Submetering Landlords Clamor for More PSC Deregulation of Electric Service

The PSC is considering new regulations proposed by its Department of Public Service Staff to "streamline" the process for waiving the longstanding prohibition against resale of residential utility service. These orders allow landlords to become, in effect, monopoly providers of utility service to their tenants. PULP and tenants oppose the "streamlining" and have urged the PSC instead to improve its enforcement of the now hollow customer and tenant protections routinely included in PSC submetering orders, which appear to be routinely ignored with impunity by landlords. See PULP Files Comments on PSC Proposal to Relax Submetering Rules; Bronx Tenant Association Objects to PSC Staff Proposal to "Streamline" Electric Submetering Rules.

Landlords, in their comments, are asking the PSC for even further deregulation of their charges for electric service.

Appealing to the PSC's deregulation ideology, Starrett Corporation's comments ask the PSC to eliminate the longstanding requirement that a landlord cannot charge more for electricity than Con Edison would charge to its directly metered residential (SC1) customers:

Moreover, and most important, the rate cap regulation, which mandates that charges to residents not exceed the utility's residential rate for direct metered service (SC 1), is a deterrent to the purchase of deregulated electricity. It is virtually impossible to buy electricity from the market and ensure that the purchased rate, be it at a monthly rate or a yearly average rate, is at or below the SC 1 rate. ...In effect, the PSC, in attempting to protect residents from higher electricity costs is . . . thereby defeating another of its stated objectives - electricity deregulation and the promotion of a competitive marketplace.

This issue first arose in early 2008 when Con Edison's SC8 rate exceeded that of the residential SC1 rate, placing some submetered properties, (depending upon their load factor) in the position of having passed along to residents charges that exceeded the SC 1 rate. In the past, the SC8 rate was lower than the SC 1 rate.

There we have it. In the past, landlords who submetered got electricity from Con Edison at a low bulk rate that, at least on paper, prevented tenants from being charged more than they would be charged as a direct customer of the utility. In theory, tenants would not suffer economic injury, would have no reason to challenge the submetering regime in court and would not seek service directly from the utility.

Those days when submetered tenants could be promised that they would pay less than Con Edison customers are now over. Now landlords want no limit on what they charge as monopoly providers of service to their captive tenants, and no review of the prudence of their purchases if they buy electricity from the "ESCO's" at unregulated prices. Essentially they seek complete exemption from the traditional requirement in the Public Service Law that charges for electric service must be "in all respects just and reasonable."

Starrett Corporation is also asking the PSC to allow landlords to implement residential time of use rates without individual customer consent, requesting that the Commission:

Clarify that consent required for real time pricing is not from individually submetered unit tenants, but rather from the entity that pays the mastermeter charge to the utility or power providers. At the Technical Conference, staff advised that it was not the PSC's intent to require the consent of every rental tenant to real time pricing, but rather the intent was to obtain consent of the building owner.

This comment reveals the plans of both landlords and the PSC staff to mandate real time pricing without tenant consent. Such pricing could be very harmful to customers. See Not so Smart? High Tech Metering May Harm Low Income Electricity Customers. This would be done under the ruse that the "customer" is the landlord and the landlord can consent to real time pricing for all his tenants. The landlord, however, is not a residential customer, and lacks power to consent for all its tenants to time of use or real time pricing.

The Public Service Law was amended in the past to take away the power the PSC previously asserted to require residential time of use rates. By granting to submetering landlords a power that the PSC itself lacks, the PSC would be evading the intent of the law. See New York Residential Real Time Pricing Experiments Must be Voluntary.

Landlords are also asking for waiver of requirements for meters that meet utility standards, and for restriction of the right of a customer under current laws and regulations to have a meter tested at least once. Starrett Corporation is asking to amend PSC rules to allow a submetering landlord to charge the tenant if the meter is found to be correct.