Thursday, July 31, 2008

PULP Provides Further Proof That Area Code Changes Are Not Needed Now in the 315 Area

In December, 2007 the PSC launched a proceeding to bring “relief” to the 315 area code that serves Syracuse and all or part of eighteen counties in northern and central New York. The Commission Order claimed that its 1999 “numbering resource conservation measures, such as thousand number pooling . . . [had] extended the life of the 315 area code and made immediate relief unnecessary,” but that now 315 is finally “running out” of exchange codes (the three numbers dialed after the area code), and so it is necessary to implement a new area code within the area currently using 315. Typically the solution is a geographic split of the existing area into two area codes, or an overlay to serve new numbers. Either method involves costs and inconvenience to telephone consumers.

The 315 Number Plan Area (“NPA”) is one of the least populous regions of New York State (outside of Syracuse and Utica), so it seemed rather odd that an additional area code would be necessary. Upon investigation by PULP, it was discovered that multiple new NXX codes were assigned in 78 rural rate centers which had historically only had one exchange or NXX code (a block with 10,000 telephone numbers, NXX-0000 through NXX-9999), to those areas in the past few years, even though less than 1,000 people lived in each of these locations. As a result, many NXX exchanges were unnecessarily committed to rural areas. See PSC Considering "Area Code Relief" For 315 -- Where Did All The Numbers Go?

PULP filed a Motion with the Commission to investigate the situation publicly (see PULP Asks PSC to Investigate Need for New Telephone Area Codes in the 315 Region), but the motion was denied by the PSC in April. See PSC Denies Request for Open Inquiry and Continues with 315 Area Code Changes.

The PSC’s decision denying PULP's motion defensively said that existing number allocation procedures had been properly followed by its staff and that even though these methods may have “stranded” thousands of telephone numbers in rural areas, no mistakes were made. It did not address alternative ways to solve the problem without creating a new area code that were suggested by PULP in its motion.

It wasn’t until very recently, the PSC maintained, that telephone numbers could be given out 1,000 at a time (a “thousands block”) which is the most effective way to conserve numbers, as opposed to 10,000 at a time. The Commission had not sought FCC permission to implement thousand block pooling in the rural areas of the 315 area code until 2005, and did not actually implement this number conservation measure until months after the FCC granted its request. As a result, when competitive telephone companies asked for numbers in tiny localities with populations of less than five thousand, many NXX codes of 10,000 numbers were unnecessarily allocated.

On April 25, 2008, PULP filed a request for reconsideration and clarification of the PSC decision, stating that the Commission has the authority to reclaim telephone numbers in order to facilitate conservation and to make them available where needed. See PULP Asks PSC to Reconsider Refusal to Investigate Alternative to New Area Code in 315. We also argued that additional time exists to further investigate and resolve these issues because of new evidence not previously available indicating there has been a very significant slowing of NXX code and thousands blocks requests by providers. We requested that the Commission appoint an Administrative Law Judge to conduct evidentiary proceedings to investigate the reclamation of NXX codes and determine how many thousands blocks and NXX codes can be emptied and returned from the 315 NPA. To date, the Commission has not acted on PULP’s Petition.

On July 29, 2008 PULP supplemented its Petition with additional new evidence showing that while 16 or 17 NXX codes had been allocated in each of the past few years in the 315 NPA, since October 2007, only one net new NXX code has been allocated and 102 NXX codes still remain available.

At the current rate of NXX code exhaustion, it would be fifty years before the 102 remaining codes are used, even without freeing up barely used 10,000 number NXX exchanges allocated to the rural areas before the Commission began to issue numbers to telephone company requesters in blocks of 1,000.

PULP urged the Commission not to implement an area code split or overlay now, and not to burden people and businesses in the 315 area with an area code change under these circumstances.

Instead, we urged the Commission to continue the proceeding to investigate whether the number “shortage” can be remedied with far less disruption to customers by emptying and reallocating improvidently issued NXX codes as new codes are needed.

The much slowed rate of exhaustion, coupled with decontamination of slightly used NXX codes to free them for reallocation could stave off number exhaustion and area code changes in the 315 area for many years.

The Legislature ended its session without acting on proposed legislation that would require closer PSC scrutiny of the need for area code changes.

The next move belongs to the Commission.

Lou Manuta

Tuesday, July 29, 2008

OTDA Must Relax Its Administrative Restriction on Utility Assistance Loans for Persons with Incomes Above the Public Assistance Level

In 1981 the Legislature overhauled the utility consumer protection laws creating the landmark Home Energy Fair Practices Act (HEFPA), whose comprehensive provisions advance the declared state policy of continuous residential utility service. Among the many provisions of HEFPA are deferred payment agreement (DPA) options which protect consumers who fall behind in their utility bills due to a temporary shortfall in income due to unemployment, disability, health reasons, etc. Many people slip into and out of poverty due to such temporary situations. Under the Public Service Law and PSC regulations, a DPA can be negotiated based on the customer's financial circumstances, with a down payment as little as zero and monthly installment payment as little as $10 per month, in addition to payment of current charges. This prevents large numbers of utility terminations.

When a customer defaults on a written DPA, however, and it cannot be renegotiated, their service is subject to termination.

For situations where the customer cannot afford to reinstate the utility account, because the utility demands a substantial downpayment beyond the customer's means, the Legislature created an emergency utility assistance benefit under Section 131-s of the Social Services Law in 1981. It provides a grant of up to the most recent four months' utility bills, funded by the state and the local social services districts.

A parallel provision of the Public Service Law, Section 65-b, requires utilities to reinstate service in response to a SSL 131-s payment even if it does not cover the full arrears. Social Services Law 131-s(6) allows the utility to collect the balance unmet by a public assistance payment through conventional means other than denial or termination of service. See Letter of PSC Chairman Gioia to Governor’s Counsel Regarding Passage of HEFPA, July 16, 1981.

Initially there was no income limit on the 131-s benefits. However, the eligibility standards effectively limited the program to households lacking resources to pay the bill, lacking the ability to enter into an alternative payment arrangement with the utility (a DPA), and lacking alternative living arrangements.

The Repayment Provision
The Legislature amended the statute to require persons whose income is above the welfare eligibility level to sign a repayment agreement to repay the grant of assistance up to the most recent four months' utility bills to the local public assistance agency (the county department of social services or City of New York HRA) within one year. The amendment states
Persons whose gross household income exceeds the public assistance standard of need for the same size household must sign a repayment agreement to repay the assistance within one year of the date of payment as a condition of receiving assistance, in accordance with regulations established by the department.
The statute contemplates that some people will not repay the loan, and so provided further that
Such repayment agreement may be enforced in any manner available to a creditor, in addition to any rights the district may have pursuant to this chapter.
Even before the amendment, Section 104 of the Social Services Law had for many years provided that public assistance creates an implied contract to repay it and is recoverable when a recipient is found to have property. For example, social services departments often impose liens on real property, or lottery winnings.

So it appeared that adding a requirement that the 131-s recipient sign a repayment agreement did not add much. Arguably, the Section 104 repayment enforcement is triggered by discovery that the recipient now has property, while the Section 131-s provisions would enable counties to sue a recipient who defaults in repayment, and obtain a judgment, even if the recipient has no property from which repayment could be made, but could enforce the judgment years later through wage garnishment or other methods.

The State Regulation Adds a New Eligibility Requirement: Repayment of Prior Utility Assistance Loans
To our knowledge, when the amendment was added, over PULP's opposition, everyone thought that the enforcement language meant that a county could sue on a defaulted repayment agreement, take a judgment, and enforce it through normal creditors' remedies.

No one dreamed that emergency utility assistance would be denied when the applicant had been unable to repay prior assistance.

The State Department of Social Services, now OTDA, issued regulations to implement the repayment requirement that applies to applicants whose income is above the welfare standard of need. The regulations added a new requirement for the assistance, repayment of prior loans, and required denial of any new assistance if the applicant previously received a loan and did not pay it on schedule. The regulation, 18 NYCRR Part 352.5 states:
Subsequent assistance to continue or restore utility service must not be provided unless any prior utility arrearage payments have been repaid or are being repaid in accordance with the schedule of payments contained in each prior repayment agreement as of the date of application for such subsequent assistance.
The Added Eligibility Requirement Upheld by the Appellate Division
The administratively added requirement for utility assistance was upheld by the Appellate Division, Third Department, in Childs v. Bane, 194 A.D.2d 221, 605 N.Y.S.2d 488 (3d Dept. 1993), leave to appeal denied, 83 N.Y.2d 760 (1993). The court said:
In our view, the Commissioner's power to deny assistance is derived by implication from the statutory requirement which conditions the receipt of assistance upon the signing of a repayment agreement. Without the power to deny assistance, the repayment agreement would be rendered essentially meaningless as it could be ignored with impunity because the failure to abide by it would have no immediate consequences.
The failure to repay, however, does have consequences. The county can take a judgment and enforce it as a creditor. This can result in wage garnishment, and spoils the customer's credit ratings. The "immediate consequences" of nonpayment apparently preferred by the Third Department, which result in hardship and destitution, were not mentioned by the Legislature in the statute.

The Appellate Division also said that the rule did not violate the state constitution's requirement to protect the needy because those who meet the welfare standard of need -- as defined by the legislature and OTDA - can get the utility assistance as a grant:
when a person's income diminishes to the point where he or she becomes entitled to public assistance, he or she may apply for and receive it even though they may have defaulted upon a previously executed repayment agreement.
The state's definition of need, however, has not changed since the court decision. As a result many very low income households are being denied emergency utility assistance grants and loans because their income is above the welfare level and they have not been able to repay a prior utility assistance loan.

Past decisions of the Court of Appeals cast some doubt on the validity of administratively created additional eligibility requirements for public assistance, because the State Constitution vests the responsibility and power to provide for the poor in the Legislature, and not the Executive branch agency (OTDA) which administers the statutory aid programs. For example, in Jones v. Berman, 37 N.Y.2d 42 (1976), the Court invalidated a state welfare regulation because it "adds a requirement that does not exist either under State or Federal law. Administrative agencies can only promulgate rules to further the implementation of the law as it exists; they have no authority to create a rule out of harmony with the statute." The Court of Appeals also previously cast doubt upon the validity of "agreements" signed by welfare recipients to repay emergency assistance via future major welfare grant reductions. See Reyes v. Dumpson, 40 N.Y.2d 725 (1976). The Court of Appeals, however, denied a motion for permission to appeal the Appellate Division's decision in Childs v Bane.

A new court challenge to the OTDA rule would require losing at the trial court, losing at the mid-level appellate division, based on the Childs v Bane precedent, and then seeking permission to appeal. Perhaps another department of the Appellate Division constrained to follow the Childs precedent would grant leave to appeal.

In light of the denial of leave to appeal in Childs v Bane, changes in the Court's composition since the era of Chief Judge Wachtler, and an apparent lack of gumption of the current Court of Appeals to upset Executive branch actions in dealing with the state's assistance programs for the needy, we doubt that a new effort to relitigate and overturn the Childs v. Bane precedent would be a fruitful expenditure of time and litigation resources. Administrative repeal or Legislative annulment of the rule is probably needed.

Families Now Without Utility Service
In order to get HEAP assistance in the winter or spring many utility customers broke a utility payment agreement. See Needy Households Must Stop Paying Energy Providers to Obtain Supplemental HEAP Benefits. OTDA's weak Utility Vendor Agreements do not require utilities to reinstate payment plans after an Emergency HEAP grant, and only require continuation of service for 30 days. As a result, emergencies were not resolved with the HEAP grant, they were just postponed until summer when the utility demands all the amounts due or large downpayments that customers cannot afford.

Now that HEAP season is over,
  • utilities are demanding full payment of all arrears,
  • the PSC does not require reinstatement of utility deferred payment plans on reasonable terms (because the customer broke a prior DPA to qualify for HEAP assistance),
  • the utility will not reinstate a payment plan without receiving a large down payment (which the customer does not have),
  • and the department of social services will not make a new loan (because a prior loan was not repaid).
The OTDA regulation is destroying the utility service safety net.

Working families with incomes just slightly above the welfare level are going without utility service, an unsafe situation, and are becoming homeless, sometimes relocated to homeless shelters at public expense far above the amount needed to maintain them in their homes.

This is happening now. The situation will only worsen as utility bills continue to soar. See Trouble Ahead: Outlook for Home Heating Costs Worsens, and Excelsior! Excelsior! Con Edison Rates Peak Again: Bills Up 30% Since May.

Emergency Action Must be Taken Now by OTDA
In 2005, when a natural gas spike hit many New York consumers whose utilities had followed the PSC mantra of introducing more price volatility, OTDA issued a directive temporarily allowing county departments of social services, in their discretion, to make additional utility assistance loans:
Certain households with a utility related emergency are required to sign a repayment agreement as a condition of eligibility for the emergency energy payment. To receive subsequent utility arrears payments, the household must have repaid the previous agreement or be current on that repayment agreement.

In recognition of the anticipated severity of the upcoming winter and the high costs of heating fuel, districts may elect to suspend enforcement of previous and new repayment agreements until April 15, 2006. This could mean that some applicants could have more than one repayment agreement in effect. The terms of new repayment agreements signed during this period would begin on April 16, 2006 and run for 12 months forward from that date, regardless of when the assistance was granted. For any previous repayment agreements, the terms of the repayment agreement would resume on April 16, 2006.

If a district chooses to suspend enforcement of repayment agreements during this coming heating season, suspension of these agreements must be uniformly applied for all applicants for emergency energy assistance under TA programs. This policy does not affect a district’s ability to secure a lien for emergency energy assistance as granted under Family Assistance, Safety Net Assistance, Emergency Safety Net Assistance or Emergency Assistance to Families.
This directive has expired, and in any event was far too weak to assure the protection of vulnerable households in counties that chose not to give further loans. See Candle Fires: A Symptom of "Rolling Blackouts" Affecting Low Income Households.

The OTDA rule creating the additional eligibility requirement - repayment of prior loans - was never intended by the Legislature when the repayment obligation amendment was made, and is causing enormous hardship, destitution, unsafe living conditions for poor working families and their neighbors, at a social cost far higher than the cost of advancing another loan and collecting it through conventional means.

OTDA should abolish its regulation that adds the eligibility requirement that an applicant for utility emergency assistance must have repaid prior loans in light of the current hardships it is causing and the even more severe energy burdens expected later this year.

New York Asks Congress to Fully Fund Low Income Home Energy Assistance Program

OTDA Asks to Double LIHEAA Funding for New York
New York State has included full funding of the federal Low Income Home Energy Assistance Program (LIHEAP) in its federal legislative agenda. Congress for years has for years appropriated about half the authorized limit of $5.1 billion for the program. Funding at the $5.1 billion level would adjust program benefits to be equivalent with 1981 funding and energy costs.

According to the New York State Office of Temporary and Disability Assistance (OTDA) 2008 Federal Agenda:
New York’s Recommendation: Congress should start funding the LIHEAP program at the full $5.1 billion annual authorization level. The appropriation has never provided the full amount. New York would receive $502.2 million annually if LIHEAP were fully funded. Furthermore, to allow states to plan for upcoming needs, Congress should finalize the LIHEAP funding level, both the regular funds and contingency funds, at the start of each federal fiscal year.
According to the OTDA 2008 Federal Agenda, "New York State’s share of LIHEAP funds has ranged unpredictably between $244 million in 2004 to more than $300 million in 2008." OTDA used much of the supplemental federal funds for 2008 for a second emergency payment requiring additional applications under more stringent conditions, which in part supplanted assistance the state would have provided under other assistance categories.

PULP urged greater public participation in the process for allocating supplemental HEAP funds and suggested using part of them for an automatic supplemental Regular HEAP payment. See
PULP Comments on HEAP Plan for 2008 -2009.

According to April 2008 HEAP program statistics, 943,147 benefits were authorized (some of them multiple emergency payments) totalling $246.4 million. Fifteen percent of New York's HEAP funds are targeted for weatherization programs. The New York HEAP program is now closed, with the exception of the furnace replacement program, and is not expected to reopen for new applications until November 1.

President Bush proposed in February to eliminate all funding for low income weatherization and to reduce funding for LIHEAP. See Bush Proposes Elimination of Low Income Home Weatherization Program, and Bush Proposes LIHEAP Cuts in 2009 Budget.

Thursday, July 24, 2008

Reform of OTDA Fuel Allowances and Utility Assistance Loan Program is Needed

With growing recognition that the rising costs of fuel will cause enormous hardship to low income families in the coming months, attention is being paid to raising federal appropriations for the Low Income Home Energy Assistance Program (LIHEAP). See State Commissioner Discusses Plans for Upcoming Heating Season: Calls on Washington to Boost Funding for Low-Income Families.

In addition, however, New York needs to reform aspects of its state-funded assistance programs.

Fuel allowances for public assistance recipients have not been adjusted by OTDA for more than two decades. The OTDA Fuel for Heating regulation, last changed in 1987, establishes a fuel allowance for a family of four heating with natural gas and living in Albany County of $56 per month. For the same family, the OTDA regulation setting rent allowances provides $348 per month.

The public assistance allowance for other needs of a family of four is $307 (last set in 1990), plus the so-called "home energy allowance" of $38.70 and the "supplemental home energy allowance of $30 (these were really welfare grant increases in 1981 and 1986 labelled as energy allowances in order to avoid Food Stamp reductions).

A natural consequence of the unrealistic public assistance allowances is the increased disqualification of persons with income slightly above the eligibility level, who are denied any assistance.

Without assistance, many customers fall behind in utility bills and service is shut off by the utility. New York utility terminations are dramatically up this year:
In New York state, there was a 41% increase in shutoffs of utility services among people who did not pay their bills in April 2008 versus April 2007, to 31,305 from 22,209, according to the Public Service Commission.
Winter Could Test Energy Math; Rising Heat Costs May Be Last Straw For Family Budgets.
The trend of terminations and families living for extended periods without utility service will only worsen as energy burdens go up. This is contrary to state policies favoring continued utility service and impairs public safety. See Candle Fires: A Symptom of "Rolling Blackouts" Affecting Low-Income Households.

The emergency utility assistance program created under Social Services Law 131-s was amended to require social services officials to offer loans to customers who needed assistance to prevent termination or to restore utility service but whose income is above the public assistance level. (Those whose income is below the outdated public assistance level can get a grant of assistance without signing a 12-month repayment agreement). The loan provision was really unnecessary, because all state public assistance is subject to repayment under longstanding provisions of the Social Services Law, so there was no necessity for a separate repayment agreement to achieve recovery from anyone who could really afford to pay back the assistance.

Making matters worse, OTDA then adopted a rule barring any further loans to a customer who previously defaulted in repayment of a prior utility assistance loan. That administratively created disqualification was not required by the plain language of the statute. It was, however, upheld in a court decision.

Many Niagara Mohawk customers lost gas or electric service after past natural gas price spikes and received loans from their local departments of social services which they have not been able to repay. As a result, they are now ineligible for any further loans, and may go without service for prolonged periods, increasing the risk of harm.

The problems become particularly acute when HEAP assistance is unavailable due either to the seasonal closure of the HEAP program or to exhaustion of HEAP benefits, which, under OTDA Vendor Agreements with utilities, only assure 30 days of continued service.

In the winter of 2005 - 2006, OTDA relaxed its harsh regulation that bars additional loans for utility assistance to those who have not repaid a prior loan.

Matters are likely to become much worse in the coming months. It is time for OTDA to repeal or waive the ban on subsequent utility assistance loans to applicants whose income is above the outmoded public assistance levels.

Niagara Mohawk Residential Gas Bills Heading Toward 58% Increase in January 2009

Residential natural gas customers of Niagara Mohawk d/b/a National Grid can expect to see a 58% increase in their winter heating bills next January. A customer using 200 Therms would see the January bill go up from $220 in 2008 to $348 in 2009.

The chart below shows the history of Niagara Mohawk January residential gas bills from 1997 to 2008, plus a projected bill for January 2009. Click to enlarge:

The chart is based on the Typical Bill reports of the Public Service Commission, which regulates Niagara Mohawk rates. The January 2009 bill was estimated by PULP based on Niagara Mohawk's forecast of the Monthly Cost of Gas. That predicts a 76% rise in the cost of the gas from January 2008 to January 2009. When the cost of gas is combined with other elements of the bill the net increase estimated by PULP is 58%.

Actual usage and bills of course will depend on the size of a home or apartment, energy efficiency of heating equipment and the structure, the interior temperature that is maintained, and weather. Also the price of gas could change between now and then.

Niagara Mohawk is purchasing nearly all of the gas its customers need for the 2008 - 2009 winter at this year's prices, which were sharply higher in the first half of the year, as shown by this chart.

As a result, even if market prices for natural gas were to moderate later in the year, it is likely that next winter's National Grid gas bills will be very high.

Gas companies in some states buy ahead for two or three years and so their prices change more gradually. The New York PSC, however, encouraged gas companies not to buy more than a year ahead in order to introduce more volatility into retail prices. It is achieving that goal, to the detriment of consumers on low and fixed incomes.

Tuesday, July 22, 2008

Enron-Like Gaming of NYISO Market Rules: Did it Cost New York Consumers At Least $125 Million?

In a cryptic NYISO filing at FERC on July 21, 2008, the NYISO asked FERC to approve a prospective market rule change to prohibit what appears to be gaming of market rules by NYISO market participants. Apparently uneconomic wholesale energy transactions are scheduled over circuitous routes involving other areas adjacent to the NYISO New York Control Area, counter to the normal flow of transactions around Lake Erie, raising prices.

The NYISO filing says
The Board concluded that exigent circumstances exist in this instance because a relatively small number of Market Participants are scheduling transactions over circuitous Scheduling Paths around Lake Erie to take advantage of a "seam" between the methods that are used by the organized markets in the Eastern lnterconnection to price External Transactions.

* * * * The NYISO believes that this filing letter presents an adequate factual record for the Commission to determine that a "seam" between the methods used to price and settle External Transactions in the organized markets around Lake Erie is resulting in unjust and unreasonable rates and charges.

* * * * The NYISO proposes to preclude the scheduling of External Transactions via the eight circuitous Scheduling Paths identified above for two primary reasons. First, until such time as the Control Areas around Lake Erie are able to more closely conform actual power flows to scheduled power flows, the path by which Energy that is scheduled to flow over one of the eight identified Scheduling Paths actually moves from source to sink will hear little relation to the Scheduling Path. Divergence between scheduled and actual inter-Control Area flows has increased the level of unscheduled power flows moving through the interconnected NYISO, MISO, PJM and IESO Control Areas and is exacerbating west-to-east congestion in the NYCA. Second, there is a "seam" between the method that the NYISO and IESO use to price External Transactions, and the method that PJM and the MISO use to price External Transactions that is providing inefficient scheduling incentives that are resulting in increasing levels of inefficient transactions.

* * * * Since January of this year a significant volume of External Transactions have been scheduled over two of the eight Scheduling Paths described above by a small subset of Market Participants that appear to be responding to an inefficient incentive resulting from differences between the External Transaction pricing and settlement roles of the ISOs and RTOs that surround Lake Erie.

* * * * The attached Tariff revisions propose to prohibit the scheduling of External Transactions over eight specified Scheduling Paths around Lake Erie to mitigate burdens on the interconnected Control Areas and costs to the NYCA that are not being accurately charged to the responsible Market Participants. These burdens and costs occur because actual power flows do not align with scheduled power flows when Market Participants schedule significant volumes of transmission service over circuitous Scheduling Paths around Lake Eric. Electricity does not follow a contractual Scheduling Path unless there are adequate controls in place to ensure that actual and scheduled flows are reasonably closely aligned. In the absence of such controls, electricity flows over the path of least resistance in accordance with Ohm's Law.

* * * * When generation is increased in the NYCA to .serve PJM Load as a result of the scheduling of an External Transaction over a circuitous Scheduling Path from New York to PJM, unless power flows are controlled, most (approximately 80%) of the power will flow directly over the common border interconnections between the NYISO and PJM, rather than traveling circuitously around Lake Erie to enter PJM at its midwestem border with the MISO. Although New York generation will serve the PJM load, most of the Energy will not flow over the circuitous Scheduling Path. The resulting difference between .scheduled and actual flows is referred to in this filing as "unscheduled flow." A well known example of unscheduled flow is the flow of unscheduled energy through the interconnected transmission system around Lake
Erie, often referred to as "Lake Erie circulation."

* * * * The NYISO incurs additional congestion related costs when actual power flows include unscheduled power flows that exacerbate internal NYCA west-to-east transmission constraints.

* * * * Studies prepared by the NYISO's Operations Department indicate that on May 26 2008, a day when Market Participants were scheduling more transactions over circuitous Scheduling Path No. I than the Available Transfer Capability on the NYISO - IESO interface, more than half of the real-time congestion costs that the NYISO was experiencing were caused by Lake Erie circulation. A study prepared by the NYISO's Independent Market Advisor explains that the cost of redispatch to address Lake Erie circulation causes costs to the market that may either be reflected in market clearing prices, or charged to the market as uplift.
How Much are Consumers Paying for the Latest NYISO Market Failures -- $125 Million in NYISO Charges Plus Higher Market Prices Paid to Sellers?
The NYISO filing does not reveal the amount of overcharges passed through to consumers through higher market clearing prices - paid to all sellers in the market - and through NYISO "uplift" or "residual" charges. See Power Grid Closes Costly Loophole: Rule Bars Power Traders from Creating Certain Interstate Transactions That Strain Lines, up Price, quoting a NYISO spokesman saying that "NYISO . . . , plans to calculate the effect ... on electric prices this year, but does not yet have an estimate."

While it may be difficult to analyzed the effect of the trading gambit on market clearing prices for energy, paid to sellers, it may be possible now to identify the effect on the NYISO fees collected by the NYISO for "uplift" and "residual" charges. These are daily NYISO costs of unscheduled energy flows or other costs not reconciled in the market due to its flaws, which are simply allocated to the utility buyers in the NYISO wholesale markets who then simply pass on the cost to retail users of electricity. According to the NYISO submission, the trading gambit caused unscheduled flows of electricity the cost of which was recovered through uplift charges.

The NYISO assessed extraordinary "uplift" or "residual" costs that were $25 million and $125 million higher in May and June of 2008, respectively, according to Slide 7 of a June 10 Suez Energy Resources, NA "webinar" presentation.

Passing the NYISO Charges Through to Consumers through Retail Utilities
In June, there were news reports of small municipal utilities objecting to extraordinarily high NYISO uplift or residual costs. According to the June 18 Plattsburgh Press
The city was recently sent a bill from the Independent Systems Operators for about $150,000 for the month of May to help pay for transmission problems on Lake Erie.
* * * * The city, and other municipal power companies in the region, received significant charges from the Independent Systems Operators in March for what was termed "unaccounted power." Plattsburgh was forced to pay about $282,000 more than usual, and Rouses Point, Tupper Lake and Lake Placid also received large bills.

* * * * The latest Independent Systems Operators bill comes under the heading of "loopflow and uplift" charges. "Obviously, they don't take us seriously, so maybe we ought to do something more than a strongly worded letter to get their attention," Kasprzak said. He said the city and other municipal-power towns and villages should seriously consider refusing to pay the charges.

The Independent System Operator has warned that if the bills are not paid, power will be cut off.

* * * * Lake Placid, which also has municipal power, got hit with a bill for about $161,000 for Independent Systems Operators charges in May. Mayor Jamie Rogers said those charges account for about 63 percent of the village's monthly bill for power.
See Mayor Upset over Latest Round of Exorbitant Electric Charges. If these small municipal utilities had to pass on large bills to their customers, what about the large utilities?

Con Edison raised its residential electric rates by 6.3 cents/kwh on July 11. That was a huge unexpected increase, far above the already very high target rate for July that was just set May 1. See Excelsior! Excelsior! Con Edison Rates Peak Again: Bills Up 30% Since May. The explanations of the NYISO and Con Ed pointed to international oil and gas markets and did not mention market design flaws of the NYISO. See It was the [NYISO] Market.

Con Edison has wholesale and retail energy trading subsidiaries, Con Edison Energy and Con Edison Solutions, that may have profited from a runup of prices, even if they were not in the "small subset" of NYISO market participants who scheduled the Lake Erie loop transactions, while the distribution utility passed the costs through to retail consumers.

The NYISO letter indicates that the rates charged for electricity were unjust and unreasonable (and hence illegal) due to the circular transactions. But the NYISO has not proposed any refunds. Under FERC's scheme, unfiled market rates are given the same force as rates filed publicly subject to review for reasonableness, are changed only prospectively. So the NYISO is at best only closing the barn door after the damage is done. There are serious questions whether FERC's unfiled market rate regime satisfies the public filing requirements of the Federal Power Act. See Supreme Court Leaves Fundamental Questions About FERC Market Rate Scheme Unanswered.

Sounds Familiar
The behavior of "a small subset" of unidentified NYISO Market Participants, described above by the NYISO, is reminiscent of Enron's "Death Star" market gaming schemes in California and the West in 2000 and 2001.

"Death Star"involved creating essentially fictitious transactions that could not be physically implemented in order to artificially "congest" the transmission system and raise prices. A FERC ALJ found in a decision issued in June 2007 after years of litigation and hearings that Enron had engaged in such transactions:
Death Stars are congestion related schemes that involve circular scheduling. The Commission has found that Circular Scheduling is a prohibited Gaming strategy. Gaming Order, 103 FERC ¶ 61,345 at P 43. Death Star Transactions were perpetrated by Enron scheduling power to flow at the same time in opposite directions, but no power would actually flow. The purpose of scheduling such counter flows was to create the illusion that Enron was relieving congestion so that Enron could receive congestion management payments from the ISO. However, congestion is not actually relieved if power does not flow. Death Star transactions were created by John Forney to take advantage of congestion payment revenues and originally called the “Forney Loop” and later renamed “Death Star.” **** There were several different types of Death Star transactions such as “Small Death Star” transactions, “Black Widow,” “Big Tuna,” and “the LOOP” which all had the fundamental purpose of creating simultaneous offsetting schedules where no energy would actually enter or be taken off the system.
The NYISO has gag rules that prevent open disclosure of the activities of the "small subset" of Market Participants who the NYISO says scheduled the uneconomic Lake Erie loop transactions, and keeps their identities, and the rates and charges they demanded and received, secret.

State Investigation Necessary

According to the NYISO, the market gaming may affect reliability, putting the public in danger. In asking FERC for permission to begin limiting the circuitous transactions on July 22, the NYISO said that the status quo
would leave the NYCA and neighboring Control Areas without any deterrent against the scheduling of External Transactions over Scheduling Paths that are not closely tied to the expected physical flow of Energy and that may adversely affect both market prices and the reliability of the interconnected transmission grid during the height of the summer peak. Under the circumstances, and in light of the potential for relatively tight supplies in New York during peak summer load periods, it is entirely appropriate for the Commission to take expedited action in this proceeding.
There needs to be a serious investigation of the NYISO market flaw, behavior of market participants, and performance of the NYISO.

Do not expect to see meaningful oversight anytime soon from FERC. See See No Evil: FERC Refuses to Examine Gaming of RTO/ISO Electricity Spot Markets .

If the past is any guide, FERC will throw a cloak of secrecy over who was making the bogus transactions, how much market prices were inflated, how much consumers had to pay, and how much was made by those who engaged in the transactions. After several years there will be a settlement in which sellers admit no wrongdoing, blame former "rogue" traders who violated their company rules against market manipulation, pay fines that amount to chump change in relation to what was overcharged, and the evidence will be sealed.

Indeed, after years of litigation and an ALJ decision finding that Enron owed $1.3 Billion due to market manipulation, FERC recently vacated the administrative decision as moot preventing it from being relied upon in related litigation. A protest of FERC's action is now underway.

The NYISO is an electric company organized under New York law and is required to operate in the public interest. The New York PSC and the legislature can and should exercise more oversight of the performance of the NYISO. The State should consider alternative structures that provide greater accountability to the public interest and the interests of consumers, beginning with appointment of NYISO Board Members by the Governor, as California did after manipulation of the CAISO markets.

The State should also revisit the policies of the PSC that have resulted in too little bilateral contracting and too much reliance upon purchases in the flawed NYISO day-ahead and real time "convenience store" spot markets to meet needs of consumers that are predictable far in advance.

Monday, July 21, 2008

Time of Use Rates and "Smart Meters"

Today's interesting New York Times article, Rewarding Those Who Wait to Flip the Switch, explores why residential time of use rates, offered for many years by Con Edison and other electric utilities, have not received wide customer acceptance.

Those who advocate widespread replacement of millions of existing meters with so-called "smart" meters would be well advised to study the lessons of the existing time of use rate programs. According to The Times:
only 2,500 residential customers — out of 2.7 million in New York City and Westchester — pay time-of-use rates. Anyone who spends even a modest amount of time at home on weekday afternoons, including people with young children, the elderly and the bedridden, would most likely end up paying more for their electricity.

It is also questionable how much money people who live in apartments can save since many of them lack big electricity guzzlers like washing machines, dryers and pools that can be used during off-peak hours to save money. For many apartment dwellers, air-conditioners and refrigerators (which are rarely turned off) consume the most electricity, so there are fewer ways to save.

Before yielding to pressure from utilities, technology, and market enthusiasts to spend billions of dollars, yes, billions in New York State alone, we need to learn a bit more about why time differentiated rates are not popular with the overwhelming majority of consumers. Also, before putting billions on the table for non cost effective measures, we need to explore whether there are better investments of consumers' dollars to be made, for example, in the areas of energy efficiency or development of renewable energy alternatives.

Not so Smart? High Tech Metering May Harm Low Income Electricity Customers;

New York Residential Real Time Pricing Experiments Must be Voluntary;

PSC Requires More Study Before Allowing Major Investment in "Smart Meters"

The time of use rate now available does not require expensive new "smart" or digital meters.

Calculating the Difference Between Time of Use Rates and Regular Rates
The Times article states "[c]ompared with standard summer rates, time-of-use customers pay three times more for electricity between 10 a.m. and 10 p.m. on weekdays, yet 80 percent less at other times." By our calculation, based on the July 11, 2008 Con Edison rate changes, a time of use rate customer using electricity during the peak hours of 10 AM to 10 PM would pay about 20 cents/kwh more than the customer on the regular rate. In the off-peak hours, she would pay about 11.7 cents/kwh less. Con Edison rates change each month, often unpredictably.

PULP's Con Edison Bill Estimator
If you are now on a Con Edison residential time of use rate and want to calculate whether you would have paid more or less if you received service at the regular rate, try PULP's Con Edison Bill Estimator. Just enter in the billing period dates and total usage peak and off-peak to find out what the bill would be.

Thursday, July 17, 2008

PULP Comments on HEAP Plan for 2008 -2009

The Office of Temporary and Disability Assistance (OTDA) this week completed its hearings on the Draft Plan for the New York State Home Energy Assistance Program (HEAP) for 2008 - 2009. HEAP is New York's federally funded energy assistance program for low income households. See OTDA to Hold Hearings and Receive Comments on Draft 2008 - 09 HEAP Plan.

PULP submitted comments on July 18, 2008, recommending several ways to improve public participation in the allocation of expected supplemental federal funds, assure that utility vendors effectuate the purpose of the program, and assure that more eligible households receive the assistance they need.

PULP's comments ask for reform of the arrangements between the utilities, the PSC, and OTDA before Governor Paterson approves a HEAP Plan for 2008 - 09 and submits it to the federal government for approval by HHS.

Lack of Public Participation in Allocation of Supplemental Federal Funds

PULP raised concerns regarding the process for obtaining public participation in the development of the HEAP Plan, a requirement of the federal law that gives states great discretion in program design and administration. The Draft Plan assumes a 2008 - 2009 funding level proposed by President Bush in February that is scores of millions of dollars less than New York received last year. See Bush Proposes LIHEAP Custs in 2009 Budget. (The Draft Plan does not address the impact on New Yorkers if such a drastic reduction in federal aid were to occur in the coming year when far higher home energy costs are likely and household energy burdens are likely to increase).

It is likely that Congress will eventually address the situation by adding substantially to the President's budget. See Schumer Seeks to Double Federal Funding for Home Heating.

Last year, when Congress added to the President's budget, OTDA simply announced how supplemental federal funds of $83 million would be used . The decision on how to use the supplemental money was made behind closed doors with no public input.

Last year's additional funds were used mainly to extend the HEAP program year by a month and to add a second emergency payment. Customers who had a Regular grant in November might not have seen any actual reduction in the payments required by their current bills if the utility applied the OTDA vendor payment to old arrears under a DPA installment plan. They also were ineligible for any of the additional benefits unless they reapplied in person and demonstrated an emergency shutoff situation, and that they had exhausted all resources in order to obtain any of the supplemental emergency benefits. See Needy Households Must Stop Paying Energy Providers to Obtain Supplemental HEAP Benefits. People who really need the assistance are reluctant to risk termination of service.

This year, the supplemental Congressional funding for LIHEAP will bring perhaps more than $100 million more for New York's HEAP plan because of the higher energy prices this year. See Trouble Ahead: Outlook for Home Heating Costs Worsens.

PULP urged OTDA to receive more public input before allocating new money, and to make a more balanced allocation of funds by providing an additional Regular HEAP benefit automatically to those who receive a Regular HEAP benefit and have not reached a shutoff situation.

OTDA Utility Vendor Agreement Reform
Nearly a quarter billion dollars was spent by OTDA in the 2007 - 08 HEAP program. Most of it did not go directly to needy households. Instead, it was paid in the form of direct vendor payments to utilities and fuel dealers, who in turn then credit the HEAP grants to customer accounts.

The Draft HEAP Plan again contemplates that energy needs of eligible HEAP households will be adddressed via the terms and conditions of the Vendor Agreements. The Vendor Agreements, and their crucial terms, however, are secretly negotiated between OTDA and the utilities, and are not attached or their terms included in the Draft State Plan.

There are several areas where the the Vendor Agreements reflect utility capture of the OTDA HEAP program and the PSC. For example, the PSC supports utilities in their efforts to divert HEAP to pay off old arrears from prior years which are the subject of installment payment agreements, and has supported utilities when they refuse to accept an Emergency HEAP payment. See PSC Approves Grid "Affordability" Program in Which HEAP Payments Do Not Reduce Current Winter Bills.

Duty to Provide Service to HEAP Recipients
Amazingly, under last year's Vendor Agreements, the utility vendors -- who received a large portion of the $234 million in HEAP funds without having to collect it from customers -- were allowed to "accept or deny" a HEAP payment proffered by a local social services district.

The result is that an emergency may not be timely resolved even when the customer is awarded a HEAP grant. In a noted case several years ago involving the death of a customer in unheated premises in Buffalo, the utility had declined HEAP payments of approximately $700, demanded more, and refused to provide service. See Lawsuit Involving Death of Velma Fordham Settled by National Fuel, PULP Network, December 4, 2007.

OTDA should revise its Plan and Vendor Agreements to include provisions which unequivocally bind the vendor to restore utility service or deliver fuel upon receiving notification that a payment is to be made on behalf of a HEAP household, without allowing any discretion on the part of the vendor to refuse to accept a proffered Emergency HEAP payment. This is also needed in order to satisfy the federal statutory requirement that a state plan must provide energy crisis assistance that resolves the crisis within 18 or 48 hours. depending on the degree of emergency, and to protect customers and the public.

This situation and the need for OTDA Vendor Agreement reform reflects the continued failure of the PSC to require utilities to reinstate service when low income customers obtain HEAP assistance and to require reinstatement of deferred payment plans when utilities receive a HEAP payment. Since the utilities' regulatory agency, the PSC, is not requiring reasonable conduct when they are proffered HEAP payments, it is up to OTDA to insist upon these protections in the Vendor Agreements, and not continue to cave in to utility interests.

Application of HEAP Benefits to Current Charges

A customer who is regularly paying off arrears by installments under a written DPA must pay in full all charges for current service plus an agreed-upon amount each month to retire the balance of old arrears. Such a customer is likely to be hit by heavy new energy burdens this year due to much higher prices. When the customer receives a Regular HEAP grant of several hundred dollars, however, all the money is used by National Grid to reduce the balance of the DPA. As a result, despite the HEAP payment, the amount the customer must pay is not one dime less.

As a result, this year's HEAP money goes to pay for service provided years ago, which is being paid off gradually under a written installment payment agreement. The effect of reducing the DPA arrears balance with HEAP shortens the repayment period, which may not end for years, and does not affect the amount the customer must pay for the current month.

Last year's HEAP Vendor Agreements generally required utilities to apply benefits to the current account or current bill. The Public Service Commission, however, recently interpreted the "current account" language in the OTDA Vendor Agreement to allow utilities to apply a HEAP benefit to the balance of a Deferred Payment Agreement (DPA), and not to "current charges" for service. See PSC Approves Grid "Affordability" Program in Which HEAP Payments Do Not Reduce Current Winter Bills.

In such situations, the immediate benefit of the HEAP grant is not to help the poor household but to improve the utility's bottom line by collecting old arrears -- which it had agreed to accept in smaller repayments over time. The OTDA should not allow the utilities, and their apparently captured regulator, the PSC, to pervert the purpose of the HEAP program, which is to provide assistance to eligible households in meeting their immediate home energy needs. The immediate need is to pay for current charges plus the installment on the DPA, not to reduce the overall DPA balance. If anyone should be allowed to apply the HEAP grant to the arrears instead of current charges, it should be the who chooses that option, not the utility.

On the plus side, the Draft Plan eliminates restrictions on eligibility that PULP had fought for years, viz., the "tenant of record" requirement for emergency HEAP and the denial of any aid to certain tenants in public or subsidized housing without regard to their energy burdens.

Friday, July 11, 2008

PULP's Con Edison Bill Estimator

Because of the lack of transparency of Con Edison prices, it is impractical if not impossible for most customers to wade through the calculations needed to identify what Con Edison would charge for a particular amount of electric service during a particular period.

There are several common situations where consumers want to know what Con Edison would charge during a particular period of time:
  • Customers lured into taking ESCO service by a small introductory discount may want to know if they are really saving money after the introductory period, or, as has frequently occurred, if they are paying more for ESCO utility service. The PSC has required utilities to spend more than $100 million over the past decade to stimulate "retail access," i.e., to urge customers to buy electricity and natural gas from ESCOs, without any way for customers to know how the ESCO price compares to the price of traditional full service. The PSC has also given Con Edison rate incentives that pay Con Edison more money the longer customers stay with ESCOs. Last year nearly 100,000 ESCO customers returned to Con Edison for full service, apparently dissatisfied with ESCO prices or service.
  • Tenants who pay their landlords for submetered electricity have a right under PSC regulations and orders not to be charged more by their landlords than they would pay if they were direct Con Edison customers, and may wish to check if they are being overcharged. Due to the lack of transparency of the rates charged by Con Edison, they have no simple way to make the price comparison. The PSC does not actively monitor submeterers' compliance with the price cap orders, or with requirements that submetered tenants be notified of the price limit and their opportunity to challenge a landlord's electric bill that exceeds the Con Edison price.
  • Customers taking service under time of day rates may want to see if they are saving money or paying more.
  • Customers considering the purchase of an energy saving appliance may want to know how much lower their Con Edison bills would be if they saved a certain amount of electricity.
  • Customers of other utilities thinking of moving to New York City could calculate how much more they will pay for electricity from Con Edison, which with its recent price increases may now have the highest rates in the continental United States, possibly surpassing Connecticut.
  • Customers of utilities other than Con Edison may be heartened by the sure knowledge that things could be worse.
It is not easy to find what Con Edison would charge.

The PSC publishes semi annual typical bill reports. These snapshots, however, do not reveal Con Edison's frequent major month to month changes in rates. Also, the reports are not timely issued, so the PSC probably will not publicly expose until September the magnitude of this month's Con Edison price spike. See Excelsior! Excelsior! Con Edison Rates Peak Again.

Comparing bills of a friend or neighbor is unlikely to work well because Con Edison has many meter reading and billing cycles within a month. Thus, a customer's regular bill issued, say, on the 20th of a month will be based on a hybrid of two months' different rates. The customer across the hall or across the street may be on a different billing cycle, so even if usage is similar, the charges will vary because one customer will have more days of her billing cycle at a higher rate than the other.

The components of a Con Edison bill are based on PSC-approved tariffs, which include the customer charge, other delivery rates, energy rates, surcharges, and taxes. The Public Service Commission (PSC) as part of its restructuring agenda issued an order in 2000 allowing Con Edison rates to change energy rates every month through a complex formula that depends on numerous factors and calculations, including a now 30-factor "Monthly Adjustment Clause." Also, delivery rates vary seasonally and by the amount of usage.

Con Edison does not publish its current total monthly rates in a simple format. Thus, it is necessary to make numerous calculations to derive the rates being charged at any given time, and to apply them to a particular amount of usage during a particular interval.

While representing submetered tenants in a large Bronx apartment building who complained about high bills from their landlords, PULP developed a Con Edison bill comparison calculator to estimate what Con Edison would charge.

We are now Beta testing PULP's Con Edison Residential Bill Estimator, which was launched today, and welcome you to try it.

This is PULP's best effort to estimate Con Edison bills. We think that the range of possible error is fairly small and the Estimator should closely approximate what Con Edison would charge for a given amount of usage over a specidfied period of days. Due to the complexity of Con Edison's rate structure and possibly different interpretation of the tariff requirements, however, we cannot guarantee its absolute accuracy, and so we urge you not to make major life decisions based on the results.

We would welcome any feedback you may have, and please let us know if you have problems using the calculator. You may contact us by email at

And, please consider making a donation to PULP.

Excelsior! Excelsior! Con Edison Rates Peak Again: Bills Up 30% Since May

In the summer of 2007, Con Edison residential bills reached an unprecedented spike. See Excelsior! Con Edison Residential Rates Spike (Again). By comparison, Rochester Gas and Electric, which unlike Con Edison did not sell most of its power plants and does not need to rely so heavily on deregulated wholesale markets to acquire energy has lower and steadier electric rates. Also, the PSC adopted rate stabilization plans for upstate utilities that have not allowed pass through of NYISO price spikes.

In January 2008, the typical Con Edison bills, as reported semi-annually by the New York Public Service Commission, also reached an all time winter high.In May 2008 FERC foreshadowed major price increases in the "organized markets" it has promoted, including the NYISO wholesale electricity spot markets. See NY City Wholesale Electricity Prices May Rise 89% Due to Market Design and Higher Natural Gas Prices. At the time, Con Edison said its customers would see a 13% increase this summer. Con Edison reportedly explained this away saying that "last summer was relatively cool, and that depressed wholesale power prices a bit as people used less air conditioning...." Yet the official PSC reports of the July 2007 prices, charted above by PULP, show that retail residential prices were higher than ever in that "relatively cool" summer.

On June 11, 2008 Con Edison adjusted upwards its energy rates. See Con Edison Electricity Rates for Energy Spike 21% in June. The energy rates do not include the monthly customer charge and the so-called "delivery" rates, so the total bill increase percentage in June would be less than the energy increase, and would vary based on the customer's consumption.

Later in June 2008, FERC revised upward its estimates of summer NYISO prices. See Summer NYISO Electricity Prices 123% Higher.

On July 11, 2008 Con Edison filed its monthly adjustments to previously filed residential rates for July, raising the rates for energy by more than 6.3 cents/kwh.

Bills for July for a customer using 500 kwh will be 30% higher than they were in May.

The PSC does not issue its reports on semi-annual typical bills until two months later. PULP has calculated the typical Con Edison bills issued in 2008 using the same format as the PSC reports (including energy, "delivery," taxes and surcharges for a residential customer in New York City using 500 kwh/month in each month). The chart below shows the PSC Report data through 2007 plus PULP's estimates of the Con Edison bills of this year to date. The August bill reflects the July price change:

Click on the chart to enlarge it.

By our calculation, Con Ed bills for July 2008 for a 500 kwh customer will be $157. They will be 30% higher than the May bills and at least 20% higher than last year's record July bill of $131 -- well above Con Edison's May estimate of 13%. Con Edison rates will change again in August.

The PSC allowed Con Edison to implement its system of unpredictable prices in 2000, denying a petition of PULP and AARP and their rehearing request.

Recent research shows that energy cost unpredictability creates serious difficulties for customers trying to manage their household budgets. Many households in New York live in poverty, without savings, from check to check, and often run out of money and Food Stamps before the end of the month. They will find it difficult to absorb these sudden and unreasonable Con Edison price changes that flow from the PSC's mistaken deregulation policies.

Wednesday, July 09, 2008

Digital TV Converter Boxes: Order Your Coupons Today!

Like millions of American households, I subscribe to cable television service, but have a single TV set which requires an over-the-air antenna to pick up local channels. In my case, the set is in my kitchen, but it easily could have been a “rabbit eared” set in my basement or garage.

With the pending conversion to digital television on February 17th, all analog television sets which are not connected to a cable or satellite television service will either need to be replaced or the owner will have to purchase a converter box if they want to continue watching television. On February 18, 2009, “Rabbit ears” will not work without a converter box.

PULP is concerned about this conversion because the vast majority of those who do not subscribe to cable or satellite are low income and elderly households. They may have the most questions about the switch to digital television and may have the most difficulty in affording either a digital TV or a converter box. See FCC Orders Telephone Lifeline Providers to Include Digital TV Transition Information in Customer Bills.

Fortunately, there is plenty of concrete information on the official federal government web page and the National Association of Broadcaster’s web page which can help advocates assist their clients with this impending change. I urge everyone to familiarize themselves with the basic concepts of the conversion because, especially for those most at risk of losing their television service, television may be their main connection with the outside world and they will need your help.

Should you choose to keep your existing analog set and purchase a converter box, a coupon program has been established to cut the price on the converter box by $40. All of the details are on the web page. While the process to order the coupons is very straightforward (two coupons are permitted per household), that’s where the easiness ends and the queasiness begins.

Since I need a converter box for my own personal use, I thought I would order a coupon to see what would happen. Completing the simple questionnaire on the web page was a snap, but there are alternative means of ordering as well (by mail and by phone), which I believe are just as useful. Even though I ordered my coupon nearly one year in advance of the transition in March 2008, it took over eight weeks for my coupon to arrive in the mail. When I opened the envelope, I was surprised to find that the coupon looked more like a credit card, including the raised numbers in the center of the plastic card. The paperwork included with the coupon spelled out that the coupon is only good for 90 days and provided a list of local stores in which I could use it to purchase the converter.

I began to search the web sites of the largest electronic retailers in the Albany area (Best Buy, Circuit City, and Radio Shack) to see what was available and to peruse customer reviews to help decide which converter box to purchase. Each store advertised two different brands, all costing about $60. I had read that some converter boxes would only cost $40 so that the coupon would cover the entire price (less taxes), but that was not the case when I was shopping. In order to avoid fraud, the coupons can not be used to purchase the boxes on-line, so I needed to travel to the stores. For persons with mobility difficulties, this could be a problem.

Unfortunately, when I went to the stores, each store was only selling one type of box, even though their web pages had indicated two brands were available. On top of that, every store was sold out of converter boxes -- in mid-June. Actually, Best Buy had a couple of “open box units,” but no sales person even knew where to direct me in the store to find them. I stumbled upon them by myself.

After visiting several stores, I opted to purchase mine from Radio Shack (the local Radio Shack I went to in suburban Albany had already sold over 700 boxes by this time, by the way) because they were willing to order one for me and have it sent to my house at no extra charge. However, due to the complexity of the coupon process, my trusty clerk, barely out of high school, did not complete the transaction properly. After 10 days and no converter box, I contacted the store to inquire about the box. I was told about the foul up, and they were able to arrange to have one ready for pick up in a couple of days.

So, three months after completing my coupon application, I had my converter box hooked up to my kitchen television set. Not only is the picture vastly improved, but instead of receiving six, somewhat grainy channels, I how receive 14 crystal clear channels, including eight “digital subchannels” only possible through the wonders of over-the air digital television. While I can not pick up these stations on my cable TV sets, at the moment they consist primarily of three local weather channels and a vintage TV channel, which seems to broadcast shows not worthy of TV Land or Nick-at-Nite.

After this experience, I can only urge everyone with a need for a converter box to order their coupons now. The number of coupons is limited and they are available on a first-come first-served basis. As the time gets closer to the conversion cut-over, the time to receive the coupons may increase with demand and the shortage of converter boxes may only get worse. Any assistance you can provide to low income families or to the elderly would be greatly appreciated.

Lou Manuta

Thursday, July 03, 2008

National Grid’s “Grand Plan” May Be Gone, but its “80% Solution” Remains

Back on March 20th, the Commission issued a Declaratory Ruling addressing PULP's challenge on behalf of applicants denied utility service under National Grid’s “Grand Plan". Applicants who owed the company over $1,000 had been required to make a $1,000 down payment in order to have service restored, and those with under $1,000 in arrears were required to pay 100% of the debt -- regardless of the statutory limits of Public Service Law (“PSL”) §31.1 and that deferred payment agreements (“DPAs”) must be negotiable, subject to Commission oversight. The PSC Ruling rejected much of National Grid’s “Grand Plan,” based on the inflexibility of the 100% or $1000 requirements. See PSC Nullifies National Grid's $1,000 "Grand Plan" Requirement for Utility Service.

Still, the Commission but left open the door for National Grid to attempt another end run around one of the most basic Home Energy Fair Practices Act (“HEFPA”) rights: the opportunity for an applicant to obtain service with an agreement to repay “any amounts due” on an old account in installments, with a down payment that does not exceed the statutory limits. Section 31 plainly lays out the process: DPAs must be offered to applicants with down payments of no more than the lesser of 50 percent of the arrears or three months average billing to repay "any amounts due" for service to a prior account in their name.

PULP sought rehearing and clarification of the Ruling on April 18th and at that time warned:
If the Declaratory Ruling is allowed to stand, it invites National Grid and perhaps other utilities, at their discretion, to deny DPA offers to applicants with arrears. Such a result is unlawful and in violation of the statute. Also, the toleration of untariffed, novel standards for the provision of service invites future deviation from HEFPA and threatens the general health and welfare which HEFPA is designed to protect.
PULP’s concerns, prophetically, appear to have become full-blown National Grid practices. Gone are the days of the “Grand Plan” and the demands of 100%, but now the company is requiring applicants in these situations to pay 80% -- and, on top of that, appears to be instructing its employees to keep any new, inflexible 80% DPA demands a secret.

PULP supplemented the record on June 9th with an affidavit from a National Grid applicant from whom the utility was demanding an 80 percent down payment to have service turned on. National Grid and PSC Office of Consumer Services both expressed surprise, the rigid demand was attributed to be the mistake of a new Grid worker, and the applicant was provided service with a DPA within the statutory limits.

Now, as part of the discovery process in the PSC proceeding to consider National Grid’s request to increase its natural gas delivery rates by 33%, PULP has learned that a new “80% Solution” may be alive and well, and that National Grid apparently doesn’t want anyone to know when its representatives rigidly insist upon a minimum DPA downpayment equal to 80% of the balance due.

Using bold, red, underlined, and italicized letters, National Grid states in its internal memo to its customer service representatives, entitled “New York Payment Agreements”:
Do not advise customers of the percentage they are required to pay. Simply calculate the appropriate figure and let them know this is the dollar amount necessary to restore service or obtain a new payment agreement.

Again, avoid statements such as “you need to pay at least 80%” or “I am required to collect 80%.” Instead, after negotiating down from the full balance, and listening to the customer, let them know the necessary dollar amount . . .
As a result of practices such as this, applicants who should receive service in accordance with the statute are being denied a DPA within the statutory downpayment limits. No lights, no refrigeration, and no fans. Apparently that’s how National Grid believes some applicants for utility service should spend their Independence Day holiday weekend. PULP submitted the National Grid memo in a supplemental filing of new evidence in support of the pending April 18 rehearing petition.
Lou Manuta

OTDA to Hold Hearings and Receive Comments on Draft 2008 - 09 HEAP Plan

Under the federal block grant program established by the Low Income Home Energy Assistance Act (LIHEAA), states are given great leeway in design of their programs for meeting home energy needs of low income households. New York is the largest recipient of LIHEAA funds.

New York does not directly supplement the federal grants, and so the State HEAP program closes to applicants when federal funds approach exhaustion. This year, the 2007 - 08 HEAP program closed in May.

The 2008 - 2009 program is expected to open November 1, 2008.The New York State Office of Temporary and Disability Assistance (OTDA) has scheduled public hearings on July 8, 10, and 11 in New York City, Syracuse, and Albany regarding its Draft Plan for the 2008 - 2009 HEAP program. The Draft Plan should be of heightened concern due to the impending high energy prices expected next winter and the effect of those prices on low income households already suffering from serious energy burdens. See Trouble Ahead: Outlook for Home Heating Costs Worsens.

Public participation in development of the plan is a requirement of the federal law. HEAP hearings are typically poorly attended. The new OTDA Draft HEAP Plan, with minor changes, is similar to past plans. It does not, in general, address recommendations made by the public in the needs assessment process for this year's plan.

The OTDA Draft State plan is based on the reduced federal funding level proposed by President Bush. The President's Budget for FY 2009 would reduce the budget for the Low Income Home Energy Assistance Program (LIHEAP) by 22% from $2.57 billion to $2.0 billion by reducing the block grant from $1.98 billion to $1.7 billion and the emergency contingency fund from $590.3 million to $300 million. See Bush Proposes LIHEAP Cuts in 2009 Budget.

In the past, Congress has substantially added to the LIHEAP budget proposals of the President, and then OTDA modifies the plan, without meaningful public input on how the added funds should be spent.

New York received a total of $357.8M in federal LIHEAP funding for the 2007-08 HEAP season, including "formula" funding and discretionary funding releases. New York's share of the $1.98 billion in federal formula funds was $248 million. Thus, in planning only for a federal allocation of $1.7 billion, and assuming the same formula continues, OTDA's Draft Plan only assumes receipt of approximately $212 million, or $145.8 million less than received last year.

While ultimate funding levels are not known yet, it again looks like OTDA will be in a position of allocating a large amount of additional funds with no opportunity for meaningful public input. The Draft Plan deals with additional funds simply by providing a long list from which OTDA chooses to spend the added money, with no priority established in the plan.

In 2007 - 2008 OTDA used added appropriations of $82 million mainly for a second Emergency HEAP payment. This had the effect of supplanting emergency assistance the state otherwise would have paid anyway under another state and locally funded program, and did not increase Regular HEAP grants. As a result, households that struggled to keep up with their payments got nothing more, and new emergencies were a prerequisite to qualify for the added grants. See Needy Households Must Stop Paying Energy Provider to Obtain Supplemental HEAP Benefits.

As in the past, the Draft Plan allows for 15% of the funds to be used for home weatherization, although some of that is retained for administrative and other purposes. On another front, the weatherization program is in jeopardy. See Bush Proposes Elimination of Low Income Home Weatherization Program.

The Draft Plan includes a change in the eligibility standards that will provide a $1 grant to households living in subsidized housing with heat included in their rent. This is a gimmick which will have the effect of making those households eligible for larger amounts of federal Food Stamp assistance. See State Leaders Discuss Looming Home Energy Crisis.

Written comments on the OTDA Draft HEAP Plan are due July 18, 2008.

Wednesday, July 02, 2008

State Leaders Discuss Looming Home Energy Crisis

New York State lacks a comprehensive strategy for addressing the home energy needs of the substantial portion of the population increasingly at risk of hardship and loss of essential heat and utility service due to rising energy prices and stagnating incomes and public benefit levels. See Wages of 30% of New Yorkers Do Not Cover Minimum Needs.

With much fanfare, state government leaders met yesterday to discuss possible action to alleviate the looming home energy crisis for low and moderate income households. See Governor Paterson Convenes Winter Fuels Summit to Plan for Rising Heating Costs this Winter; Heating Costs in State Might Rise 40%, Officials Warn at Meeting.

A One Dollar Home Energy Assistance Grant. Evidencing no new state commitment to supplement the HEAP program, as other states do, New York State announced that in the Draft HEAP plan it will give a new one dollar (yes, $1) HEAP benefit to previously ineligible households who reside in subsidized housing with heat included in the rent. The one-time Regular HEAP benefit for such households not in subsidized housing has been reduced over the years to about $40. It is hard to see how this benefit disparity can be reconciled with any methodology based on income and energy burdens, as is generally required under the federal LIHEAP program. The rationale for the $1 grant is that this will leverage added federal Food Stamp funds. See State Aims to Help Families Struggling to Buy Food.

More than 15 years ago, on behalf of subsidized housing tenants, PULP resisted the State's elimination of benefits for financially eligible households with heat included in rent, but the exclusion was upheld by the federal courts in light of the broad power given states under the federal LIHEAA "block grant" program to tailor the contours of its home energy assistance program.

So, even a $1 HEAP grant is some progress, even if nominal, if it recognizes that households living in subsidized housing are needy and helps them to leverage benefits in other programs.

Once eligible for HEAP, in addition to being eligible for increased Food Stamp benefits, utility customers are also eligible for telephone lifeline assistance (which can be worth approximately $150 per year) and for low income utility rates for electric and natural gas service, the benefit of which varies from utility to utility. For example, Niagara Mohawk reduces electric rates for HEAP customers by $5 per month and proposes to reduce gas rates for 50,000 HEAP customers by a similar amount in the pending gas rate case. So, if tenants in subsidized housing are not receiving utility rate reductions now, their receipt of a token HEAP grant could leverage utility rate reductions worth more than the normal small HEAP grant for renters.

Some modest suggestions. We suggest that state agencies could benefit from self scrutiny and take a few actions to ease their practices that now work to grind New Yorkers deeper into poverty.

The Public Service Commission (PSC)
  • stop the deliberate introduction of more volatility into natural gas and electric rates than can be handled by households without savings to absorb price spikes,
  • reduce utility cost burdens on low income households by improving low income rate structures, as other states like Massachusetts and California have done. Allocation of lower rate burdens to the poor in the utility rate setting process is a very efficient way to target their critical needs without added outlays of tax funds by the state and local governments, a concern during times of budget austerity. See N.Y Wants to Help Poor -- But How to Afford It? State Must Not Create More Taxes, Bureaucracy, in Attempt to 'Help Us'.
  • implement more adequate universal service policies and revitalize the telephone Lifeline program which in recent years disenrolled more than 400,000 New York customers
  • vigorously enforce the Home Energy Fair Practices Act and cease allowing utilities to train Office of Consumer Services staff who deal with customer complaints against utilities.
The Office of Temporary and Disability Assistance (OTDA) could revise its obsolete public assistance fuel allowance standards. These provide $60 a month or less for families of up to four and have not been updated to reflect rising natural gas costs for since 1987, when the average delivered price to New York residential customers was $.688/ccf. Today, National Grid is charging approximately $2/ccf, more than double the prices when the allowance schedule was set by the state agency. As a result, families with low incomes and high energy expenses are not deemed needy, because their incomes are slightly above the obsolete public assistance standard of need, while those who receive public assistance have their grants reduced when they get emergency aid to prevent terminations. OTDA also could eliminate restrictive conditions on state utility emergency assistance that result in increasing numbers of households going without essential utility service. Also, OTDA could adopt changes in the HEAP program that would assure better use of funds for current winter heating costs, and institute other measures to improve the program by tightening up the responsibilities of utilities in the weak vendor agreements the agency negotiates with utilities.

For example, OTDA vendor agreements currently allow utilities, who ultimately receive the bulk of HEAP funds each year, to refuse Emergency HEAP funds needed to prevent service termination or restore it, and the PSC does not require utilities to provide new installment payment plans after receiving significant Emergency HEAP payments.

Instead, the emergency is not actually resolved, as the federal LIHEAA statute contemplates. It is merely allowed to fester and recur after a month, when the utility again demands the full amount of arrears which is often far beyond the ability of customers to pay, and refuses a reasonable installment payment agreement. We are now seeing the consequences of this inadequacy as customers who received Emergency HEAP in May are again being terminated for the same arrears that triggered the initial termination. See PULP Urges HEAP Program Reforms.

The Division of Housing and Community Renewal (DHCR) could update its obsolete schedule of rent reductions that affect many tenants of low and moderate income housing in buildings where landlords are allowed to sell electricity separate from rent. Under the outdated DHCR schedule from 2003, landlords who stop providing electricity included in rent, and who submeter it, lower their rents by a small amount, for example, $39, while exposing customers to electric bills of $100 per month. Every month a continuous stream of submetering applications is approved by DHCR and the PSC, inflicting hardship upon already financially pressed tenants.

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According to the news articles, state officials will announce their actions later this week.