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).
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.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.
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.
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.
Posts
