New York's Household Telephone Penetration and Lifeline Enrollment Falling

In its latest report on telephone penetration in the United States, the FCC found that from November 2007 to March 2008 (the date of the most recent data), the percentage of households in New York State with a telephone remained at 94.2 percent. By comparison, the national average is 95.2 percent, up from 94.9 percent in November. The New York numbers are lower than neighboring states Connecticut (97.4 percent), Massachusetts (96.4 percent), Vermont (97.3 percent), Pennsylvania (97.7 percent), and New Jersey (94.3 percent).

Meanwhile, the most recent numbers from the FCC on Lifeline subscribership (dated 2006), released on the same day as the 2008 subscribership data, reveal only 352,919 Lifeline customers in New York, even though there well over 900,000 readily identifiable households eligible for Lifeline by reason of their receipt of HEAP or Food Stamps or other income-based benefit programs.

According to the PSC, Lifeline assistance dropped again in 2007 to about 310,000. In 1996, the number of Lifeline customers in New York had exceeded 750,000, and household penetration reached its highest rate for NY at 95.8 percent in 2002. Since then, more than 400,000 low income customers have lost Lifeline discount service, and 112,000 fewer households have telephone service.

Utilities Must Offer Written, Negotiable Payment Agreements Before Terminating Electric or Natural Gas Service

One of the basic and most important consumer protections in the Home Energy Fair Practices Act (HEFPA) is the opportunity for customers who fall behind in payments to avoid termination of natural gas or electric service by repaying their arrears in affordable installments, along with full payment of their current bills. Section 37 of the Public Service Law (PSL) requires utilities to offer a written Deferred Payment Agreement (DPA) with any notice of service termination for nonpayment.

Typically the utility proposes a DPA with a substantial down payment and substantial monthly payments. DPAs are required to be fair and equitable, however, and are negotiable. Public Service Commission (PSC) regulations require utilities to negotiate in good faith the terms of a DPA, based on the customer's financial circumstances, to a minimum DPA downpayment of zero and monhly arrears payments of $10. If agreement cannot be reached, the PSC will adjudicate the terms.

If a customer breaks a DPA, service may be terminated. Sometimes the broken DPA can be renegotiated if a customer has had a change of circumstances since entering into a DPA for more than the minimum monthly payment. Also, it may be possible to negotiate reinstatement of a broken DPA with the utility or with the help of the PSC.

Recently, PULP was contacted by a local advocate trying to assist a frantic customer with a young child whose electric service had been terminated earlier in the week. As it turned out, the customer had broken a prior installment payment agreement that had been made with a utility over the telephone. That was not a written agreement signed by both the customer and the utility, containing the requisite information required by PSL Section 37.

The PSC has recognized that utilities and customers often enter into informal unwritten arrangements to repay arrears that do not meet the requirement of PSL 37 for a formal written DPA. In several decisions, the PSC has held that a customer who has broken an unwritten agreement to repay arrears is still eligible for a real, written DPA that satisfies the definition and requirements of Section 37.

We suggested to the advocate that she verify with the utility whether the customer had indeed broken a written DPA, and if not, to request a real written DPA and reinstatement of service, and if the utility refused to provide a DPA, to contact the PSC Hotline at 1-800-342-3355.

The PSC Hotline staff are authorized to order the reconnection, continuation or initiation of residential utility service when

• a reasonable question regarding the circumstances of a termination, threatened termination, or denial of an application for service exists,
  
• a dispute with regard to a utility charge or service is pending, or
  
• the health and safety of a person is involved.
  

Thus, the advocate should be prepared to provide the PSC's designee relevant information, stressing facts demonstrating the emergency and the existence of a reasonable question regarding the disputed utility actions.

Will Governor Paterson Repurpose the Public Service Commission to Protect Consumers?

With the unanticipated resignation of Commissioner Cheryl Buley, Governor Paterson will soon be able to pick a majority of the five-member Public Service Commission. In addition to filling the new vacancy, terms of two commissioners appointed by prior governors will expire soon, in February, 2009.

Over the last decade, traditional utilities, power producing utilities, power trading utilities, and new retail gas and electric companies enjoyed the benefits of a PSC mission to deregulate the wholesale and retail generation portion of the industry in the state. To win utility cooperation in its effort to replace regulation with markets, the PSC approved mergers and new holding company structures, and relaxed its oversight of utility costs, services, and profits under the rubric of multi-year rate case settlements and "performance regulation." See Assembly Task Force Report on Queens Outage, Part II: Improving the Accountability of Con Edison and the PSC.

Apart from stellar opportunities and revenues for some utilities, the fruit of the Commission's policies yielded new challenges, including

• Utility prices unaffordable to the poor. See Trouble Ahead: Outlook for Home Heating Costs Worsens; A Well Kept Secret: Con Edison's Low Income Rate.
• Electricity prices rising faster than in states that did not follow New York’s deregulation experiments.
• Retail prices of utilities following the PSC-preferred pricing models spike unpredictably. See Excelsior! Excelsior! Con Edison Rates Peak Again: Bills Up 30% Since May.
• A retail energy market regime lacking price transparency and consumer protection. See PSC Makes ESCO Service Comparisons Difficult;
• More than 400,000 customers have lost low income telephone lifeline assistance, worth at least $60 million per year. See Assembly Passes Bill to Expand Low-Income Telephone Lifeline Assistance.
• Lax enforcement of the Home Energy Fair Practices Act. See National Grid's "Grand Plan" May Be Gone, but its "80% Solution" Remains.
• Failure to assert jurisdiction over wireless and VoIP telephone service to protect customers from unreasonable terms and conditions. See FCC: VoIP Providers Can be Required to Support State Universal Service Fund: Where is New York?; Early Termination Fees.
• Lax enforcement of HEFPA and price cap rules applicable to landlords who resell electricity to residential tenants. See White Plains Landlord Submetering Electricity Without PSC Approval; Residential Submetering Update.
• Unnecessary telephone area code changes. See PULP Provides Further Proof That Area Code Changes Are Not Needed Now in the 315 Area.
• Reliance on flawed NYISO wholesale energy spot markets. See FERC Watched While NYISO Gamers Looted Consumers; It was the [NYISO] Market.
  
• Reliance on costly and ineffective NYISO capacity markets to meet future electricity supply needs. See Cornell Professor Gives Low Marks to NYISO Electricity Markets.

When the last PSC commissioner vacancy occurred, consumer groups urged the appointment of a new PSC Chair less devoted to market nostrums and more attuned to consumer concerns. See Governor Spitzer Asked to Name Pro-Consumer PSC Chair. Now, Governor Paterson will soon have three picks, and thus a real opportunity to repurpose the PSC. Will the Governor seize this opportunity to modify composition and direction of this body which has enormous impact on the safe provision of reasonably priced utility services essential to the public welfare and the economy of the state?

PULP Reiterates Need to Expand Niagara Mohawk’s Gas Efficiency Program

After the Joint Proposal ("JP") regarding Niagara Mohawk's Interim Gas Energy Efficiency Program was submitted on August 1st by several parties, all parties were permitted to submit comments on the JP. PULP, along with several parties, filed comments on August 8th, expressing concern that basing the low income portion of the program on last winter's costs would be woefully inadequate in light of the anticipated increase in the cost of natural gas for the coming winter. See PULP Opposes Niagara Mohawk's Interim Gas Efficiency Program PULP's submission, and that of NYSERDA (which identified several inadequacies with the implementation and operation of the programs), prompted Commission Staff to request permission of file reply comments. The judge presiding over the case granted the request and all parties were given until today to file replies.

In today's reply, PULP reiterated its support for energy efficiency programs which would benefit low income consumers, but demonstrated that funding these programs at a static level, essentially the same as last year -- when the cost of the natural gas itself was 32 cents less per therm than what it is anticipated to be in January 2009 -- does not comport with Niagara Mohawk and Staff's claim that impact of the JP will be "meaningful." PULP emphasized that the JP is not in the public interest:

Rather, it is a public relations disservice, which will draw attention from the need to address soaring spikes in arrears, disconnections for non-payment, and thousands of families being left in the cold. Terminations are already higher this year. Weatherization efforts designed to reach as many people as possible would be one credible way to defend against the worst that winter 2008 - 2009 has to bring. Since the JP lacks this basic benefit, and merely continues existing efforts, it must be rejected for not being in the public interest. In this case, the status quo equals more fuel poverty, more hardship, and a potentially deadly winter for low income households.

PULP asked that at a minimum, the program be expanded to $8 million, with $5 million of that reserved for low income customers whose homes need weatherization.

The Public Service Commission may act on the JP at its September 17, 2008 meeting.

Lou Manuta.

State Cuts Grants for PULP

The New York Legislature met this week to consider cuts in the previously enacted budget for the year beginning April 1, 2008. PULP and many other programs were cut by 6% in this unusual midyear budget revision, undertaken in response to declining state tax revenues in the current recession.

For the last twenty-six years, state budget appropriations provided financial support to PULP, with the exception of 1998 when Governor Pataki vetoed its legislative appropriations. This support enables PULP to advocate for low income consumers in the enforcement of their rights under HEFPA and energy assistance programs, to provide training and consultation to local advocates for utility consumers, and to participate in developing the record of complex and time consuming rate case and generic proceedings at the PSC, where rates, terms and conditions of utility service are established.

Historically, PULP's financial support was based on a tripod of regular funding from three sources, augmented by occasional small grants from foundations such as the Energy Foundation and State Bar Foundation, special appropriations for specific purposes, and small individual donations. The three core sources were the Legal Services Corporation, the New York IOLA Fund, and state budget funding. But in 1994, Congress, under the influence of Senator Gramm and Newt Gingrich, restricted LSC appropriations to end all funding to organizations that provide support for local legal aid lawyers and advocates. Next, the state IOLA Fund, which was and apparently still is under sway of former Governor Pataki's appointees, eliminated all funding for PULP in 1998, as well as ending funding for other organizations performing similar roles. The tripod of core funding from multiple sources was destroyed.

After Governor Pataki's 1998 veto, PULP was kept alive only due to the steadfast support of the State Assembly and Speaker Silver, who eked out funding through the legislative member item process to continue PULP and other organizations throughout the state providing advocacy assistance to the poor.

In 2001, after the World Trade Center attack, state appropriations for PULP and many other organizations were cut by 25%. PULP has received essentially the same level of funding every year since then. Now this will be cut by another 6%.

PULP is operating at less than half of the nominal funding level of the early 1990's, not taking into account cost inflation since then, so the real resources for our work are much less than half.

PULP has been continuing its operations by borrowing in anticipation of receipt of the appropriations. Although the bulk of the latest state budget cuts apply to funds undisbursed as of August 15, PULP has to date received none of the appropriated funds, due to delays in the state contracting process. See NYS Continues to Disadvantage Not for Profit Grantees, discussing the slow payment of state funds to non profit organizations. Thus the 6% annual cuts will need to be implemented in the second half of the year. PULP's Board of Directors will consider a revised financial plan for 2008 - 2009 at its next meeting in September, which will probably include suspension of employee pension contributions.

Last year, four Assembly Committee Chairs asked the Governor to appropriate $1 million in utility special revenue funds to PULP to restore it to a more appropriate level of funding and operations. Utility special revenue assessments support the cost of the PSC and related functions associated with utility regulation, in contrast to general revenue appropriations. For several years prior to this year, the PSC had not used the entire assessment and had been rebating unused funds to the utilities, who had included the cost of the assessment when setting the rates charged to customers. Like most utility expenses, there is no true-up between PSC assessment costs projected when rates are set and actual expenses. As a result, utilities were benefiting from PSC under expenditure of the assessed amount being paid by consumers as a small part of their rates and utility bills. A special revenue appropriation for PULP would not have added to the general budget and would not have appreciably affected utility bills.

In the 1980s and early 1990s PULP received significant utility special revenue funds to support its participation in PSC proceedings and other utility work, in addition to general budget funds and annual support from LSC and IOLA. Despite the request of the Assembly to resume special revenue funding for PULP in the Governor's budget this year, the Governor included no appropration at all, and a general fund appropriation had to be added again, as in every year since 1995. While the rationale for not including PULP in the Governor's budget is unclear, the request for special revenue may have met opposition because the PSC may have intended to use the maximum assessment level allowed by statute for its own operations and so it seemed there was insufficient "headroom" to provide additional funding for PULP.

In this week's budget cuts, the Governor set a target for the PSC to cut its budget by $2.6 million in the current fiscal year. This means that money collected from utilities through the PSC assessment under Public Service Law 18-a which funds the PSC and the Consumer Protection Board will be refunded or credited back to the utilities. The CPB funding for utility intervention function, funded the same way as the PSC, will also be cut.

Unused PSC assessment revenue will not save tax revenues and will not be credited back to consumers. The result, which we would hope is not intended by the Governor, is that PSC regulatory oversight of utilities is reduced, the consumer advocacy function of both CPB and PULP withers during a period of mounting energy burdens and rapidly changing utility policy and practices, and utilities again get a windfall, the refund of unexpended assessments.

As the state moves toward more austerity in the next year, it is important not to lose sight of the critical importance of independent consumer advocacy on behalf of low and fixed income residential customers in the utility regulatory process. Other states like Pennsylvania, Ohio, and California recognize the importance of this function and devote far more resources for utility consumer advocacy than New York.

FERC, NYISO and PSC Watched While NYISO Gamers Looted Consumers

Today FERC released an Order approving NYISO's emergency request for approval of rules to limit circuitous scheduling paths for the sale of electricity. It also revealed that it had a "non public investigation" underway since May. No action was taken to protect customers in May by commencing a formal complaint proceeding and setting a refund effective date, and that was not done yesterday either. See Feds Reveal Power-trading Probe: FERC Says it Secretly Began Investigating Two Months Before Complaint.

FERC did not act on requests of many parties, including PULP, for an open investigation under Section 206 of the Federal Power Act, saying it would await the outcome of a pending non-public investigation that has been underway since May. As a result, FERC is also not considering requests for refunds of the overcharges due to the market gaming activities. FERC said:

The Commission’s Office of Enforcement began a non-public investigation under Part 1b of the Commission’s regulations in May of this year into the scheduling of flows over the circuitous paths such as those that are addressed in the instant order. The Commission will determine what further action may be appropriate with respect to the above described claims after it considers the results of the staff investigation. We also will not require NYISO to file reports beyond those directed above, as such issues are more appropriately addressed in the investigation.

There are indications that the gaming cost consumers $25 million in April and $100 million in May. See Enron-Like Gaming of NYISO Rules. The gaming continued at least until July 21, when NYISO filed new rules intended to restrict the gaming. Commenters on the filing indicated that the cost in 2008 was $240 million to $415 million. This suggests that the gamers went for the gold in June and July until the fun stopped -- or slowed.

As indicated in the post below, Lake Erie circulation continues, suggesting that the market gaming may be continuing, which also raises reliability concerns. By not initiating a Section 206 investigation and not setting a refund effective date, and by vacating a ruling that Enron's California Death Star congestion and Megawatt Laundering gaming was illegal on June 5, FERC is making refunds more difficult, if not impossible, to remedy gaming that raises NYISO market prices.

The primary purpose of the Federal Power Act, which FERC is charged to implement, is protection of the nation's electricity consumers. The failure of FERC to set a refund date and publicly investigate the NYISO gaming is an embarrassment.

In the absence of meaningful federal enforcement, what can the state do?

The NYISO is an electric company organized under New York law and is required to operate in the public interest. While the PSC lacks power to revise NYISO rates, the New York PSC can and should exercise more oversight of the performance of the NYISO. The PSC has access to the NYISO data, and might take action against sellers if they have certificates from the state, or might refer matters to the Attorney General for prosecution under the state unfair and deceptive practices laws. Also, the PSC could take a more vigilant stance in FERC proceedings. In the current case, the PSC basically supported the narrow approach of the NYISO, which was to limit certain scheduling paths, and did not seek refunds or ask FERC to open a broader investigation.

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.

NYISO Death Star Gaming: LIPA, Con Ed, and Other Utilities Ask FERC to Investigate, Pursue Refunds

LIPA President and CEO Kevin S. Law has filed a letter to FERC Chairman Joseph T. Kelliher supporting the request of Senator Schumer and others for a FERC investigation of the Enron-like congestion gaming of unnamed NYISO market participants that increased rates for wholesale electricity and NYISO charges ultimately collected from retail consumers. Law said "I fully intend to pursue financial recovery (and/or other claims LIPA may have) on behalf of our 1.1 million customers and look forward to receiving FERC's cooperation in those efforts."

PULP previously demanded FERC undertake a full public investigation in its comments filed on August 1. Motion for leave to intervene of Public Utility Law Project of New York, Inc. and Request for FPA section 206 Investigation and Order setting refund effective date regarding New York Independent Transmission System Operator, Inc. under ER08-1281.

Estimates contained in other filings put the cost of added NYISO charges in the range of $240 - $290 million in 2008 alone. Some commenters suggest the higher NYISO charges due to gaming began before 2008.

These direct charges, which the NYISO calls "uplift,"are crammed down by the NYISO and retail utilities to consumers. They do not include the impact of higher spot market clearing prices achieved by the gamers which, due to the NYISO market design, are paid to all sellers in the market, who profit too when gamers succeed in driving prices up. Thus the cost to consumers of the gaming may far exceed the NYISO "uplift" assessments.

A group of New York retail distribution utilities, which includes Con Edison and other major investor owned companies, the "Transmission Owners," also filed a letter asking FERC Chairman Kelliher to initiate an investigation. Reading between the lines a bit, the letter suggests the NYISO was less than quick to discovery the gaming:

The costs of these circuitous scheduling transactions have been borne by all NYISO consumers. Various Market Participants, including those representing New York consumers, observed and repeatedly questioned the NYISO regarding the cause for significant increases in certain costs, known as “uplift.” Ultimately, the NYISO’s investigation of these increased costs led to the discovery of the circuitous scheduling.

The NYISO’s filing should protect consumers from adverse effects of the circuitous path scheduling on a going-forward basis. However, it does nothing to address the ability of the NYISO to curtail transactions that create unscheduled flows such as Lake Erie Circulation, which is still going on. The transactions which are the subject of the Exigent Circumstance Filing may have violated the Commission’s prohibition against market manipulation and the Federal Power Act (“FPA”) when they occurred.

The New York Transmission Owners and many other market participants have requested that the NYISO provide additional information to ensure a complete understanding of the nature of the market activity that took place and the economic impact on New York consumers, to develop tools, and if needed, new tariff language, to monitor and mitigate future unscheduled flows. In addition, it is appropriate for the Commission to review this market behavior, to determine if the transactions were appropriate under applicable provisions of the Federal Power Act and implementing regulations and to take steps consistent with the Commission findings, including remedying economic harm. It is important to maintain public confidence in competitive electricity markets.

How can there be any confidence in the flawed markets which allow sellers to manipulate prices and soak consumers at will, without refund, and without meaningful sanction?

Because of the cloak of secrecy thrown over rates by FERC and the NYISO, we might never have known of the problem but for the objections of the small local municipal utilities who began to protest the outrageous and unexplained NYISO "uplift" charges. Where were the Transmission Owners? Were they just passing the charges through to their retail customers? Did their energy trading affiliates with market-based rates benefit from the higher market prices caused by gaming.

For years, FERC has consistently raised obstacles to refunds in cases of market manipulation in its so-called "organized markets" like the NYISO. Indeed, June, FERC vacated the precedent established in the Enron case that Death Star congestion gaming in California was illegal. Only last year, FERC refused a request of consumer advocates to hold proceedings to hear how its "organized markets" can be gamed. FERC said that would be unduly burdensome. See No Evil: FERC Refuses to Examine Gaming of RTO/ISO Electricity Spot Markets.

It is no wonder that a growing national Campaign for Fair Electric Rates is now demanding that Congress act to oversee and reform FERC's market rate regime.

The Transmission Owners indicate in their filing that undesirable Lake Erie circulation "is still going on," raising costs and possibly impairing reliability.

The NYISO in its filing only sought to change its rules to ban a certain set of circuitous transaction routes prospectively, sought no FERC investigation, and did not seek refunds. One might analogize a situation where a bank embezzlement has occurred, the establishment knows it was an inside job, knows who did it, does not ask for the money back, and simply changes the passwords and vault combinations that were used to accomplish the theft.

In its July 22 filing NYISO acknowledged that even after banning the use of several transaction routes, the software for its major market, the day ahead spot market, cannot detect continued gaming. NYISO filed its rule changes on one days notice and had not alerted market participants because it was concerned that if normal 60 day advance notice were given as ordinarily required by the Federal Power Act, Section 205, more market participants would take advantage of the market flaw while the change is being considered.

NYISO also has indicated that if it catches a market participant continuing to use the banned routes, it will have its market monitor (no Sherlock Holmes) send a warning letter. If the participant is caught twice, NYISO will send a note to the FERC enforcement department. The rule changes proposed by NYISO do not ban other gaming beyond the prohibited scheduling paths, do not provide for disgorgement of profits wrongfully obtained, and allow for continued secrecy regarding the identity of the gamers who have driven prices up for consumers.

PULP has called for public identification of the gamers and their transactions in a public proceeding at FERC in which a "refund effective date" is set to at least assure refundability of charges due to future gaming.

Under the Federal Power Act Section 205 all rates and contracts are required to be publicly filed. Under FERC rules and orders and NYISO tariffs, however, sellers are allowed to make secret contracts, the cost of which is passed on to consumers. Whether this is legal is an issue left open in a recent Supreme Court decision, which held that contracts will be deemed reasonable in most situations, without addressing whether FERC had power to lift the public rate and contract filing requirements absent an act of Congress amending the Federal Power Act. See Supreme Court Leaves Fundamental Questions About FERC Market Rate Scheme Unanswered.

PULP Utility Bill Estimator Now Available for Central Hudson Customers

Electric customers who switched to ESCO service may find it difficult to determine if they are saving money. See PSC Makes ESCO Service Comparisons Difficult.

To compare the cost of ESCO electric service one needs to know the cost of full service from the traditional utility. This can be difficult if the traditional utility changes its rates each month, and when billing periods are not identical. PULP is testing its new Electric Bill Estimator, which can be a tool for checking utility rates. See PULP's Con Edison Bill Estimator.

It was recently modified to accommodate residential customers of Central Hudson, one of the utilities that changes its rates each month. Please email us at info@pulp.tc to let us know if you have difficulties using it or suggestions for improving it.

UPDATE: We are having some problems with the Central Hudson bill calculator and have disabled it temporarily. 8/21/08

PSC Makes ESCO Service Comparisons Difficult

How Can Customers Compare ESCO Prices?
With prices of electricity rising, consumers are looking for ways to economize. Recently PULP's website Help Center received this customer inquiry regarding ESCO service.

We are presently served for electricity by Orange & Rockland, and are trying to find an alternate supply company hoping to save some money, but, after making many phone calls, not a single company has mailed us their rates so we can compare.
Gateway Energy, a supplier we used in the past when they were known as Econergy, directed us to their web site (gesc.com) to get rates, but there are none. It simply shows their electric rates vary by the month.
Can you direct us to some source that will supply data we can use to help us make a decision?

A basic question, which should be easily answered.

The simple answer is that there is no ready source of accurate public information on ESCO prices. A PSC website purports to show ESCO price comparisons but it is based on incomplete reporting of ESCO prices on only one day a month. The PSC allows ESCOs to change prices without notice and without publication. By the time prices are reported, they may have changed. There is no reliable evidence of any significant consumer savings over time for switching to service from ESCO gas and electric companies. Indeed, there is evidence that ESCO service may cost more. Also, slamming and deceptive practices to induce switching are common, as are one-sided terms of service. These include long term contracts with early termination fees to discourage customers from switching back to the traditional utility or to other ESCOs after they discover the ESCO is charging higher, not lower prices.

Background
Over the past decade, the PSC at great expense -- estimated at more than $100 million -- has promoted the idea that customers should shop for electric service from alternative ESCO gas and electric companies, whose rates, terms and conditions the PSC largely chooses not to regulate. Apparently the theory was that if the PSC set the rates of the traditional utility, competitive companies would provide cheaper or better service in order to win and keep customers.

The PSC deliberately designed a system that frustrates meaningful ESCO price comparisons. To encourage customers to switch, the PSC promoted so-called "ESCO Referral Programs" promising minor short-term savings of $2 - $4 per month for two months for customers who switch to ESCOs. After that teaser rate expires, they get future service at the price, terms and conditions set by the ESCO in its contracts which are not reviewed for reasonableness by the PSC. Some of these contracts are for fixed prices while others have no price, and allow the ESCO to change prices at will. The fixed price contracts typically give the ESCO the option to change the price or cancel on one month's notice while locking in the customer for a year or more with monetary penalties for early termination. See PULP's webpage on ESCO Contracts.

In 2002, in a rebuke to the PSC, the Legislature clarified that the Home Energy Fair Practices Act (HEFPA) applies no matter which company provides electric or gas service to residential customers. See PULP's website page on ECPA 2002. A critical component of HEFPA gives customers the right to challenge ESCO bills and practices through the PSC complaint handling process. Previously the PSC Office of Consumer Services refused to accept and decide customer complaints against ESCOs.

Even after the 2002 statute, however, the PSC itself has not, to our knowledge, issued any formal decisions in ESCO complaint cases, even though there is a steady stream of PSC customer complaint decisions involving the traditional utilities, and PSC Complaint Statistics show there is a higher rate of initial customer complaints regarding ESCO service.

The PSC has been considering petitions of the New York City Office of Consumer Affairs and the State Consumer Protection Board to provide added consumer protections in light of questionable ESCO door to door marketing practices for months, but has made no decision. See ESCO Marketing Practices Subject of New PSC Proceeding.

The PSC Drops the Ball on ESCO Price Reporting
The PSC issued a Notice seeking comments in 2006 on a proposal to require ESCO price disclosure. The Notice stated:

residential electric and gas customers have come to expect that ESCOs will furnish the price information necessary for them to make intelligent decisions on retail market choices. To obtain that price information, customers rely on a variety of sources besides the ESCOs themselves, including the Commission’s Web site. Since October 2004, the Commission has listed, at its Web site, the ESCOs serving residential customers in the various utility service territories, along with additional information on those ESCOs. In October 2005, the Web site’s capabilities were enhanced to enable customers to make more meaningful price comparisons among ESCOs and utilities. That function, however, is dependent on the pricing information ESCOs submit, and not all ESCOs have been willing to furnish complete information voluntarily. Nor does it appear the complete price information customers have come to expect, when making price comparisons, is readily available elsewhere.

In its Comments, PULP supported full and timely public disclosure of all ESCO prices and price changes. In reply to ESCOs who opposed this, PULP stated in its Reply Comments:

in the absence of price reporting, effective price discovery by consumers is significantly less likely to occur. Where consumers cannot discover and compare prices for competing retail offers, they must act on less than complete information. When they do, they can only make a market optimizing decision by accident. ****
[I]f customers do not operate in a market with price transparency and they cannot discover the price of the competing offers, there is no assurance that the choice they make actually maximizes the benefits to them. If an incorrect choice is made, resources are drawn to an option which would not receive these benefits if all consumers could actually make the optimal choice. When the incorrect choice is made, the market theory on which policy arguments supporting retail access are based clearly shows that the social benefits from “market-based” retail access are lost.

In its Order, however, the PSC again yielded to the ESCOs and only required after-the-fact monthly "snapshot" price disclosure, i.e., posting of prices that were previously effective on just the first day of each month. The PSC deliberately allowed ESCOs to change the reported rate the next day without posting the change. The Commission stated

The Price Reporting Requirement
* * * * ESCOs shall report, by the 5th day of each month, for each generally-available service they were offering to eligible residential customers, the price they would have charged for each service as of the 1st day of that month. Those prices will then be posted to Power Choose, along with the disclaimer that the prices are illustrative, to alert customers that the Web site is only the starting point for price discovery and that an actual offer to provide service must be obtained directly from an ESCO. * * * *

ESCOs, after reporting the snapshots of their generally-available prices, may revise them at any time subsequent to their submittal without seeking regulatory authorization. * * * *

Because the prices reported are snapshots of what was offered on a particular day, ESCOs are not bound to offer them to new customers after that date, enabling them to modify their prices rapidly in response to new market circumstances. * * * *

it is not necessary to go further at this time by burdening the Web site with the additional functions of quoting current prices or identifying price availability.

Under the PSC's regime, an ESCO could offer a low rate on the first day of the month for five customers, stop taking applications that day (because the PSC does not enforce the duty to serve on ESCO gas and electric companies), raise the price on the second day of the month, and report the low price on the fifth of the month. The PSC then posts that price on its PowerToChoose webpage which encourages customers to rely on the dubious price reports. The disclaimer mentioned in the PSC Order is not prominently disclosed on the webpage, which basically provides free advertising for ESCO service and encourages customers to switch. If you can find the disclaimer, please let us know.

Thus, a consumer seeking to compare ESCO prices is not likely to find meaningful price comparison information at the PSC "PowerToChoose" website or from the ESCO, if the ESCO chooses not to publicize fully what it charges.

Due to the limited "snapshot" data publicly available, it is not possible to compare historical prices actually charged by ESCOs with those of the traditional utility. Traditional utilities that bill on behalf of ESCOs will have such information, because the ESCO prices are needed to formulate the bills. The PSC allows this information to be treated as confidential trade secrets. This flies in the face of a century of policy favoring publicly filed rates for electricity. PULP proposed that Central Hudson conduct a study, based on the billing information it has in its possession regarding what ESCOs have charged for their service, but that was refused. Utilities are now purchasing ESCO receivables at a discount and stand to earn additional revenue from ESCO charges, essentially sharing in their mark up of the cost of energy.

Some Utility Rates are Hard to Find
Even if accurate ESCO prices were available, it can be very difficult to compare them with the prices of the traditional utility. The PSC allows some electric utilities, including Con Edison, Orange & Rockland, and Central Hudson, to adjust their rates monthly. The rate adjustment formulas are so complicated they make it very difficult for customers who switched to ESCOs to know, after they have switched, whether they would have been better off staying with the utility and whether they should switch back.

Other utilities, such as NYSEG and RG&E have fixed rate options that make it somewhat easier to compare that service with ESCO service.

In essence, the PSC created a system in which prices for ESCO electric and gas service are not transparent and cannot readily be compared. This favors sellers who induce customers with hype, teaser rates, and high pressure telephone or door to door solicitation, only to be followed by higher prices and onerous conditions of service ostensibly agreed to in the boilerplate of one-sided contracts.

This is contrary to the elements of a competitive marketplace in which customers have reliable information about prices that would facilitate easy comparison and price competition.

PULP's Utility Bill Calculator
As discussed above, no one, not even the Public Service Commission, knows the prices actually charged by ESCOs. At best we might know, after the fact, the price charged on just one day a month. In contrast, the traditional utilities still follow the statutory requirements to publicly and timely file all rates and every rate change, so it is at least possible to calculate what they would charge based on accurate information in the public domain.

PULP has developed a Utility Bill Estimator that could be used by electric customers to compare ESCO rates with those of the traditional utility. Currently it is available for Con Edison customers and Central Hudson customers. It takes into account variations in billing cycles and locational tax differences. A customer who has switched to ESCO service should be able to readily compare whether her total bill is now higher or lower than it would be if she received full service from the traditional utility. See PULP's Con Edison Bill Estimator.

The Best Way to Lower Your Electric Bill is by Conserving, Not ESCO Shopping
There is no reliable evidence to show that customers seeking to lower their electric bills can do so by shopping for ESCO service. After a period of minor savings with teaser rates they may pay more.

Customers are far more likely to achieve bill reductions by reducing their consumption of electricity, by shutting off devices or installing more efficient appliances. See NYSERDA's GetEnergySmart webpage. Improving energy efficiency can be a difficult problem for low income consumers who, due to their high energy burdens in relation to their incomes, are conserving already but lack the money needed to invest in more efficient refrigerators and other major energy consuming appliances.

For further information, see PULP's website page on ESCO service issues.

NYISO Governance - Director Conflicts

The head of the Port Authority last week resigned his position as a director of the NYISO. As reported by the Daily News:

The Port Authority's executive director is going to have to get by on just $286,702 a year.

Chris Ward resigned Monday from a second job at an obscure nonprofit that manages the state power grid, where he could have earned another $100,000 a year. Ward stepped down from the post less than two months after the Daily News revealed he was moonlighting at the New York Independent System Operator.

"He felt he could not give it adequate time considering his responsibilities at the Port Authority," said Stephen Sigmund, a Port Authority spokesman.

Ward had been appointed to the Independent System Operator in mid-April, just two weeks before Gov. Paterson tapped him on May 3 to helm the Port Authority.

The nonprofit lavishes its directors with a $35,000 annual retainer for part-time work - plus $2,000 for each monthly meeting, $1,500 a day for committee meetings and $750 for telephone conferences.

The move will give Ward more time to grapple with the mess he inherited at Ground Zero, where squabbling, inefficiencies, cost overruns and budget-busting delays have marred efforts to rebuild the World Trade Center site.

PA Boss Ditches Moonlight Gig. This followed prior Daily News articles focusing on the amount of time spent by NYISO directors and their compensation, see Port Authority Boss Also Earns $100G as Part of Nonprofit's Board, and the full time duties of the Port Authority position. As stated in a NY Post editorial after the Port Authority chief resigned from the NYISO Board:

"Not that there was anything at all illegal, or unethical, about Ward's post with the New York Independent System Operator. But his position at the Port Authority is a full-time job - now more than ever."

Chris Ward's Full Plate.

Newsday pointed out that "The New York Independent System Operator provided no reason for the resignation of Christopher Ward from the board of directors." Port Authority Head Resigns from NY Power Board.

The press apparently did not notice that NYISO filed a request to FERC on July 9, stating that it had just noticed that two of its Board members are chief executives of companies that are participants in the spot markets run by the NYISO. NYISO asked FERC to waive conflict of interest requirements of tariffs previously approved by FERC. As summarized by Con Edison in its request for intervention in the case:

On July 9, 2008, the NYISO filed a request for a tariff waiver to address a conflict of interest that has arisen with respect to two of its board members, Christopher O. Ward and Erland E. Kailbourne. The NYISO stated that it "recently determined that these directors are associated with entities that have interests in resources that are eligible to provide demand reductions in the NYISO-administered markets." Because of these associations, the NYISO is concerned about a violation of Section 5.01 of the ISO Agreement which prohibits any NYISO director from "being affiliated with any Market Participant." Accordingly, the NYISO's filing seeks a limited waiver of Section 5.01 of the ISO Agreement to enable these two directors to remain on the NYISO Board.

In addition to Con Ed, numerous parties intervened in the case. Both of the directors mentioned are heads of organizations that can receive large payments for so-called "demand response," i.e., reducing consumption of electricity at times when NYISO spot market prices surge above a designated level. According to the NYISO filing, after the discovery was made (following news stories about the dual role of the Port Authority chief) the two directors were isolated from NYISO Board decision making in matters directly dealing with "demand response." However, other matters at the NYISO, such as those affecting rates of sellers, might indirectly increase or decrease the number of incidents in which "demand response" is called for and is rewarded.

NYISO withdrew the request for waiver of conflict rules with respect to Board member Ward last week after he announced he would resign.

The NYISO was created privately by New York utilities in order to conform with the desires of the NY PSC expressed in its 1996 NY PSC "vision order." Through the carrot and stick of its rate making powers, the PSC encouraged, but did not require, utilities to "restructure"by divesting their power plants from state-regulated traditional utilities and forming new holding companies which would be able to make and sell electricity through less regulated affiliates whose profits would not be limited.

In its restructuring orders, the PSC rejected a New York Power Authority proposal that it be the Independent System Operator, on the ground that it would also be a market participant due to its ownership of the Niagara and St. Lawrence hydro projects and around 2000 miles of transmission lines.

Instead, the utilities cooperated with the PSC vision by morphing the NY Power Pool, which had been directing bulk power grid operations, into a private, non profit electric company to oversee the grid and to run wholesale electricity service spot markets. Under its bylaws, NYISO directors pick their successors. There is some theoretical oversight of the NYISO by FERC and the NY PSC, but current FERC commissioners, like those of the NY PSC, remain in laissez faire deregulation mode, trying to meet their statutory duties to fix reasonable rates by designing and relying upon markets, yet another illustration of hope triumphing over a decade of experience. See Disconnected Policymakers.

In California, the CAISO , a public benefit corporation, performs grid operation and market making functions similar to those of the NYISO. After the Enron debacle, California required the CAISO Board Members to be selected by the Governor and approved by the state senate. See NYISO Governance. Perhaps New York will consider this the next time the NYISO markets fail or the lights go out.

Schumer, Power Authority Ask FERC to Investigate NYISO Market Gaming and Consider Consumer Refunds

In recent weeks, we have mentioned the costly and glaring failures of the NYISO wholesale electricity markets that recently came to light in filings at the Federal Energy Regulatory Commission (FERC). See Enron-Like Gaming of NYISO Market Rules: Did it Cost New York Consumers At Least $125 Million?, (PULP Network, July 22, 2008); PULP Demands Full Public Investigation by FERC of NYISO Gaming, (PULP Network, August 1, 2008).

New York Senator Charles Schumer has now written to the FERC Chairman asking for a full investigation. See Schumer Demands Federal Investigation Into Energy Trading Scam That Fleeced NY Consumers Of Untold Millions And Put NY-Area Power Grid At Risk Of Blackout; Schumer: Did Power Trades Cost Millions?. In his letter to FERC Chairman Kelliher, Senator Schumer said:

While the New York Independent System Operator (NYISO) has yet to determine the exact costs of these trading practices, some estimate that increased congestion and "uplift" fees have cost consumers as much as $125 million in April and May of this year alone, and as much as $240-290 million overall. Furthermore, it appears that this practice may have played at least a part in New Yorkers spiking utility bills, as well as the record bills faced by many municipal electric utilities. Given the magnitude of economic impact these trading practices appear to have caused, it is imperative that FERC determines the extent to which they are to blame and if monetary recompense can or should be exacted from the parties involved.

This week, the New York State Power Authority made a supplemental filing with FERC. Request of New York Power Authority that the Commission Launch a Vigorous Investigation into the Lake Erie Loop Flow Matter under ER08-1281. NYPA, the largest power producer in the state,
operates the state owned hydro power plants at Niagara and on the St. Lawrence River, and major transmission lines. NYPA's filing points out that NYISO was slow to identify and halt the market gaming, and that NYISO in its filings sought no refund remedy from FERC to redress what has been estimated to be overcharges of $240 - $290 million or more:

[I]t is clear that New York consumers have been significantly harmed by the exploitive, and possibly illegal actions of a small group of market participants over the first seven months of 2008. * * * *

[W]hile the NYISO's filing protects consumers from any additional market abuse, it does nothing to address the significant overpayments made by New York consumers for almost seven months, starting in January 2008. * * * *

NYPA along with the other New York transmission owners and many other market participants have requested that the NYISO provide additional information to enable a full understanding of the extent of the suspicious market activity and the economic harm experienced by New York consumers. We expect that the Commission also has an interest in understanding the magnitude of the problem. As NYPA understands the issue, the current market design allowed certain un-named market participants to economically benefit at the expense of New York consumers from irrational transaction schedules.

NYPA trusts that FERC will immediately initiate a full investigation into this market behavior. We find it totally unacceptable for New York consumers, already burdened by some of the highest energy prices in the country, to pay more because some small number of market players discovered and profited from a market design flaw. These profits must be returned to New York Consumers. Not doing so will further erode confidence that competitive electricity markets benefit consumers.

The story started with the July 21, 2008 NYISO filing at FERC; to date has been covered by

• the PULP Network blog: Enron-Like Gaming of NYISO Market Rules: Did it Cost New York Consumers At Least $125 Million?, (July 22, 2008), and PULP Demands Full Public Investigation by FERC of NYISO Gaming,(PULP Network, August 1, 2008).
• the Syracuse Post Standard: Schumer: Did Power Trades Cost Millions?,
  
• the trade publication Platts, New York ISO Moves to Cut off Loop Routing as Cost of Strategy Mounts for Whole Market (July 28)
• New York Post, and
  
• the Plattsburgh Press Republican, (noting that the added NYISO charges have affected municipal customers in Plattsburgh, Rouses Point, Lake Placid and Tupper Lake, and that the Mayor of Plattsburgh had demanded an investigation in March, before $150 million in additional charges were passed through by NYISO in May and June 2008).
  

The Times Union mentions it in a reporter's blog, and the New York Times briefly mentions the matter in a City Room blog post, citing the New York Post article:

Con Edison customers and electricity users across the state were essentially cheated of about $240 million, and New Yorkers were put at risk of a blackout, by an elaborate scheme involving the sale of power out of state. Documents filed with the Federal Energy Regulatory Commission suggest the scheme began in January and ended in July, when it was shut down by the New York Independent System Operator, which runs the state's power grid.

FCC: VoIP Providers Can be Required to Support State Universal Service Fund: Where is New York?

There’s an important case pending in the federal Eighth Circuit Court of Appeals (Vonage Holdings Corp. v. Nebraska Public Service Commission (No. 08-1764)) regarding the ability of Nebraska to require interconnected Voice over Internet Protocol (VoIP) providers to contribute to its state Universal Service Fund. VoIP providers interconnect their system to the public switched telephone network, thus enabling their customers to call anyone else and the world being able to call any of the VoIP provider’s customers.

A federal District Court issued a preliminary injunction preventing Nebraska’s Public Service Commission from requiring a VoIP provider, Vonage, to contribute to the state’s universal service program. The lower court held that the FCC pre-empted states from imposing such fees on VoIP providers, but in its amicus brief to the Court of Appeals, the FCC stated otherwise.

VoIP regulation is a web of inter-related, and often conflicting, rules and orders, which only gets murkier when one extends the examination to the ability of states to oversee VoIP. It gets even more complicated when one considers that “interconnected VoIP” encompasses everything from a nomadic service like Vonage to fixed services like those offered by the cable television companies. While the FCC has had a generic “IP-Enabled Services” proceeding open and pending since 2004, in the ensuing years, several issues have been clarified. For example, interconnected VoIP providers must now provide E-911 access, participate in wiretapping under the Communications Assistance for Law Enforcement Act, and contribute to the federal Universal Service Fund (“USF”).

In extending USF obligations to all interconnected VoIP providers, the FCC specifically addressed the difficulty that nomadic interconnected VoIP providers have in distinguishing between interstate and intrastate calls. As a result, the FCC referenced in its brief that it created a “safe harbor” under which a company such as Vonage may presume that 64.9 percent of its revenues arise from its interstate operations. Such companies are also free to conduct a traffic study to estimate the percentage of revenues derived from interstate traffic and use that percentage to calculate the contribution amount. VoIP providers that are able to track the jurisdiction of their calls may instead calculate their federal contribution amounts using actual revenue allocations.

Since the Telecom Act permits states to adopt regulations that are not inconsistent with the FCC’s rules in order to “to preserve and advance universal service,” the FCC wrote in its brief that the Nebraska PSC was correct in determining that interconnected VoIP providers can be required to contribute to its state USF and can calculate their intrastate revenues using the same formula options provided by the FCC. Accordingly, the FCC argued that by subjecting Vonage’s intrastate revenues to a state USF in no way frustrates the FCC subjecting Vonage’s interstate revenues to the federal USF.

New York, unlike Nebraska, currently has no state USF. New York does have a “Targeted Accessibility Fund,” to which wireline carriers (not wireless or VoIP) contribute. TAF was created in response to New York PSC orders regarding the collection of state universal services surcharges and their distribution. Currently TAF is used to support offerings such as Lifeline assistance to low income customers, and the relay service for the deaf.

However, contributions to TAF are declining at an accelerating pace due to intermodal migration (from landline telephones to to wireless and VoIP). In the not-too-distant future it may become impossible for the TAF fund to be supported only by the current contributors, increasing their charges while allowing the VoIP and wireless providers to escape contribution to state public purpose functions.

The time has come for the New York State Public Service Commission to catch up with Nebraska and other states that are adjusting their universal and consumer protection policies to take into account customer migration to VoIP and wireless phone services. The PSC should end its timid approach, and instead take swift action to reverse the dwindling assistance provided to low income telephone customers (more than 400,000 low income customers have lost Lifeline assistance worth scores of millions of dollars in recent years), and to support this by add inginterconnected VoIP providers and wireless companies to the roster of entities which support relay service, Lifeline and other universal service objectives.

Lou Manuta

Governor Proposes 50% Cut in State Funding for Civil Legal Services

Governor Paterson is asking the Legislature to cut general budget funding for civil legal services contained in the state budget for 2008 - 2009 previously enacted into law in April by 50%.

The April New York State budget included an appropriation of $4.2 million for numerous not for profit legal assistance organizations that provide legal aid in civil matters to low income people who cannot afford an attorney. The state general fund support was added by the Legislature to the Governor's proposed budget as an initiative of the Assembly.

PULP provides information, consultation, and training services to local organizations that serve low income utility consumers, including legal services organizations.

The list of twenty-two of the organizations whose funding would be cut if the Legislature were to adopt one of the Governor's proposals is below.

DEPARTMENT OF STATE
STATE OPERATIONS AND AID TO LOCALITIES 2008-09

1 Legal Aid Society NYC .......................... 1,091,251
2 Legal Aid Society of Northeastern NY ..............216,826
3 Legal Services for the Elderly Disabled and
4 Disadvantaged .................................... 7,507
5 Legal Services of Central New York ............... 256,561
6 Legal Services of Hudson Valley .................. 184,447
7 Legal Services of New York City ................ 1,157,381
8 Medicare Rights Center ............................ 10,530
9 Monroe County Legal Assistance Center (LAWNY) ..... 37,930
10 Nassau Suffolk Law Services ...................... 198,883
11 Neighborhood Legal Services (Orleans, Gene-
12 see, Wyoming) ................................... 18,069
13 Neighborhood Legal Services (Erie) ............... 159,043
14 Neighborhood Legal Services (Niagara) ............. 30,328
15 New York Legal Assistance Group (NYLAG) ........... 12,060
16 Public Utility Law Project ........................ 34,666
17 Puerto Rican Legal Defense and Education Fund ..... 15,084
18 Research Found. CUNY-Brookdale .................... 11,258
19 Southern Tier Legal Services (LAWNY) .............. 49,114
20 Urban Justice Center .............................. 18,766
21 Volunteer Legal Services of (NYC) ................. 43,701
22 Volunteer Legal Services of Monroe ................ 24,119
23 --------------
24 Program account subtotal ................... 4,241,911

The governor proposes to reduce the above appropriations by fifty percent, to $2.1 million.
In addition, funding for legal services organizations would be cut under other proposals of the Governor to cut other parts of the state budget.

New York state spending for legal assistance for the poor is significantly less than other states. Often funding under state appropriations for the period beginning with the state fiscal year on April 1 does not begin to flow until the fall. As a result, organizations that receive state funding often borrow from banks in reliance on their appropriations in order to continue their services while awaiting completion of the state contracting system. See NYS Continues to Disadvantage Not-for-Profit Grantees. As a result, cuts could have an even more severe impact on services provided under the grants.

In reaction to lower state government revenues due to the recession, the Governor proposed limits on real property taxes and called the Legislature back to Albany for a special session on August 19 to consider his proposed tax limits and cuts in the current budget.

PULP Opposes Niagara Mohawk's Interim Gas Efficiency Program

As part of the Niagara Mohawk natural gas rate proceeding, a settlement process was begun to establish interim energy efficiency programs, pending the completion of the overall case. The interim programs would aid customers in reducing their gas consumption, and will be in place for the coming winter heating season. PULP, an active participant in the process, did not sign the "Joint Proposal" of other parties seeking PSC approval. PULP opposes the "Joint Proposal" because it did not increase the amount of money from last year, even though far higher bills are expected in the coming year. As a result there is no increase in funds designated for low income consumers to benefit from the energy efficiency and weatherization programs, and the proposal would require low income consumers to pay into the program even though only a small fraction would be able to participate. PULP urged that the entire amount of the $5 million program be allocated to low income efficiency programs or, alternatively, that the program be expanded to $8 million with $5 million allocated to low income customers.

National Grid Modifies Policy Denying Service to Minors Living Independently

PULP petitioned the PSC for emergency relief in March 2008 on behalf of a young parent denied utility service by Niagara Mohawk d/b/a National Grid. Without utility service she and the father of her child, also under 18, could not occupy the apartment they had rented.

The PSC's Office of Consumer Services Hotline decision had supported the utility in its decision to deny service. PULP sought a declaratory ruling of the Commission to the effect that the utility's untariffed policy of denying service to persons under 18 years of age who live independently from their parents who are not receiving public assistance. See National Grid Policy of Denying Utility Service to Minors Challenged.

After the petition for Commission review of the Hotline decision was filed, the Office of Consumer Services Hotline and National Grid reversed their prior positions, and service was finally provided to the applicant.

The petition was then treated as an ordinary complaint to be decided by the Office of Consumer Services rather than the Commission itself. On July 28, 2008 the Office of Consumer Services of the Department of Public Service wrote to PULP stating

We contacted National Grid regarding this matter and requested that they respond directly to the points in your complaint. National Grid has responded and informed our office that its current policy requires the utility to provide service to minors 16 years of age or older who provide the following documentation following an application for service:

- Proof of receipt of public assistance in the minor's name
OR
- Proof that they are self-supporting (i.e., pay stub) and

- a notarized lease, notarized landlord's statement or deed in the applicant' s name demonstrating they are living separately from (or independent of) their family

This policy has been reviewed by our Office of General Counsel who confirmed this position is within the limitations of the Home Energy Fair Practices Act (HEFPA). National Grid has informed us that this policy has been communicated to its Syracuse and Niagara Falls Contact Centers to prevent any application difficulties in the future."

PULP was not provided and did not see National Grid's ex parte response regarding its policy, or the document articulating the "current" policy, and so PULP had no opportunity to comment on it prior to the Office of Consumer Services determination of the complaint. In the past, National Grid, when policies have been challenged regarding deposits and payment agreements, has adopted slightly different policies with the tacit approval of the Office of Consumer Services that still resulted in delay or denial of service or imposition of requirements that created hardship for utility service applicants.

Although the individual applicant has obtained service, and National Grid has modified its policy to recognize the right of a minor living independently to obtain utility service, there are problems with the new policy. For example:

• A minor living independently might be self supporting without a pay stub.
• A lease can be unwritten
  
• A lease need not be notarized
  
• A lease may have expired and the tenant has a month to month tenancy
• A landlord need not notarize documents and may not be cooperative
• The documentation requirements may create delays

These revised requirements are not contained in the Home Energy Fair Practices Act. The purpose of HEFPA is to foster continuous residential service without unreasonable qualifications. Adding time consuming documentation requirements can result in households going without safe utility service for additional periods of time, adding to the risk of harm to them and their neighbors. See Candle Fires: A Symptom of "Rolling Blackouts" Affecting Low-Income Households.

A Well Kept Secret: Con Edison's Low Income Rate

In general, the New York PSC has done little in the way of encouraging utilities to establish rate plans that lighten burdens on the poor. The PSC has approved rate plans for most of the major utilities that purport to include a low-income rate plan, but these are mainly cosmetic, in that they do not really reach the eligible customer population or really provide sufficient benefits to make energy burdens affordable.

In a Con Edison electric rate case in 2000, PULP submitted testimony in support of a reduced rate for low income customers who were eligible for a broad range of benefit programs for the needy. This had been vigorously opposed by Con Edison for many years. In the prior case, Con Edison agreed to a reduced customer charge for customers receiving public assistance whose bills were directly paid by the local social services agency. In the eventual settlement of the case, Con Edison agreed to implement its first broadly available low income rate, which is provided as a discount to the regular $12.42 per month rate for the customer charge, and this was approved in New York PSC Opinion 00-14.

California utilities provide a rate reduction of 20% for low income customers in the California CARE program, and prominently advertise its availability. In contrast, the Con Edison low income rate is a rather well kept secret.

Try to find information about the rate on the Con Edison website, or at its "Customer Central" information page.

Good luck!

If you mine hundreds of pages of the Con Edison tariffs you can find that the customer charge rate reduction is $5.92 per month for Customers who are "enrolled" in the Company's low-income program. Even this small rate reduction can be important for customers on low and fixed incomes who live from check to check and are faced with higher Con Edison bills.

To qualify for the low-income rate

[A] Customer must be enrolled in the Direct Vendor or Utility Guarantee Program and/or receiving benefits under Supplemental Security Income, Temporary Assistance to Needy Persons/Families, Safety Net Assistance, or Food Stamps, or have received a Home Energy Assistance Program grant in the preceding 12 months.

There is no readily available application form for the Con Edison "low-income program." Callers to the PULP Hotline have told us that Con Edison's call center 1-800-75-CONED (1-800-752-6633) does not provide information to customers when they call and inquire about reduced rates for low-income customers.

In contrast to Con Edison's downplaying of its very modest rate break for low-income customers, Keyspan prominently provides information about its Reduced Residential Rate and other assistance for low-income customers at its website, and provides an online application form for service in the reduced rate classification, which is established in the tariffs as a separate residential subclass.

Utilities in other states provide more appropriate rate reductions to reduce energy burdens and publicize them well.

For example, see Southern California Edison's webpage regarding its CARE rate for low income customers, which provides a 20% rate reduction. Applications can be downloaded from the utility's web page.

Many customers who do receive the Con Edison low-income rate reduction are enrolled through a data matching program between Con Edison and public assistance agencies in New York City and Westchester County. For customers eligible for the reduced rate who are missed in this "automatic" enrollment process, PULP has created an application form which is available online at PULP's website page on the Con Edison low income rate. For further information contact the PULP Hotline at 1-800-255-PULP (1-800-255-7857).

PULP Demands Full Public Investigation by FERC of NYISO Gaming

Captain Renault: I'm shocked, shocked to find that gambling is going on in here! -- Casablanca, 1942.

A recent NYISO filing at FERC brought out of the shadows a strong indication that market participants have been gaming the NYISO wholesale electricity markets by deliberately scheduling circuitous transactions around Lake Erie. This has the effect of creating economic congestion, raising spot market clearing prices, and increasing costs related to uscheduled flows of electricity.

Estimates of the cost of the practice range from $125 million to $290 million. See PULP Network, Enron-Like Gaming of NYISO Market Rules: Did it Cost New York Consumers At Least $125 Million?, Platts: NYISO Electricity Market Gaming Cost $290 Million, and New York ISO Moves to Cut off Loop Routing as Cost of Strategy Mounts for Whole Market

NYISO implemented changes in its tariffs to limit the use of certain transmission paths on one day's notice, and filed an "exigent circumstances" petition asking FERC to approve only the tariff changes it filed under Section 205 of the Federal Power Act. In a subsequent letter, NYISO reported that it had implemented the change in its rules to restrict certain transaction routes, and that average power flows had changed direction around Lake Erie in the first week of the new rules, from 457 MWh clockwise to 67 MWh counterclockwise.

NYISO acknowledges in its filings that it may be unable to detect continued circuitous transactions in its day ahead electricity market until September, when it will have new software. It says that if it discovers additional gaming its "market monitor" will send a letter warning against further gaming. In the event of a second infraction of the new rule prohibiting the gambit, NYISO will notify the FERC Office of Enforcement.

Thus, all NYISO market participants get at least one more free bite at trying a New York Death Star gambit at the expense of consumers. There is no provision in the NYISO rules for disgorgement of gaming profits. One might add that with FERC led by ardent deregulators and architects of a scheme of unfiled, unreviewable, and unrefundable market rates, what better time to loot and pillage New York than in the waning days of their reign.

On August 1, PULP moved to intervene in the case and asked FERC to commence a proceeding under Section 206 of the Federal Power Act, to examine publicly any gaming activities, to examine more closely and modify NYISO tariffs, to set a refund effective date to assure that refunds will be available in the event of continued gaming, and for other relief, including public identification of the sellers or other parties and their circuitous transactions that elevated rates and NYISO costs. PULP pointed out that "[t]he remedy sought by NYISO is grossly inadequate to address the situation....

• NYISO does not identify the extent of unreasonable rates and charges flowing from the gaming activities of its Market Participants.
• NYISO seeks no disgorgement of profits from unreasonable rates and no refunds.
• NYISO asks for no revocation of market-based rates of Market Participants whose gaming activities elevated congestion costs, clearing prices, residual NYISO charges, and uplift charges.
• NYISO acknowledges that its requested rule change may not completely halt the circuitous gaming transactions it has attempted to prohibit, and only reduce gaming.
• NYISO asks for no Commission investigation under Section 206.
• NYISO does not ask for a refund effective date that would allow for refunds related to gaming that occurs prospectively.
• NYISO’s Section 205 filing does not propose to add new NYISO tariff provisions that would prohibit its Market Participants from gaming, other than a few listed transaction routes.
• NYISO does not propose new NYISO tariffs that would require resetting of clearing prices influenced by gaming.

Seven utilities and neighboring states filed information suggesting that the market gaming had been going on longer than revealed by NYISO in its filing, and pointed to a $240 million increase in NYISO uplift charges since early 2007.

there is likely to be more going on than has been identified in the NYISO’s filing here. Although it blames a few unnamed market participants playing within the then-existing rules for driving up the initial cost of hydro power and energy five fold simply to move it across New York, it would be a serious mistake for the Commission to take the NYISO’s explanation at face value .... A different explanation may be that market participants were manipulating the market prior to January, 2008, and—having gotten away with doing so—were inspired to launch this latest, more aggressive gambit.

The Neighboring States' filing suggests that NYISO knew for months about the problem and apparently tolerated the gaming. Only after being confronted at a meeting on July 15, 2008 with evidence of gaming, reproduced in the filing of the Neighboring States, did NYISO go forward with the exigent circumstances filing on July 21.

A filing by AES also indicates that FERC was aware of the situation months ago. FERC did nothing to correct it or to protect customers by commencing an investigation with a refund effective date prior to the $125 million added uplift charges that were extracted from consumers' pockets this spring.

The New York Association of Public Power Utilities filing indicates that NYISO uplift charges alone rose $240 million in the first six months of 2008:

the Total Uplift was $129.4 million in May 2008 and $97.3 million in June 2008, according to the NYISO President’s Report, July 23, 2008. For the period January through June 2008, Total Uplift in New York has more than doubled and is approximately $240 million above Total Uplift for the same six-month period in 2007. Consumers in the other affected organized markets have also been harmed.

The filing of the New York Public Service Commission basically supports the NYISO. In all likelihood the PSC has known about the situation for months but has done nothing to protect consumers. Although NYISO tariffs are under FERC jurisdiction, the NYISO is still a New York electric corporation and the PSC has some jurisdiction over the NYISO to see that it operates in the public interest. See NYISO Governance. In its filing as a party in the FERC proceeding the PSC seeks no refunds, no disgorgement of profits, and demands no broader investigation of gaming at the NYISO.

The Consumer Protection Board requests refunds in its filing. FERC precedents indicate that this is highly unlikely. FERC will claim that the rates elevated by gaming cannot be changed under the "filed rate" doctrine -- even though the actual rates and charges are not filed publicly and are not reviewable before they take effect as contemplated by the Federal Power Act. The Supreme Court recently remarked that FERC's unfiled market rate scheme is rather "mystical." See Supreme Court Leaves Fundamental Questions About FERC Market Rate Scheme Unanswered.

The American Public Power Association (APPA) filed comments asking a number of pointed questions, including:

• Who are the market participants engaging in these scheduling practices?
• Are these participants load-serving entities with physical market transactions, or are they purely financial players?
• How many dollars in uplift charges and increased locational-based marginal prices have their activities caused other NYISO transmission customers to pay?
• Are these scheduling practices the sole reason for the substantially increased transmission charges APPA members are paying the New York ISO, or are there other practices that are contributing as well?

APPA told FERC, "Something is clearly wrong here. This commission, if it is to ensure that consumers only pay just and reasonable rates as the Federal Power Act requires, must get to the bottom of it."

DC Energy, LLC in its filing provides independent evidence of the circuitous transactions designed to exploit differences in market rules of adjacent control areas, and points out the adverse impact on reliability:

Since the circuitous transactions commenced (January 2008), there have been 72 NERC TLR [transmission load relief] procedures enacted at level 2 or above to relieve flows on Ontario/NYISO flowgates. By contrast, only one was issued in all of 2007. The Circuitous Path Transactions’ pernicious effect on the market includes additional and avoidable challenges to the reliable operation of the system.

Because it is possible that the NYISO action may not completely curb the identified gaming techniques, or that it has only identified one of several gambits, it is important for consumers that FERC, in response to the NYISO Section 205 filing to change its rules, on its own motion commence an investigation proceeding under Section 206 of the Federal power Act and establish a "refund effective date" forthwith, as PULP and some other intervenors have requested, to at least shore up the possibility of refunds of ongoing and future overcharges due to continued gaming which occurs after the NYISO filing.

Platts: NYISO Electricity Market Gaming Cost $290 Million

Captain Renault: I'm shocked, shocked to find that gambling is going on in here! -- Casablanca, 1942.

Earlier we noted that NYISO filed a request to change its tariffs to foreclose certain spurious transactions that had the effect of raising wholesale electricity rates artificially. According to NYISO, this was accomplished by scheduling circuitous transactions from New York to Pennsylvania counterclockwise around Lake Erie -- through Canada, MISO, and finally into PJM -- instead of a more direct transaction, in order to create economic congestion and game the rules of the loosely regulated "organized markets" approved by FERC to establish rates privately, in place of the filed rate regulation system.

Platts has now reported that the cost of this gaming may be $290 million.

The New York Independent System Operator said a small subset of its market participants has been increasing congestion around Lake Erie by creating circuitous power schedules in order to benefit from the differences in locational marginal prices in neighboring areas. As a result, the rest of the NYISO members and customers were adversely affected and will end up paying an estimated $290 million in additional charges.

The market behavior may seem reminiscent of Enron trading practices in California with colorful names such as “Death Star” and “Fat Boy,” which were denounced by the Federal Energy Regulatory Commission. That controversy ended with Enron traders pleading guilty to federal wire fraud charges.

See New York ISO Moves to Cut off Loop Routing as Cost of Strategy Mounts for Whole Market.

The lower figure of $125 million we cited earlier (See PULP Network, Enron-Like Gaming of NYISO Market Rules: Did it Cost New York Consumers At Least $125 Million?) may relate only to increased NYISO uplift and residual charges imposed to balance daily transactions involving unscheduled flows of electricity, as of early June 2008. Perhaps the higher $290 million estimate from Platts includes the added NYISO uplift charges plus impact of the manipulation upon spot market clearing prices and the impact of additional gaming that occurred after the first estimate. Under NYISO rules, all sellers generally benefit when prices are inflated because all are paid the same spot market clearing prices. By artificially creating economic congestion, however, more expensive power plants may be called to run, while less costly power cannot be dispatched, so sales of some producers may have been curtailed by the gaming.

NYISO did not identify the amount the gaming has cost, did not seek refunds, acknowledged that the rule changes it is adopting may not halt the gaming, and indicated that it lacks the ability to detect the gaming in its major spot market, the "day-ahead" market. NYISO indicated that if it discovers continued use of the particular circuitous transactions it will refer the matter to FERC for enforcement. There is no talk of a refund for consumers.