Friday, March 28, 2008

Landlords Charging Tenants for Utility Service?

PULP recently received a call on its helpline from a tenant, inquiring about his landlord’s effort to collect separate charges for natural gas service. The landlord changed the lease upon its renewal to allow separate charges for electricity and natural gas service, perhaps in response to higher energy prices.

Many years ago, New York’s highest court, the Court of Appeals, ruled in Campo v. Feinberg, 279 A.D.2d 302 (3d Dep’t 1952), aff’d 303 N.Y. 995 (1952), that landlords cannot charge their tenants for utility service. That case involved electric service, but its reasoning would seem to apply fully to natural gas too.

Although the law did not change, the Public Service Commission (PSC) issued regulations authorizing coops, condominiums, and landlords to submeter electric service on a building-specific basis, when the owner or its agent petitions for an order permitting submetering. Most important for consumers, these orders cap the charges that a landlord may bill for electric service, to no more than the utility would charge for direct service. The PSC submetering orders also require landlords to comply with the requirements of the Home Energy Fair Practices Act (HEFPA), including notifying tenants of their HEFPA rights and the opportunity for recourse to the PSC’s complaint determination procedures.

In contrast, the Commission has never allowed residential landlords to charge tenants for natural gas service. Tenants may only be made to pay for natural gas service if they are provided utility meters and billed only by the utility for the amounts used in their individual dwelling units. (Under the “Shared Meter Law,” tenants cannot be made to pay for service to areas outside their individual apartments, subject to a de minimis exception.) See N.Y. Pub. Serv. Law § 52(8).

If a landlord has not enabled individual metering for service by the utility, the landlord must bear the energy costs and supply unmetered utility service to tenants without specific charge, with the utility service included in rent. This gives the landlord, who is directly responsible for equipment such as furnaces, boilers and water heaters the incentive to invest in more energy efficient equipment.

In the case that came to PULP’s attention, the landlord is charging tenants for natural gas service each month, based on the total amount used and the price paid, pro rated to the tenants based on the square footage of their apartments. The landlord is also imposing a monthly administrative charge, in addition to the charge for gas. The Public Service Law plainly prohibits the sale of natural gas on this basis. “Neither the scheduled rates nor the minimum charge for residential customers shall, after July first, nineteen hundred thirty-seven, be based in any manner on the number of outlets, number of rooms, cubic or square foot area or other such standards.” N.Y. Pub. Serv. Law § 66 (14). The Public Service Law also prohibits separate administrative charges. .” N.Y. Pub. Serv. Law § 65 (6)

Furthermore, after Campo, the Commission adopted regulations prohibiting residential gas and electricity submetering and required all utilities to file tariff provisions “prohibiting the submetering of gas or electricity for residential purposes . . . .” 16 NYCRR § 96.1 Thereafter, the Commission approved the resale of electricity to tenants in accordance with submetering regulations and individual orders, 16 NYCRR § 96.2, but the neither the utility tariffs nor the Commission allow submetering of natural gas for residential purposes.

ESCO Marketing Practices Subject of New PSC Proceeding

The Consumer Protection Board and the New York City Department of Consumer Affairs filed a Petition, supported by PULP in its Comments, seeking Public Service Commission action regarding the marketing practices of some Energy Services Companies (ESCOs). See PULP Files Comments on Regulation of ESCO Sales Practices.

On March 19, 2008, in response to the Petition, the Commission issued a Notice Soliciting Comments on Revisions to the Uniform Business Practices soliciting public input on standards to govern ESCO Energy Service Company marketing practices.

The Commission stated it is considering whether to modify its Uniform Business Practices (UBPs). The Commission issued the UBPs instead of official regulations after the Commission allowed ESCOs to sell portions of natural gas and electric service. The Commission has made the UBP standards part of the tariffs of distribution service utilities. These UBP modifications could, according to the Commission

  • incorporate standards for marketing by ESCOs and third party contractors acting on their behalf;
  • improve residential customer protections;
  • strengthen the oversight of and expand the remedies available to Staff and the Commission; and,
  • other related matters and housekeeping items.

In addition, the Commission invited comment on the following questions:

  • Should the ESCOs be subject to the utility assessments provided by PSL §18-a?
  • Should the customer of record be the only person qualified to enroll the residential account with an ESCO?
  • Should early termination fees for residential customers be limited to: (a) a flat amount (e.g.$200); (b) an amount based upon a set fee per month multiplied by the number of monthsremaining on the contract (e.g. $8 x 20 months = $160); or (c) some other variation?
  • Should there be a grace period for the application of early termination fees to residential customers, and if so, what is the appropriate length of time for the grace period?
  • Is the number of Customers served by an ESCO proprietary trade secret information, under the standards set forth in the State Freedom of Information Law?
  • Should the UBP provisions with respect to Marketing Standards be applicable to small commercial customers? If so, how should small commercial customers be defined?
  • Should ESCOs that include early termination fees in residential sales agreements be requiredto obtain a “wet” signature on the sales agreement?
  • How often do ESCOs enforce early termination fees for residential contracts? If available,fixed and variable price contracts. the Commission seeks this information on an annual basis separated by contract types, e.g.
  • How should the term “plain language” as used in Section 2.B.1.b of the UBP be defined?
  • Are there additional modifications to the UBP that should be considered?

Comments are due by April 18th.

Monday, March 24, 2008

PSC Puts 315 Area Code Changes on Hold Pending Investigation

Responding to PULP’s Motion for Interlocutory Relief in the New York State Public Service Commission’s proceeding to consider numbering relief options in the 315 area code, the Commission issued a Notice Establishing Response Time for Comments on PULP Petition and Suspending Comment Period Regarding Staff White Paper.

The Commission requested interested parties to submit comments on PULP’s Motion regarding whether any area code number change in the 315 area is necessary. Comments on PULP’s Motion are due by March 31st.

The Staff Report annexed to a March 3, 2008 PSC Notice requesting comments on various options for adding a new area code indicated that there are still millions of unused telephone numbers in the 315 area code. See PSC Considering "Area Code Relief" For 315 -- Where Did All The Numbers Go?. PULP believes that an artificial “shortage” may have arisen due to how the numbers have been allocated. See

Some of the issues PULP discovered include:

  • That a disproportionate 83 percent (656 of 792) of the central office (or NXX) codes in the 315 area code have been assigned, yet only 34 percent (2.7 million of eight million) of the telephone numbers contained in those codes are in use.
  • That numerous “thousands blocks” of telephone numbers remain available in rural areas.
  • That there is no number shortage in the urban population centers, as demonstrated by the fact that the City of Syracuse has 146 active codes of its own (1,460,000 telephone numbers) for a city of 147,306 people.
  • That in the past few years, 78 formerly single exchange rate centers in the 315 area code have received a second full NXX code, in some cases, several new NXX codes, each containing 10,000 numbers.
  • That, for example, Star Lake, a community with about 860 residents, had been served for years by Verizon with a single 10,000 number NXX code. However, in the past few years, three additional NXX codes have been assigned to Star Lake by three different competitive carriers. Now, there are 40,000 telephone numbers assigned to this exchange

Due to the costs and inconveniences to consumers and businesses tied to area code relief, PULP’s Motion argues that it should be avoided unless absolutely necessary and that numbering relief should not be commenced due to mistakes or gaming of the number allocation process, which may have caused an artificial “shortage.” PULP asked the PSC not to proceed in its consideration of several options for adding a new area code in the 315 area until further investigation of the reasons for the impending “shortage.”

The Commission suspended its previously established dates for public comment on methods for changing area codes in the 315 area without setting new dates. The Commission will now hear comments on PULP’s Motion from other active parties, mainly telephone companies, before considering any area code relief methods.

Lou Manuta

Wednesday, March 19, 2008

PSC Nullifies National Grid's $1,000 "Grand Plan" Requirement for Utility Service

In October, 2007 applicants for utility service represented by PULP who had been denied service under Niagara Mohawk d/b/a/ National Grid's $1,000 "Grand Plan" requirement for utility service, and whose requests for help from the Department of Public Service Consumer Services Division Hotline (1-800-342-3355) had been denied, petitioned the Public Service Commission for a Declaratory Ruling that the National Grid "Grand Plan" is invalid.

On March 19, 2008, the PSC announced it is nullifying the $1,000 requirement. See National Grid's `One Grand Demand' Struck Down, Schenectady Daily Gazette, March 20, 2008; NY Regulator: National Grid Must Be More Lenient on Payment Plans, AP, March 19, 2008.

The petitioners and seventeen other denied applicants who moved to intervene in the case typically had arrears for service to prior accounts that had been closed years ago. National Grid made no attempt to collect the arrears, but when they applied for service, typically after a change of living arrangements such as moving to a new apartment, Grid withheld service and demanded a down payment of $1,000 as a condition of service. In many of the cases Grid refused substantial payments that were short of the "Grand" demanded.

Grid referred many of the denied applicants to local welfare departments, but they were ineligible for aid because their incomes were slightly above the welfare need standard (which has not been changed for 18 years) and because the emergency utility assistance program will provide grants or loans only to those who have had utility service within the most recent four months (PULP argued that under the Public Service Law applicants should be able to get deferred payment plans for old arrears without welfare assistance).

When the applicants did not have the money demanded by Grid, they and their families went without service, and in some circumstances, experienced homelessness because they could not get the keys to move into their new apartments without demonstrating to the landlord that they had arranged for utility service in their name. As a result of the withholding of service applicants went without utility service, causing hardship and increasing the risks of tragedy. See Candle Fires: A Symptom of "Rolling Blackouts" Affecting Low-Income Households.

The Legislature in 1981 declared the goal of continuous utility service to residential customers in order to promote safety and the general welfare of the state. PULP argued that the Grid "Grand Plan" clashes with specific provisions of the Home Energy Fair Practices Act (HEFPA) which govern the provision of service to applicants who owe money for service to prior, closed accounts.
  • Section 31 requires Grid to offer a repayment plan for "any amounts due" for service to a prior account,
  • Section 31 limits down payments to three months' bills,
  • Section 37 requires that all payment plans must allow for consideration of individual circumstances, fairness, and equity.
Evidence in the case indicated that National Grid had provided "training" sessions to the PSC Consumer Services Division staff on its informal "Grand Plan" requirement. PULP argued that the rule had been adopted by Grid without filing tariffs that can only be adopted after public notice and review by the PSC. Also, persons denied under the "Grand Plan" did not receive proper notice of the reasons for denial and of their opportunity to seek review of the denial by the Public Service Commission.The case is discussed in our prior postings on the "Grand Plan":
A PSC press release announcing nullification of the "Grand Plan" issued March 19 states:
"One of our most important roles is to safeguard and protect ratepayers, in particular consumers who are financially less fortunate or have fallen on hard times,” said Commission Chairman Garry Brown. “National Grid’s practice in this matter regarding residential applicants who are in default does not conform with the intent of Commission regulations.”
The order has not yet been released. For further information, contact PULP at 1-800-255-PULP, or by email at

Friday, March 14, 2008

PULP Asks PSC to Investigate Need for New Telephone Area Codes in the 315 Region

In a recent posting we raised questions about the need for new telephone area codes in the region of central New York that now has the 315 code. See PSC Considering "Area Code Relief" For 315 -- Where Did All The Numbers Go?

A review of data from the North American Numbering Plan Administration (NANPA), the FCC-designated national telephone number allocation organization, shows that some telephone companies have been obtaining large allocations of telephone numbers for tiny rural localities in the 315 region - areas that already have a surplus of unused lines and which appear to have no need for more.
In Alexandria Bay, for example, five competing carriers assigned five exchanges and 50,000 numbers to the population of 4,097. Harrisville, with a population of 653, had four exchanges from four different carriers and 40,000 available numbers.
Group Challenges Area-code Changes - Public Utility Law Project Petition Asks PSC to Probe Whether 315 Really Is Running out of Numbers, Watertown Daily Times, March 26, 2008.

Under FCC and PSC rules, blocks of new numbers are to be used 1,000 at a time in the locality for which they are obtained, and new three-digit exchange codes containing 10,000 numbers each should not be opened until existing ones are at least 75% used.

On March 14, 2008, PULP made a motion to the PSC to conduct a thorough investigation of the reasons for the apparent number shortage, which may be due to the unlawful or mistaken opening of more three-digit exchanges than necessary.

The PSC has the power to reclaim any unused, hoarded, or possibly improperly allocated numbers. Perhaps the cost and inconvenience of new area codes and number changes can be avoided if the PSC finds that more numbers are actually available or can be reclaimed.

PULP Asks PSC to Require National Grid to Provide Answers to Questions in "Grand Plan" Case

In October 2007 PULP petitioned the PSC on behalf of customers seeking a declaratory ruling to annul National Grid's "Grand Plan." See PSC Asked to Investigate Grid's "Grand Plan" The utility demands $1,000 as a condition of service to customers who owe the company more than $1,000 for service to a prior account in their name.

Under the Home Energy Fair Practices Act (HEFPA), applicants with arrears must be offered payment plans, payment plans must be fair and equitable, and an applicant with prior arrears can be made to pay no more than three months' bills as a down payment, with the remainder to be paid in monthly installments. The opportunity to obtain utility service on this basis is not available to some applicants who are disqualified by National Grid because, in a prior episode of service, they broke a prior payment plan which then expired due to the default. There is no such disqualification in the statute, which does not allow a utility to withhold service if the customer enters into a payment plan for the arrears. The PSC regulations distinguish between applicants with arrears who are eligible to obtain service with a payment agreement, and existing customers with arrears who in certain circumstances cannot have another payment agreement after they have broken one.

National Grid responded to the petition and the case has been submitted for a decision whether the "Grand Plan" violates HEFPA since late November 2007. See PULP Replies to National Grid’s “Grand Plan” Defense.

The Commission has taken no action in the case to date. PULP is concerned that tragedies and undue hardship may occur while service is being withheld under the challenged Grand Plan.

PULP recently moved to compel National Grid to answer questions regarding other issues in the case. National Grid opposed the motion on March 12, 2008 arguing that discovery is premature "[b]ecause there is no schedule of evidentiary hearings, appointed presiding officer or determination that formal proceedings are appropriate. . . ."

The motion is now pending.

Thursday, March 06, 2008

FCC Orders Telephone Lifeline Providers to Include Digital TV Transition Information in Customer Bills

In its March 3rd Order regarding the digital television transition, the FCC announced that local exchange carriers which have been designated as Eligible Telecommunications Carriers (“ETCs”) must provide information in the monthly bills to their low-income Lifeline and Link-Up customers about the transition to digital television in February 2009. This information must be included in every such bill through March 2009.

The ETCs operating in New York include all of the incumbent local telephone companies, for example, Verizon and Frontier, several competitive local companies, and Sprint/Nextel wireless. The cable television companies and VoIP providers are not ETCs and are not presently required to offer Lifeline or Link-Up.

Importantly, there is no reference in the FCC Order regarding customers eligible for reduced rate Lifeline service -- including hundreds of thousands in New York State alone -- who do not receive Lifeline service and therefore would not receive this information deemed valuable and necessary by the FCC for low income consumers.

The information announcement can be a “bill stuffer” or as part of an information section on the bill itself and must clearly state:

(1) That on February 17, 2009, analog broadcasting will end and analog-only televisions may be unable to display broadcast programming unless the viewer takes action.

(2) That analog televisions should continue to work as before with cable and satellite television services, gaming consoles, VCRs, DVD players, and similar products.

(3) That more information on the transition can be obtained by going to

(4) That more information about the converter box program (which provides coupons for the purchase of a converter box to permit continued viewing of television programming on an analog television) by going to or by calling the National Telecommunications and Information Administration (“NTIA”) at 888-DTV-2009.

Carriers required to include the notice may use languages other than English, if necessary.

More information on the transition and the $40 converter box coupons is available from the National Telecommunications and Information Administration (NTIA). Further information on the digital transition is available directly from PULP.

Lou Manuta

Wednesday, March 05, 2008

PSC Considering “Area Code Relief” For 315 -- Where Did All The Numbers Go?

Something isn't adding up in Syracuse, Utica, Watertown, and surrounding areas. How can an area -- the 315 area code to be specific -- with 1.4 million people run through 6.5 million telephone numbers? Short answer, it can't.

Staff at the Department of Public Service (the administrative arm of the New York Public Service Commission) drafted a report on February 27th regarding the need for "area code relief" for the 315 Number Plan Area ("NPA"). The Staff Report was officially released by the Public Service Commission ("Commission") with a Notice inviting public comment on March 3rd, followed by a press release on March 6th. The press release asserts that
The 315 area code that has served central New York since the early 1950s is running out of assignable telephone numbers, and implementation of a new area code is required.
The DPS Report proposes several options to ensure that central and northern New York State does not run out of numbers. That is, various area code split scenarios (taking the existing area code and breaking it into two areas with one keeping 315) and an overlay option (where current customers all keep their telephone number, but new customers would receive a telephone number from the new area code and everyone within the existing 315 NPA would need to dial 11 digits in order to call anyone else) have been proposed. Interested parties were asked to select which option they prefer, the Commission would consider the Staff Report and comments, and an Order would be issued directing how the number shortage should be resolved. Comments are due on March 26th, with replies due April 4th.

Very straight forward. The Commission is using a process that has been successfully employed numerous times around the state. In recent years, Long Island was split, the Catskills were broken away from Westchester County, a new code was added to New York City, and Buffalo and Rochester were given their own NPA codes. As expensive and inconvenient as it is for consumers and as difficult and expensive as it is for the telephone companies to implement, we all take part to make sure we don't run out of telephone numbers. That could cause dire economic consequences if the North American Numbering Plan ever became exhausted.

What's Unique About 315?
However, the situation in the 315 NPA raises many issues not seen in these other more populous areas so that selecting a relief path (the aforementioned proposed splits or overlay) should not even be on the table. The consideration of splits or an overlay should be brought to a complete halt and a full investigation started. The costs and inconvenience to residential and business customers are real -- cell phones will need to be reprogrammed, calls across the street will require 11 digit dialing, business cards and letterhead stationery will need to be reordered, etc. -- and are unnecessary based on the information available.

The underlying, preliminary question that needs to be answered before the expense, difficulty, and inconvenience of area code relief begins is this: Where did the all the numbers go?

Let's start with some facts and figures about the 315 NPA. It consists of all of Onondaga, Wayne, Madison, Oswego, Herkimer, Lewis, Jefferson, and Oneida Counties, most of St. Lawrence and Cayuga, about half of Yates and Seneca, and pieces of Cortland, Chenango, Hamilton, Fulton, Ontario, and Otsego Counties. Beautiful country, but with the exception of Syracuse, Utica, and Watertown, not known as a major population center. In fact, the 2000 U.S. Census states that there are only about 1.4 million people living in the area, with about 620,000 households.

According to the North American Numbering Plan Administrator, the group responsible for the telephone numbering scheme for the United States, Canada, and the Caribbean, there are nearly seven million telephone numbers designated for the 315 NPA. There are 697 central office codes, or exchange codes, in 315, of which, 671 have been assigned to carriers to distribute the telephone numbers to customers.

According to the Staff Report, there are 792 central office codes in 315, a count which must include codes that have not even been identified for usage yet. Of these 792 central office codes, the Report states that approximately 656 of these have already been assigned, leaving only 136 codes left. With 10,000 numbers per central office code (NXX-0000 through NXX-9999), that's 1,360,000 telephone numbers remaining. While that may sound like a lot, considering that it can take time to make the area code relief effective, it's not too early to start.

That is, it would be time to declare the 315 area code in jeopardy if these numbers were accurate -- and true. By using the Staff's math to this point, the assumption is that the 1.4 million residents (including infants and children too young to have their own cell phone) and the 620,000 households have taken 6,560,000 telephone numbers. Of course they have not. Most, if not all, of these 656 codes have not been exhausted and many, many, many numbers remain available.

We know this because the Staff Report continues by stating
Of the approximate 8 million assignable seven-digit telephone numbers in the 315 area code, approximately 2.7 million are currently in use.
So, why is the Commission proposing to disrupt everyone's life in the 315 NPA when only 34 percent of the numbers are in use and 66 percent are still available?

How can 83 percent (656 of 792) of the central office codes be assigned, yet only 34 percent (2.7 million of eight million) of the telephone numbers contained in those codes be in use?

PULP believes it is time for a full investigation of this unexplained anomaly.

Numbering Relief Authority in New York
The state Commission was granted authority to oversee numbering resource management by the FCC in 1999 and began to implement what is known as thousands block pooling in 2000. Under thousands block pooling, instead of a carrier receiving an entire central office code of 10,000 numbers for a single location (of which they may only need a few hundred), they would receive just 1,000 and the entire code could be shared by up to 10 different carriers. Unused "thousands blocks" would be placed in a pool for other carriers to request when they reach 75 percent saturation of their own block. By mandating thousands block pooling throughout the state and requiring unused blocks to be placed in the pool, New York has been able to stave off area code relief for a significant number of years, most notably in 518 which almost ran out of numbers in 2002. Thousands block pooling has been a success for both consumers and the carriers.

Now we have a situation in the 315 NPA which defies logic. An area with enough telephone numbers to give each man, woman, and child nearly six telephone numbers should not require area code relief.

Let's look at the numbers.
Central office codes can only be used in their designated rate center. In a city such as Syracuse, multiple central office codes can be used throughout the city (which is its own rate center), but its suburbs have their own rate centers with their own central office code or codes. A small town like Georgetown, on the other hand, also is its own rate center, so the single code assigned there can only be used in Georgetown, even though there are less than 1,000 people living there and they have 10,000 telephone numbers available to them.

Examining the Mystery
In a footnote, Staff states its belief that low-growth rate centers (i.e., rural areas like Georgetown) under-utilize their codes, which has led to the shortage. There are about 50 single central office code rate centers like Georgetown in the 315 NPA. If each of them "wasted" 90 percent of their telephone numbers, this would only account for 450,000 of the "lost" telephone numbers. Staff does go on in its Report to recognize that thousands block pooling "has helped to alleviate some of this problem," but there is only so much pooling can accomplish in a rural community with only one service provider. That said, mathematically, rural areas are not the main culprit in this mystery.

Since the comparatively few unused numbers in rural areas can not be the basis for this purported shortage, it must apparently be a problem in the cities. Even though it is true that a central office code or thousands block in Georgetown, New York can not be used in the growth areas of 315, such as the city of Syracuse, Syracuse has 143 active codes of its own (1,430,000 telephone numbers) for a city of 150,000 people. That's nearly 10 telephone numbers for every man, woman, and child in Syracuse. In contrast, currently the 1.4 million residents of 315 use 2.7 million lines for home and business, roughly two telephone numbers per person. Utica has 46 of its own codes (460,000 telephone numbers) and has a population of 61,000. Additional "unassigned" codes, with 10,000 unused numbers in each, are available in each city as well.

So, the problem isn't that the "lost" rural codes are needed in the cities and can't be used. On top of that, the cities have numerous untapped numbering resources. Something strange is going on with the telephone numbers in the 315 NPA which has not been seen in any of the other area code relief projects around the state. Before the Commission goes down the road to determine how the residents and businesses in 315 should be inconvenienced, we need to go back to step one: whether any "area code relief" is really necessary. A full investigation needs to be launched to find the cause of this artificial shortage and resolve it before a split or overlay is ordered in 315 (the only topics the Commission is seeking comments on) and before this mystery has an opportunity to expand to other regions of the state.

Lou Manuta

Tuesday, March 04, 2008

PSC Should Investigate Village of Ilion Utility Deposit Requirement

Ilion Village Utility Demands A $300 Deposit to Obtain Electric Service
According to the March 4, 2008 Utica Observer Dispatch, the Village of Ilion municipal utility adopted a $300 deposit requirement as a condition of residential electric service, effective January 1, 2008. See Ilion's Utility Deposit Takes its Toll. It is not clear whether this new rule was filed with and approved by the Public Service Commission (PSC). It is not contained in the Ilion tariffs posted at the PSC website. Ordinarily, a utility cannot impose any requirement for service that is not contained in its tariffs filed with and approved by the PSC. In turn, the PSC is powerless to approve a requirement for utility service in violation of the statutes that govern it.

HEFPA Generally Prohibits Deposits
The Home Energy Fair Practices Act (HEFPA) is New York's utility consumer "bill of rights." It was adopted in 1981 by the Legislature, to establish and consolidate in Article 2 of the Public Service Law the basic rights and remedies of New York's residential energy consumers. Perhaps the strongest utility consumer protection statute in the nation, HEFPA has saved many lives, and implements much of New York State's universal service policy for electric and gas service.

Under HEFPA, residential service deposits for electricity, natural gas or steam such as the requirement adopted in 2008 by Ilion have been generally forbidden for 26 years:
On and after January first, nineteen hundred eighty-two, no utility corporation or municipality shall require any new residential customer, other than a seasonal or short term customer, to post a security deposit as a condition of receiving utility service....
Under other provisions of HEFPA, residential customer deposits are allowed in very limited circumstances, e.g., when a customer requests service for a short term or seasonal basis, or when a customer is deemed to be "delinquent" by reason of his payment history, or when the Public Service Commission (PSC), after a hearing, approves a different deposit requirement, which has never been done.

In the very narrow set of circumstances when a deposit is allowed under HEFPA, a deposit is limited to "not greater than twice the average monthly bill for a calendar year...." Where a customer uses electricity for space heating, the limit is twice the "average monthly bill for the heating season." According to PSC typical bill reports, the typical Ilion electric bill for 500 kwh is about $24. According to the news article, Ilion demands a flat $300 deposit from new customers, obviously excessive for those who do not heat with electricity.

The Village of Ilion is currently listed by the PSC as one of the utilities currently subject to PSC jurisdiction and regulation - including HEFPA. HEFPA protects all customers of municipal utilities like the Village of Ilion. (Some municipal utilities that receive the majority of their power at very low cost from the Power Authority of the State of New York (NYPA) are exempted from the jurisdiction of the Public Service Commission (PSC). Even those utilities, however, are subject to residential consumer deposit limitations similar to HEFPA, under NYPA regulations). Over the years, previously exempt municipal utilities have come under the PSC's jurisdiction - and the requirements of HEFPA - as they began to purchase more of their power from non NYPA sources.

The purpose of HEFPA is to protect the public interest by assuring the continuous provision of safe utility service without unreasonable qualifications or delay. Deposit requirements impede the prompt provision of service. Energy is a modern necessity. When utility service is not provided, less safe alternatives are likely to be used at higher risk and cost to society (see Candle Fires: A Symptom of "Rolling Blackouts" Affecting Low-Income Households ) and accidents are more likely, (see Cop Who Shot Kid has Light Excuse).

The Public Interest Outweighs the Utility Interest
The public policy of continuous service, adopted in HEFPA, overrides the legitimate, but secondary, concern of the Village of Ilion to collect its bills. Utilities must pursue strategies other than imposing deposit requirements and withholding of service in the absence of a deposit.
  • Customers who move owing arrears can be pursued through legal action.
  • Customers who default in payment because they cannot afford it may be eligible for assistance to satisfy unpaid utility bills through the Herkimer County Department of Social Services. The County administers the federally funded Home Energy Assistance Program and the county-and-state funded utility emergency assistance program under Section 131-s of the New York Social Services Law, which in certain circumstances requires counties to provide utility assistance grants in amounts up to the most recent four months' bills.
  • Many utilities assist customers in establishing eligibility for HEAP and other assistance
  • Utilities are allowed by the PSC to set their rates at a level which makes a reasonable allowance for uncollectibles, which can arise from simple bad debt or customer bankruptcies.
PSC Should Direct DPS to Investigate
The Public Service Commission should direct the Department of Public Service (DPS) -- the administrative arm of the PSC -- to investigate and determine if the new Ilion utility deposit rule was properly filed and adopted and if it complies with HEFPA.

In addition, the PSC should direct DPS to undertake a broader audit of HEFPA compliance by Ilion. For example, the Application for Service form attached to the Ilion tariffs contains the following language:
Customer understands that service will be furnished by the Utility in accordance with its rules, regulations, and general rates on file with the New York State Public Service Commission.... It is the policy of the Utility not to grant electric service to a past customer if said customer owes a balance from a previous account. Electric service will be granted only when past due amounts are paid in full.
HEFPA, however, mandates that applicants who owe a utility for past service to an account in their name must be offered a deferred payment plan that is fair, equitable, and negotiable, based on the applicant's financial circumstances. The maximum down payment to obtain service cannot exceed half the amount due or the amount of three months service, whichever is less. Thus, Ilion appears to be in violation of this requirement, too.

Apparently, compliance with HEFPA is not closely monitored and enforced by the DPS, which accepted the Ilion tariffs that do not recognize the right of an applicant who owes arrears for past service to a deferred payment agreement. Indeed, the news article indicates that Ilion copied a similar deposit rule adopted three years ago by the nearby Village of Frankfort, which is also listed by the PSC as a utility it regulates.

PSC "Hotline" and Complaint Remedies for Applicants and Customers
Applicants for residential utility service from Ilion can challenge a denial of service by calling the PSC Hotline, at 1-800 342-3355. The Hotline staff have the power to order a utility to provide service forthwith.

If the PSC Hotline does not solve the problem, persons required to make deposits can file complaints with the PSC and can challenge a demand for a deposit or seek a refund of any deposit that was paid in violation of HEFPA. The PSC complaint number is 1-800-342-3377. If the complaint is not resolved informally, an administrative hearing is available, and persons still aggrieved can obtain a written ruling from the five-member Public Service Commission.

Persons denied service due to an illegal condition for service may receive $25 per day for wrongfully denied service, under PSC regulations, 16 NYCRR § 11.3. Also, if denial of service in violation of HEFPA leads to death or serious injury, the utility is potentially liable in court for damages. See Lawsuit Involving Death of Velma Fordham Settled by National Fuel .

Example: The National Grid Deposit Case
In 2003, National Grid attempted to introduce onerous new deposit requirements. First, without filing new tariffs, Grid tried to classify all customers without written leases for more than one year as "short term" customers. With respect to this rule, the Commission later said
all deposits now held by the company under its lease-based policy and which have not been applied to delinquent accounts should be returned immediately with interest at the rate established for security deposits. . . .
When PULP petitioned the PSC to annul that rule, which had not been filed with the PSC, Grid abandoned it and asked the PSC for permission to adopt a different rule that would require customers to pay a deposit if their "credit score" is below a certain level. Hearings were held on that proposal, which was withdrawn after PULP's expert witnesses testified in opposition to the "credit score" requirement and showed how a deposit requirement places undue burdens on lower income households. Then, a third National Grid deposit proposal - this time contained in a proposed settlement that was agreed to by National Grid, DPS Staff and the Governor's CPB - was opposed by PULP, and ultimately was not adopted by the PSC in its decision.

In the National Grid deposit case, PULP argued for return of wrongfully required deposits and statutory penalties for wrongful service denials. The PSC rejected an argument that the utility had reasonably relied on informal approval or acquiescence of the DPS:
PULP continues to urge that all lease-based security deposits be immediately returned to customers and that a forfeiture be imposed for customers whose service was delayed as a result of the lease-based policy. PULP does not believe that Niagara Mohawk's mistaken belief that the lease-based policy was legal together with the silence of Staff on the subject should provide "good cause" for the company's delay in providing service to applicants.**** The record suggests that the company disclosed its plan for a lease-based policy 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 lease-based 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.
The utility was required by the PSC to rectify wrongful denials of service and to return deposits to customers, with interest. The PSC indicated that individual customers whose service had been denied due to the deposit rule might be eligible for the $25/day statutory penalty on a case by case basis.