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.

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