos in Blast

Asbestos Released in Yesterday's Explosion
Today, Con Edison announced in a press release that asbestos was released by the explosion. Con Edison Reports Asbestos Found in Debris from Midtown Steam-main Rupture. According to Con Edison, asbestos was not found in air samples but was found in debris.

The company urges persons in the area at the time of the explosion to bring in the clothes they wore to a pick-up point and to claim reimbursement:

Anyone who was in that area around 6 p.m. who has dust or debris on clothing or belongings should put them in a plastic bag and bring it to the Con Edison customer service van parked at the corner of Madison Avenue and 42nd Street. The van will be at that location for the next several days from 7 a.m. to 9 p.m. Con Edison will arrange for the safe disposal of these items. Customer care personnel will be available to help people fill out a reimbursement request.