Wednesday, October 24, 2007

Reduced Rate Wireless Lifeline Service Now Available in New York

Nextel Advertises Lifeline Rates
PULP has noticed that for the first time Nextel has begun advertising a Lifeline and Link-Up service in the Capital Region. While the company received its authorization to offer Link-Up/Lifeline in New York from the FCC in August 2004 (as part of its designation as an Eligible Telecommunications Carrier, or ETC, in several states, including Alabama, Florida, Georgia, Pennsylvania, Tennessee, and Virginia), the only surprise is the lag time.

According to the Nextel website, eligible Lifeline customers in New York can save up to $13.50 per month off of a $29.99 service plan. Those who live on Tribal Lands may only need to pay $1.75 per month for the same service.

Four Wireless Providers in New York Must Offer a Lifeline Rate for Low Income Consumers
Nextel is not alone. In fact, American Cellular, Dobson Cellular (soon to be part of AT&T), Nextel Partners, and Sprint PCS have all received their ETC status in New York. Nextel appears to be the first of the group to actually advertise its Lifeline service in New York.

In order to receive its ETC designation, Nextel and the other companies demonstrated to the FCC:

(1) That the FCC had authority to consider its petitions because the state commissions claimed that they lacked jurisdiction. In fact, a letter was sent by the PSC general counsel’s office to the FCC stating that New York lacks jurisdiction over the Nextel petition. Nextel Lifeline PSC Letter.

(2) That it offers, or will offer upon designation as an ETC, the services supported by the federal universal service mechanism. Nextel also certified that, in compliance with the FCC’s Rules, it will make available and advertise Lifeline and Link-Up services to qualifying low-income consumers. Three years later, the advertising has begun, but Nextel had pledged that it was ready to offer these services in 2004.

Consumer Protections
Nextel also promised the FCC that it would follow the CTIA Consumer Code and the commitments laid out in the FCC’s Virginia Cellular Order, including:

(a) annual reporting of progress towards build-out plans, unfulfilled service requests, and complaints per 1,000 handsets;
(b) specific commitments to provide service to requesting customers in the area for which it is designated, including those areas outside existing network coverage; and
(c) specific commitments to construct new cell sites in areas outside its network coverage.

The CTIA Code is not an adequate substitute for the Telephone Fair Practices Act (“TFPA”) consumer protections expected by telephone consumers. See PULP Testimony to NYS Assembly.

Nextel went on to pledge to the FCC: (1) that it offers and will continue to implement E-911 access; (2) that it will comply with any minimum usage requirements required by applicable law (Nextel also stated that local usage is included in all of its calling plans); (3) that it will provide access to interexchange services, and is not required to offer equal access to those services; (4) that it offers the supported services using either its own facilities or a combination of its own facilities and resale of another carrier’s services (Nextel stated that it intends to provide the supported services using its existing network infrastructure); and (5) that it is committed to specific methods to advertise the availability of the supported services and the charges for the services using media of general distribution.

Limited Services Available With Wireless Lifeline
So, what does reduced rate wireless Lifeline service include in addition to savings of $13.50 per month? On Nextel’s Lifeline application form, it states that the Lifeline service itself includes 200 anytime minutes and unlimited night and weekend minutes, which may be used for local or long-distance calls. Lifeline service also includes Voice Mail, Call Waiting, Caller ID, Numeric Paging, Roaming, and Three-Way Calling at no additional charge. Lifeline subscribers may also purchase a reduced-cost Lifeline phone. Nextel Lifeline Application

There are some limitations, however. The application also states that Lifeline service is available in limited (but, unidentified) geographic areas and is only available for one wireline or wireless phone line per household. In addition, data services and other enhanced services or features, international long distance, and access to “900” numbers are not available to Lifeline subscribers. Another limitation is that Lifeline service plan minutes are only available for calls within Sprint Nextel coverage areas

Further, some customers may be charged a service deposit based on the applicant’s credit history. The service deposit may be avoided, however, by choosing an account spending limit (“ASL”) of $75 or less.

Access to emergency services by dialing 911 is not subject to any account usage limitation. The Nextel website failed to mention that wireless E-911 is not available in all geographic areas.

As for Link-Up, Nextel will pay one-half of the $36 service activation fee. Eligible residents of Tribal lands may receive an additional credit of up to $70 to cover 100% of the service activation or installation charges. Applicants may also receive a deferred schedule (of up to one year) for payment of the discounted charges for commencing service.

Open Questions
Will wireless Lifeline increase Lifeline enrollment, which has fallen in recent years? Will landline Lifeline customers switch to take advantage of the mobility benefits or will they reject wireless Lifeline due to the E-911 or service availability gaps? Will the New York PSC or the State Legislature extend state TFPA telephone consumer protections to users of wireless phones now that they are becoming substitutes for conventional landline service? Stay tuned.

-- Lou Manuta
Staff Attorney

Saturday, October 20, 2007

PSC Asked to Investigate Grid's "Grand Plan"

Grid's "Grand Plan"
National Grid is withholding service to applicants who owe money for service to closed accounts if a prior written payment agreement on the old account was not paid in full when the account was closed. The utility has been insisting upon an up front payment of $1,000 ("one grand"), or the entire balance owed if the amount is less than one grand, and has been refusing to negotiate for a lower amount based on the applicant's ability to pay. See New Barrier to Utility Service: National Grid's "One Grand" Demand, PULP Network October 2, 2007.

As a result, low income applicants for utility service are unable to meet the impossible demands of National Grid and live in dark homes, sometimes for weeks, without utility service, increasing the risk of loss of life. See Candle Fires: A Symptom of "Rolling Blackouts" Affecting Low-Income Households See also, Mom sought state help before fatal fire, describing recent Pennsylvania deaths while utility service was off.

This is squarely in conflict with the state legislature's declaration in the Home Energy Fair Practices Act ("HEFPA") Section 30 that residential service is to be provided by the state's utilities without unreasonable qualifications and without lengthy delays. HEFPA Section 31 requires applicants for service who owe the utility for prior service to closed accounts to be given the opportunity to repay "any amounts" owed for service to a prior account in a deferred payment plan, with a maximum down payment of half the amount due or the cost of three months' service, whichever is less. Further, HEFPA Section 37 requires that all deferred payment plans must be "fair and equitable" and negotiable based on the customer's financial circumstances, and HEFPA Section 43 gives authority to the department of public service staff to resolve disputes over the appropriate terms of repayment plans.

Petition Asks PSC for Relief
On behalf of applicants denied utility service by National Grid under its "Grand Plan" (as the company names it in a recent denial notice) PULP petitioned the state Public Service Commission on October 17, 2007, to investigate the practices of the utility. The petition seeks an interim order directing a halt to the practice of demanding large payments as a condition of service, pending completion of an investigation and conclusion of the case. The petition asks for a one-Commissioner order granting interim relief pending full action by the Commission.

In addition to interim relief, the petition seeks an investigation by the PSC, a declaration that the challenged practices are unlawful, remedial relief for applicants who have been denied since implementation of the "Grand Plan," and a rate reduction if the evidence shows systematic denial or delay of service to applicants based on unreasonable and unlawful conditions. The relief requested includes a minor $25 per day payment to wrongfully denied applicants. That remedy has not been adjusted for inflation since 1981.

Bad Advice From Grid: Ask Welfare to Pay Old Bills for Accounts Closed More than Four Months Ago
Instead of providing service, National Grid has been telling applicants who lack the "grand" demanded for service to apply for welfare assistance.

The state welfare assistance program for utility customers now contained in Section 131-s of the Social Services Law was enacted together with the Home Energy Fair Practices Act in Chapter 895 of the Laws of 1981. It will cover utility arrears for a needy person not now on public assistance, and can provide a loan if the person's income is above the welfare income eligibility levels. The program will only pay an amount equal to the utility bills for the four months immediately preceding the month of application. Upon receiving notice of that payment, Section 65-b of the Public Service Law requires the utility to provide service, even if the four-month amount is less than the total owed.

A person who has not had utility bills for an account in their name in the past four months can be denied the welfare assistance. The welfare scheme simply was never intended to pay old bills for prior service to a closed account, because the HEFPA changes assured that an alternative payment arrangement is available under the Public Service Law to the applicant with arrears for service to a prior account. HEFPA requires the utility to offer a DPA to an applicant who owes money from a prior closed account, and thus the welfare offices may deny aid on the theory (if not the reality) that a payment agreement with the utility should be available to the applicant as an alternative to public assistance.

In addition, the federally funded HEAP crisis assistance program provides emergency benefits only in situations where the applicant for HEAP is the "customer of record" with an energy vendor. An applicant for utility service is not a customer.

As a result of Grid's "Grand Plan," utility service to low income applicants and their households is denied or delayed because they are unable to pay the large up-front amounts insisted upon by Grid as a condition for service, and they cannot receive public assistance. In some situations, another household member may be able to apply for and receive service, but this is not always possible, for example, when there is no other adult in the household.

National Grid apparently claims that despite HEFPA Section 31, which establishes a deferred payment plan option for applicants to repay "any amounts due for service to a prior account in his or her name," it can refuse to offer a plan if the applicant had defaulted on a prior payment plan when the prior account was closed. Section 31, however, does not limit the availability of a deferred payment plan.

In 1981, when HEFPA and the companion SSL 131-s welfare program were enacted the PSC Chairman submitted a memorandum in support recognizing that the new safety net of HEFPA combined with the limited public assistance program was designed to overrule prior requirements of full arrears payment as a condition of service. Also, in a report, the PSC Chairman observed that HEFPA had removed "unrealistic restrictions on obtaining utility service." The statutory deferred payment provisions coupled with the limitation of welfare assistance to the most recent four months, along with other HEFPA provisions such as a prohibition on termination of service for stale bills, encouraged utilities not to let customers unable to pay fall far behind and accrue large arrears. Instead, utilities could pursue termination of service for arrears that would be within the scope of the four-month welfare payment. Also, such early action might identify needs for referral to weatherization services or other social services needed by the household to help manage their bills.

Grid's referral of denied applicants to welfare offices abuses the welfare system and taxpayers because the welfare program was intended to be a last resort and was never designed to aid the company in collecting old bills and bad debt from prior closed accounts. Indeed, when utility rates are set by the PSC, the rate level is set so as to make a reasonable allowance for bad debt and uncollectibles.

Emergency HEAP Situation Unclear
The federally funded Home Energy Assistance Program ("HEAP") begins November 1, 2007. The HEAP program is inadequately funded by the federal government, is not supplemented by New York State, and closes in the Spring when federal funds are exhausted.

New York's HEAP Plan contains a "crisis assistance" component called "Emergency HEAP" to resolve the home energy crises of individuals who meet all income eligibility standards and other program requirements. Because deferred payment plans should be available under HEFPA to persons now being denied utility service under the National Grid "Grand Plan" due to old bills from long closed accounts, however, there really should be no "emergency" or "crisis" to consider addressing with Emergency HEAP or any other welfare program.

Further, state OTDA regulation 18 NYCRR 393.4(d)(1) contains a requirement that limits Emergency HEAP payments to those who are the "customer of record" with "an account in their name with an energy vendor." Persons denied utility service by National Grid under the "Grand Plan" are not the "customer of record" as defined under the welfare regulations cited above, because they do not now have an account in their name. Also, a person denied utility service under the "Grand Plan" is an "applicant" and not a "customer" as defined in the regulations of the Public Service Commission at 16 NYCRR 11.2(a)(2).

It is possible that some counties administering the 100% federally funded HEAP program may respond sympathetically to a person denied utility service by National Grid by proffering an Emergency HEAP payment. Under the vendor agreements negotiated between the utilities and OTDA, however, utility vendors are given the option to refuse an Emergency HEAP payment. As a result, it is not clear whether Emergency HEAP grants could solve the problem. Moreover, the limited funds available under the federal LIHEAA program should be conserved to meet this winter's home heating needs, not to help utilities collect bad debt for years past which can be addressed with a deferred payment plan.

Insensitivity to Low Income Customer Predicaments
Some of the applicants denied service under the "Grand Plan" owe large amounts for closed accounts for unaffordable natural gas service. National Grid introduced more volatile natural gas rates with unpredictable spikes in recent years. These often cannot be absorbed by low income customers, who live from check to check and often lack savings. Many people may have lost service and closed accounts, perhaps moving to new situations with utilities included. Now, sometimes years later,when their situations change and they need service again, they cannot obtain it because of Grid's "Grand Plan." Compounding the problem, National Grid
  • Lacks meaningful low income rate plans such as those of other National Grid companies in Massachusetts to make service more affordable
  • Closed all its New York walk-in customer service offices where customers could negotiate payment agreements
  • Reduced its staff who provide services to persons with payment difficulties
  • Appears not to have empowered its representatives to negotiate fair and equitable payment agreements based on financial circumstances of applicants
  • Withheld service in some instances without providing notices of possible commission remedies
  • Misadvises people regarding the availability of public assistance and
  • Is reverting to harsh pre-HEFPA tactics that endanger the public.
HEFPA History
Before the Home Energy Fair Practices Act (HEFPA) was enacted, New York's utilities had harsh policies that often led to hardship, sometimes with tragic consequences. See PULP's HEFPA History web page. In 1981 HEFPA required the provision of service to applicants who owe the company money if they agree to pay back the arrears through a deferred payment agreement. There is no bar to a new agreement or disqualification of applicants who had an unpaid DPA that was terminated when their old account was terminated and a final bill was rendered for all outstanding charges.

HEFPA does allow a current customer's service to be terminated if he defaults on a signed payment agreement. If the customer cannot afford to pay the arrears, and is not eligible for a renegotiated payment plan based on a change of financial circumstances. It is then that he may be able to obtain a 4-month welfare payment, to forestall the termination or restore recently terminated service. Also, if a current customer has been terminated for nonpayment in the past six months, the utility can require a deposit. In this manner, HEFPA balanced the rights of applicants and utilities in a way that favors the timely provision of service to all residential applicants, even those who owe the company for past service to previously closed accounts.

Implications for the Current Long Term Rate Plan
National Grid is enjoying the benefits of a lengthy rate plan in which it can keep the benefits of improved practices, cost reductions, and revenue enhancements, instead of cost savings or increased revenue being taken into account through more frequent recalibration of rates. The petition alleges that National Grid's "Grand Plan" is a means to enhance revenue during the long-term rate plan at the expense of needy applicants for service, in violation of the expectation that the utility would extend service to applicants in accordance with law, and asks the PSC to make a downward rate adjustment.

DPS Staff Acquiscence to Grid's "Grand Plan"
Some staff of the Department of Public Service (DPS), which is overseen by the PSC, apparently have supported implementation of Grid's "Grand Plan," as in the case of National Grid's initiation of harsh and illegal deposit policies several years ago. The Public Service Commission, however, is not bound by informal acquiescence of any DPS Staff to a utility rule or practice that has been changed informally without filing new tariffs approved by the Commission. As the Commission stated in the deposit case
The record suggests that the company disclosed its plan *** to the Department and was never specifically told it could be illegal; the record also shows that the company never specifically asked the Department if the policy was legal. In arguing that the company had good cause to deny utility service to residential customers under the *** policy, Niagara Mohawk and Staff rely on the Department's silence, which, in our view, is not a strong position from which to argue good faith or due diligence.
Thus, even though the staff of the utility regulator have gone along with a utility's practices, the PSC itself is not bound by their acquiescence.

Withholding of Service Without Notice?
In some instances denied applicants do not have written notices of denial of service, which is required by law. Notice must include a detailed statement of the reason for denial, a precise statement of what must be done to qualify for service, and notice of the PSC Hotline number, 1-800-342-3355. These notices must be provided if service is not provided within three days of an application

Denied Applicants may Join in Petitioning the Commission
Individuals denied service under the National Grid "Grand Plan" have received service after joining in the proceeding. For further information and possible intervention in the case contact PULP at 1.800.255.7857.

Wednesday, October 10, 2007

Lou Manuta Joins PULP Staff

PULP is pleased to announce that Louis Manuta, Esq. recently joined our staff. Lou has been a practicing attorney and legal editor since 1989 when he graduated from the National Law Center at George Washington University in Washington, D.C. He relocated to New York's capital region in 1995 after several years in Washington, DC covering local loop, wireless, and satellite communications issues before the Federal Communications Commission.

Immediately prior to joining PULP, Lou was an attorney in the telecommunications practice group at the Herzog Law Firm in Albany, NY. Previously, Lou was Vice President-Regulatory Counsel for the NYS Telecommunications Association where he was responsible for advising, coordinating, and representing telecommunications industry positions before State and Federal regulatory agencies and other external organizations, and he provided counsel to member companies regarding matters affecting their business operations. He joined NYSTA in August 1998 as the Director -- Regulatory Policy and was named Vice President in 2003.

Lou has been a member of the New York State Bar and the Federal Communications Bar Association since 1990. He has represented clients before the Public Service Commission, the Federal Communications Commission, other state agencies, and in the federal and state courts.

Lou was born and raised on Long Island and received his Bachelors Degree Magna Cum Laude in Communications/Political Studies from Adelphi University.

Thursday, October 04, 2007

New York Restructuring: It Was About Price

New Yorkers Pay More for Electricity
Today, New York electric consumers pay more than those in states that continued conventional state utility regulation. More troubling, the gap between New York and the states that did not drink the restructuring Kool-Aid is widening, making New York less competitive in the national economy.

This is illustrated in an October 1, 2007 report by Marilyn Showalter, for Power in the Public Interest. See Electricity Price Trends in New York Compared to Trends in Price-regulated States, based on EIA data through June 2007.

Marilyn Showalter is a former Chair of the Washington State Utilities and Transportation Commission (WUTC) and former President of NARUC, the national association of state utility regulators. She also served as chief clerk of the Washington State House of Representatives and as legal counsel to the governor of Washington. She is a graduate of Harvard College and Harvard Law School. Her report shows how New York customers are paying far more for electricity than customers in states that did not try to deregulate. In the traditionally regulated states, utilities did not sell their power plants and thus they are less dependent on buying energy in essentially deregulated federal wholesale markets.

A New York Times article, A New Push to Regulate Power Costs, also summarized the national trend: electricity prices in states that adhered to the deregulation model, like New York, are not only higher than they were before the experiment began, but also higher in relation to the majority of states that did not follow their example.

The First Goal of New York's Restructuring was Lower Retail Prices
Confronted with this reality - prices did not go down with deregulation, and the price gap between New York and other states is widening - a former New York PSC Chairman was recently quoted as saying lower prices are not the only goal of deregulation. See Push on for Energy Policy: 3 Former Heads of PSC Tell Independent Power Producers a State Plan Is Needed.

It is true that other goals were stated when the PSC adopted its "vision" of "unbundling" and deregulating wholesale and retail generation service in 1996, (see below), but the number one goal was to reduce New York electricity prices that were high in relation to other states
Market forces overall are expected to produce, over time, rates that will be lower than they would be under a regulated environment. As we move toward competition, our expectation is that rates overall will be reduced.
Opinion 96-12 at p. 26. It was this "vision order" that paved the way for the New York PSC and utilities to implement restructuring by requiring the utilities to file plans to conform with the "vision." PULP's opposition to divestiture and deregulation of new providers was not heeded. Subsequently, the legislature undid the PSC effort to deregulate new retail gas and electric companies.

After most of the utilities agreed to restructure, and as ownership of their power plants was being shifted to new wholesale utilities who would sell at market rates allowed by FERC, the 1998 State Energy Plan also stated an expectation that the rate differential between New York and other states would narrow:
Future electric generation prices should move closer to the national average since over time competition will likely eliminate most market distortions, leaving only regional anomalies for state-to-state price differences. Thus, changes in generation prices should have no more impact on New York's competitive position than comparable changes in other states.
Now, however the situation is worse. The gap between New York electricity prices and those of other conventionally regulated states is widening.

No state deregulated electricity like New York did since the demise of Enron in 2001 drew attention to the flawed scheme of deregulated federal wholesale markets. Since then, a number of states halted their plans to deregulate. Other states that had enacted laws requiring divestiture of power plants, like Connecticut, have recently passed new laws to authorize utilities to build or acquire power plants as a way to bring more of the generation costs of electric service back under state regulation. This reduces the need to buy electricity at wholesale market prices inflated by design and gaming.

Rate Differences Within New York: Customers of a Vertically Integrated Utility Did Best
Within New York state, customers of the utilities that most enthusiastically implemented the PSC vision saw their bills rise and become unpredictable. In contrast, residential customers of RG&E, a utility that kept most of its power plants, and thus remains the most traditionally regulated, enjoy the lowest bills. See Excelsior! Con Edison Residential Rates Spike (Again).

There is no legal barrier that prevents a utility from building a power plant, as Con Edison did with its East River steam/electric "repowering" project several years ago. RG&E has announced plans to retire an old coal plant and build a new 330 MW plant, and to improve several of its old hydro plants, raising their output by 9 MW. Deregulation proponents are now asking the PSC to require divestiture or prevent RG&E from repowering old power plants, so customers of that utility too would have to buy electricity at inflated prices established in the deregulated federal markets.

The New York PSC adopted a policy to flow NYISO spot market rates through to all customers, eventually, starting first with the largest customers. The results for industrial customers in the PPI Report show how this has caused their rates to soar as the policy was implemented. Again, this is due to faulty design and possible gaming of the spot markets, in which sellers with energy that costs less to produce can always get paid the top dollar demanded, which may be for the most costly, least efficient plant.

It's Market Design, Not Gas Prices
In response to Marilyn Showalter's study, deregulation proponents - mainly the deregulated wholesale utilities and traders - claim New York's rising electricity prices are simply tracking previously unanticipated increases in prices for natural gas and oil. See Energy Deregulation Too Costly, Study Shows New Yorkers Pay More for Electricity Now than under Regulated System, Says Advocacy Group Director.

Those fuels, however, only account for about 34% of New York's electricity production. According to NYSERDA data, the majority of New York's electricity supply is from sources that produce electricity at costs far lower than natural gas or oil fired power plants. This includes
  • 25% from nuclear,
  • 14% from hydro,12% from coal,
  • 13% imported (much of which is Canadian hydro or produced from coal in other states)
Yet, New York prices are paralleling increases in natural gas prices is due to defective NYISO spot markets, where a 20% "tail" of natural gas in many hours wags the entire "dog" of prices for all generators, including those less costly to operate.

Sellers of lower cost energy receive the maximum clearing prices set in the NYISO markets for much more expensive power plants. As a result, with deregulation, the benefit of low cost electricity shifted from New York's consumers to producers and traders.

Industrial customers, once the major "consumer" supporter of deregulation, are defecting as the prices they pay in the deregulated states go up. See Industrial and Residential Customers Agree: Proposed FERC Rules for Electricity Market Rates are Flawed. It is now mainly the producers and traders who continue to bombard the public and press with spurious claims of that deregulation is succeeding. It is, for them.

Other Goals
As mentioned above, lower price was the first goal of deregulation, and there were other objectives. New York has not done so well on the other restructuring goals, either. The other goals articulated by the New York PSC when it adopted the "vision" promoted by Enron were
Background: The "Vision" of Electricity Deregulation
In 1996 the New York Public Service Commission (PSC) adopted policies favoring electricity price deregulation. The major trade off for utilities was that in exchange for selling their power plants to new owners, as desired by the PSC, the utilities were allowed to form holding companies and to have long term "performance" rate plans. Rates would be set at a "macro" level rather than based on detailed scrutiny of costs, and the companies could retain savings achieved by cost cutting in operations. The PSC approved "rate/restructuring" agreements for each utility. In November 1999, the New York ISO (NYISO) was formed to create a FERC-approved "organized" market for spot market sales and purchases. Now the majority of wholesale energy in the state is sold or influenced by prices in that essentially deregulated market. See NYISO Costs Skyrocket, Benefits Questioned.

In 2004, the PSC still believed in a transition to a situation where eventually all customers would face spot market pricing:
Based on the current state of the competitiveness of the electric market, it is our view that, for the largest commercial and industrial customers, their commodity rates should reflect spot markets and existing hedges should be allowed to expire without being renewed. We will continue to monitor the state of the market for other customer classes and as the markets continue to mature, we expect that the hedges providing price volatility protection for these customers will be allowed to expire as well.
Statement of Policy on Further Steps Toward Competition in Retail Energy Markets, Aug. 25, 2004.

Utility consumer advocates generally oppose reliance on spot market pricing:
The Default Service Provider shall not simply pass through wholesale spot market rates for the energy or gas commodity portion of Default Service, and shall be required to take prudent measures to provide least cost service and assure long term rate stability, through various means including but not limited to competitive bid, bilateral contract, or provider-owned generation or supplies
NASUCA Resolution on Competitive Provision of Electricity and Natural Gas, 2001.

In 2006 the New York PSC commenced a new case to consider how retail utilities should acquire electricity and natural gas for their customers. That case is underway. Meanwhile, some New York utilities are continuing to implement plans adopted years ago to increase their reliance on short term spot markets to purchase energy for their retail customers in the coming years.

Time for a New Plan
Other states that restructured are considering major changes after the failed experiment with deregulation. See PSC Study: Michigan's Electric Utilities Should Return To Regulated Market Structure. The three former New York PSC commissioners mentioned in the article above were right to call for a new energy planning initiative for New York State. The last state energy plan issued in 2002 relied heavily on a deregulatory approach. See Disconnected Policymakers.

Energy Plan "Updates" to the 2002 plan have been issued by NYSERDA based on information voluntarily provided by industry sources. In its 2006 "update" report, NYSERDA stated
Although Article 6 expired on January 1, 2003, NYSERDA, acting on behalf of the former Energy Planning Board, requested this information on a voluntary basis in an attempt to maintain an accurate and complete record of information and data in anticipation of the future re-authorization of the planning process. As compliance of major energy suppliers with this voluntary request has waned considerably, NYSERDA will cease to request voluntary compliance.
It appears from the statement above that without new statutory authority, NYSERDA may lack the scope of information and tools needed even to assess the situation accurately. There has been no legislative reauthorization of a comprehensive energy planning process for the state.

Tuesday, October 02, 2007

New Barrier to Utility Service: National Grid's "One Grand Demand"

The One Grand Demand
In recent weeks, PULP's Helpline received calls from low income consumers involving denials of utility service by National Grid because they owed money from prior accounts, sometimes closed years ago. National Grid demanded large DPA down payments of as much as $1,000.

In each of the instances we learned of, Grid's "one grand demand" was far beyond the financial means of the applicant. Further, National Grid refused to negotiate the amount of the up front payment demanded for service, even when charitable groups offered assistance that would partially meet the demand.

As a result, households go without electric service. For example
  • A household with a 14 month old infant was without service because they could not meet the demand for $1000
  • A mother with four children was evicted and became homeless when the father halted child support payments. The family was living in a car, and is now in a costly and possibly dangerous motel situation. The mother found an apartment, but is unable to move in because the landlord requires utility service to be on before giving possession. She could not resolve her homeless situation because she could not meet Grid's demand for $1000
  • A senior citizen who receives SSI and who is moving to a different apartment where utilities are not included in rent, who has arrears dating back more than six years, was refused service unless he paid at least $1000, which he does not have.
  • A disabled amputee with seizures was denied service due prior arrears and could not satisfy Grid's inflexible demand for $1000
The Emergency Utility Assistance Program Does Not Cover an Applicant's Old Arrears
National Grid referred the customers to the local welfare office, where they were denied emergency utility assistance.

The utility assistance safety net created in Social Services Law § 131-s provides a grant equal to the past four months service for current customers or those recently terminated. It is not designed to cover old arrears or to use public money when the applicant for service has a remedy under the Public Service Law, i.e., a fair and equitable DPA tailored to one's financial circumstances. See the PULP Help Center web pages on public assistance for utility emergencies and utility Deferred Payment Agreements.

HEFPA Requires Affordable DPAs for Applicants
Before the Home Energy Fair Practices Act (HEFPA) was enacted in 1981, utilities could insist upon full payment of arrears from prior accounts before providing service, even when it was impossible for the customer to pay the entire arrears. See PULP's web page reviewing HEFPA History.

HEFPA changed all that.

The law declares that continuous utility service is in the public interest and necessary for the public health and welfare. HEFPA requires utilities to offer deferred payment agreements (DPAs) to enable applicants for utility service retire old arrears from prior accounts over time with affordable payments. The DPA includes an agreement to pay current bills on time plus installment payments on the arrears. Breach of an existing DPA by a current customer is grounds for termination of service, unless the customer can obtain a new DPA with lower payments based on a change of financial circumstances.

Further, regulations of the Department of Public Service require utilities to negotiate fair and equitable DPAs to as little as nothing down and $10 per month, based on the applicant's financial circumstances. The Department of Public Service also is also required to resolve disputes between utilities and applicants over the terms of a fair and equitable DPA.

The apparent rationale of National Grid to demand the "one grand" up front payment from an applicant for service is a section of HEFPA that allows the utility to terminate service to a current customer who has broken a DPA. National Grid apparently maintains that an applicant, who defaulted on a DPA previously when he or she was a customer, can never get a new DPA. The PSC regulations, however, clearly differentiate between applicants for service and current customers. The cessation of service to a customer for defaulting on an existing DPA does not preclude a DPA for an applicant who has not had service within the past 60 days, and who has not broken an existing DPA. Applicants who were recently terminated for non payment can be required to make a deposit.

National Grid's rigid "one grand demands" amount to a refusal to negotiate a fair and equitable DPA.

A Pattern of Undermining HEFPA Protections
National Grid's "One Grand Demand" is an effort to roll back the effects of HEFPA legislation intended to protect applicants for utility service and the public health and welfare. It is resulting in denial of service contrary to the intent of the legislature when it adopted HEFPA. This is not the first time. Several years ago, National Grid denied service to more than one thousand applicants by demanding deposits in situations not allowed by HEFPA. PULP opposed that move successfully, the PSC did not adopt harsher deposit rules proposed by the utility and DPS staff during the litigation, and Grid was directed by the PSC to take corrective action.

Section 31 of the Public Service Law expressly recognizes that some applicants for service will owe the utility for prior service. The law expressly provides the solution for those who cannot afford to pay arrears in full: a negotiable DPA that is a fair and equitable arrangement based on the customer's ability to pay for old arrears.

National Grid appears to be creating new, unreasonable barriers to utility service to some applicants with old arrears, contrary to the purpose of HEFPA. In addition to family hardship and frustration of the public policy of the state favoring continuous utility service, it is quite possible we will see new tragedies as a result. See Candle Fires: A Symptom of "Rolling Blackouts" Affecting Low-Income Households

Persons denied service by National Grid may call the PSC Hotline at 1-800-342-3355 for assistance in negotiating a fair DPA. In some instances, the staff of the Department of Public Service has supported National Grid in its demands for more money than applicants can afford. If calling the PSC Hotline does not solve the problem applicants denied utility service, they, or their advocates, may call PULP at 1-800-255-7857 for further information.