PULP Submits New Evidence to PSC Showing No Need for Area Code Changes Now in Central NY 315 Area

On April 28, 2009, PULP submitted a Further Supplemental Brief on Exceptions with the New York State Public Service Commission (“PSC”) regarding the Recommended Decision issued in November 2008 calling for an overlay area code to be added in the current 315 area. PULP previously submitted a Brief on Exceptions outlining the reasons why area code “relief” is not necessary and filed a Supplemental Brief in March with updated data from the North American Numbering Plan Administrator (“NANPA”).

PULP previously uncovered evidence that multiple 10,000 telephone number exchange (NXX) codes had been assigned to over 50 rural communities in the 315 area code in recent years, which created a perceived impending “shortage” signaling the need for a new area code. See:PULP Submits More Evidence to PSC Showing that a New Area Code in 315 Region is Unnecessary, which contains a list of prior posts on this topic.

In the Further Supplemental Brief, PULP noted that after we filed the Supplemental Brief, NANPA issued two documents which further support PULP’s position that it is premature to enact any area code changes in the 315 NPA.

First, NANPA’s March 2009 monthly Code Assignment Report states that the number of NXX codes requested in the 315 NPA for the first three months of 2009 stood at zero with one returned. As a result, when combined with NXX code usage for the latter part of 2008, there has been a total of negative one NXX codes assigned in the 315 NPA since October 2008 and 99 NXX codes remain available.

This changed factual circumstance is buttressed by NANPA’s release of its semi-annual “NPA Exhaust Analysis” on April 24th. This document indicates that since the previous semi-annual report was released in October 2008, the life of the 315 NPA has been extended yet another full year – from the first quarter 2012 to the first quarter 2013. The listing for the 315 NPA also includes a notation indicating that the code is now facing “reduced historical and projected demand.” This extension marks the fourth consecutive semi-annual NPA Exhaust Analysis to push the date of the 315 NPA exhaust further out. In fact, since this proceeding commenced, two and a half years have been added to the life of the code. (Stated another way, on December 20, 2007, when the Commission instituted this case, NANPA’s projected 315 NPA exhaust date was the third quarter 2010, or about 34 months. Now, after the passage of 15 months, the exhaust date is 43 months in the future).

Based on the current code usage trends, the next NANPA exhaust analysis could push the date out even further, even if no new measures are taken by the Commission to reclaim scores of little-used NXX codes currently stranded in rural areas, as PULP recommended. As a result of these updated findings, PULP reiterated its position that there is no need to implement any new area code changes now in the 315 area.

Lou Manuta

Another Verdict: Consumers Did Not See Tangible Benefits from Electric Restructuring

In a recent newsletter, veteran utility industry analyst and consultant Leonard Hyman weighed in on the issue of who, if anyone, has benefited from electric utility restructuring:

Every year, at year-end, I recalculate the numbers and come to the same conclusion after comparing electricity prices in states that restructured and those that did not. I always come up with the same result: prices started out high relative to the average in states that restructured and, more than a decade later, they remain just as high (or higher) relative to the average.

The regulated states started out and remained lower than the average. Shouldn’t competition have forced down costs and then prices in the restructured markets relative to costs and prices in regulated markets? The numbers always indicated that restructuring had not narrowed the gap. That is, probably, consumers did not see tangible benefits from restructuring.

Leonard Hyman, Rudden’s Energy Strategies Report, April 27, 2009. Hyman performed another analysis this year which took into account fuel price changes, and reached a similar conclusion.

Verizon Proposes $1.95/month Rate Increase; Spares Lifeline Customers

In an April 14, 2009 tariff filing with the New York Public Service Commission, Verizon proposes to increase its residential monthly charge for local exchange access lines by $1.95 in those exchanges with the smallest local calling areas, to be effective on June 20th. As part of the filing, flat rate usage charges for all other New York rate groups would be reduced to keep the total charge for all Verizon flat rate customers at $23 per month.

Verizon stated that Lifeline rates for low income customers would not increase and the total flat rate service charge for Lifeline customers in rate groups outside those exchanges with the smallest calling areas will actually see a reduction of $1.95 per month.

The charge for Verizon’s flat rate (unlimited local) service has two components: the basic service access line rate and the local usage rate. Historically, these rates differed based on the size of the customer’s local calling area (Group 1 covers local calling areas with 1 through 3,600 lines, Group 3 covers 3,601 through 17,000, Group 5 covers 17,001 through 60,000, Group 7 covers 60,001 through 260,000, and Group 9 covers 260,001 through 650,000), but, with the proposed changes, the rates will now be identical for all rate groups.

Essentially what the tariff charge would accomplish is to raise the basic service access line portion of the charge for Group 1 from $13.85 to $15.80, the same rate already charged in other parts of the state. At the same time, the local usage charge in Groups 3, 5, 7, and 9 will decrease from $11.15 per month to $9.20 everywhere outside the Group 1 exchanges, where the rates will remain at $9.20 per month. These changes will result in $23 per month charges for all Verizon exchanges. Since the local usage portion would be a uniform $7.20 statewide, Flat Rate Lifeline service will be reduced by $1.95 per month outside of Group 1.

Flat Rate Lifeline service provides unlimited local telephone calls, while Basic Lifeline would continue to cost $1 per month, with each local call costing about a dime.

While many Lifeline customers will benefit from this tariff filing (because they are Flat Rate Lifeline customers in Groups 3, 5, 7, or 9), that does not mean that the state’s Lifeline program is a success. Since 1996, Lifeline enrollment in New York State has dropped from a peak exceeding 750,000 subscribers to around 300,000 today. This anemic amount represents a fraction of those eligible to participate. The January 2009 statistical reports from the state Office of Temporary and Disability Assistance (“OTDA”) indicate that 1,173,412 households across the state receive SNAP (Food Stamp) assistance – one of several eligibility conferring criteria for Lifeline eligibility. (at Table 16) While OTDA has an automatic enrollment program in place with Verizon to confidentially link people receiving qualifying benefits with Verizon’s Lifeline program, there are obviously gaps in the process, because only about 300,000 persons have Lifeline assistance, and there are additional eligibility-conferring programs beyond SNAP.

In contrast, California has fewer SNAP households than New York. Yet the January 2009 California Public Utilities Commission ("CAPUC") Lifeline report “Efforts to Improve California LifeLine Program Accessibility” shows that California enrolls more than 2.1 million low income telephone customers in its Lifeline assistance program - about seven times the number of New York Lifeline customers. The report indicates that CAPUC is committed to enrolling all customers eligible for the reduced rate and devotes significant staff resources to work toward fuller enrollment, and is planning to enroll more low income customers:

The [California] Commission is considering a number of initiatives to further increase Lifeline participation. One proposal is to increase the income eligibility requirement from its current level that approximates 150% of the Federal Poverty Guideline (FPG) to 200% of the FPG. Current enrollment in LifeLine is about 2.1 million, whereas the CARE energy program (which has a 200% FPG enrollment criteria) has about 3.6 million participants.

While it is good that Verizon’s proposed tariff changes will not negatively impact current Lifeline customers in New York, until the PSC confronts all the issues inherent in the dwindling Lifeline enrollment numbers, more and more New York households that qualify for Lifeline will continue to pay more for phone service than they should. Meanwhile, universal service surcharges paid by New York's consumers, many of them eligible for Lifeline, will go to reduce phone bills for residents of other states.

Lou Manuta

PSC Launches Seven Low Income Conferences as Utility Shutoffs Soar

Last year, electric and natural gas service to 330,000 New York customers was interrupted as a bill collection measure when they could not afford to pay their bills. See PSC Reports on Devastating Termination Statistics. This year, with many more New Yorkers having lost their jobs and a worse economic climate, the number of utility shutoffs may increase.

As warmer weather brings more shut offs -- May is typically the month when service terminations peak -- the Public Service Commission (PSC) Office of Consumer Services and NYSERDA will hit the road to hold a series of meetings at seven conference centers and hotels across the state to discuss low income utility customer issues.

According to yesterday's PSC press release, the meeting schedule for its Low Income Forum on Energy ("LIFE") is as follows:

April 30 Bay Ridge Manor, Brooklyn
May 5 Holiday Mountain, Ellicottville
May 6 Red Mill Inn, Syracuse
May 7 Binghamton Regency Hotel, Binghamton
May 12 Ramada Inn West Point, Newburgh
May 13 Riverstone Manor, Schenectady
May 14 The Wild Center, Tupper Lake

According to the PSC Press Release

LIFE is the nation’s longest running statewide dialogue on the energy needs of lowincome customers and has built a reputation as an interactive exchange of ideas and resources. This year’s regional meetings will build on lessons learned in prior LIFE conferences and will feature sessions on emerging energy issues, consumer education, and information on some of the resource programs that assist low-income energy customers.

The agenda for the meetings is here. Online registration information is here.

PULP lacks staffing and financial resources to attend and participate fully in the LIFE conferences.

Parker Towers Residents Petition PSC to Vacate Prior Submetering Order

On April 20, 2009, the Parker Towers Tenant's Association petitioned the New York Public Service Commission to stay and vacate its December 20, 2007 Order approving the owner's petition to submeter 1,327 apartments at Parker Towers, a Queens housing development.

The Owner plans to begin charging tenants for electricity on April 24, 2009.Approximately 66% of the Parker Towers apartments are rent stabilized, and the resident population includes many elderly and fixed income tenants.

The tenants' petition alleges the

Owner's Petition for submetering approval did not fully inform the Commission of the facts, that the Commission misinterpreted or misapprehended or failed to consider issues relevant to the feasibility of submetering at Parker Towers, and that since submetering approval, there has been substantial Owner noncompliance with the Submetering Order.

More specifically, the tenants' petition alleges that

• The tenants were not properly or timely informed of the submetering plan;
• The Owner violated the Submetering Order by not complying with "shadow billing" provisions intended to help tenants prepare for the transition to submetering;
• The inefficient heating system for which the owner is responsible necessitates use by tenants of air conditioning in winter;
• The Owner is deeming charges for electric service to be "additional rent," which circumvents utility consumer protections and limits availability of utility assistance to needy tenants;
  
• The Parker Towers lease rider for electric service is deficient in that it does not contain PSC-required provisions;
• The complaint procedures for electric service do not comply with HEFPA;
• The Owner has not complied with the Commission-ordered rate cap;
• Shared Meter Conditions exist
  

The tenants asked the PSC to reopen the matter for rehearing and to vacate the Submetering Order or stay it pending a full investigation into the reasonableness of submetering at Parker Towers. The tenants ask that if the Commission still finds submetering to be reasonable, that any order allowing a resumption of submetering be conditioned upon the following:

• Proper notice to tenants affording them an opportunity to submit comments to the Commission on implementation of any submetering plan;
• remediation of building-wide energy inefficiencies that are not controlled by tenants but for which they will bear the cost burden;
• correction of any double-billing resulting from pre-existing electricity surcharges embedded into base rents;
• provision of adequate and timely shadow billing periods prior to actual billing;
• prohibition of the deeming of electricity charges to be "additional rent";
• disclosure of and incorporation into the leases the method of rate calculation, the rate cap, complaint procedures, tenant protections and enforcement mechanisms;
• Owner implementation of complaint procedures that comply with HEFPA, and
  
• adequate notice to tenants of these procedures, and of their right to avail themselves of the Commission's complaint procedures and to receive a written determination from the Commission on their complaints;
• Owner disclosure of the rate cap and compliance therewith, together with disclosure to tenants on each monthly bill of the comparable Con Edison SC-1 price for direct electric service;
• Elimination of different rates for different tenants;
• Elimination of any crossed wire or shared meter conditions; and
  
• other relief that the Commission deems appropriate under the circumstances.

The tenants also asked the Commission to consider whether to impose statutory penalties upon the Owner for any knowing failure to implement the tenant protection measures required by the Commission's prior Order allowing submetering.

New charges for submetered electricity are not offset by rent reductions
Tenants at Parker Towers who are not rent stabilized receive no rent reduction when submetering is implemented, and simply pay more.

The rent stabilized tenants receive rent reductions in the transition from master metering to submetering, because the rent previously included electric service. A DHCR schedule requires rent reductions ranging from about $30 to $60 for one to six rooms, but those rent reductions are not sufficient to offset the new charges for submetered electric service. As a result, rent stabilized tenants will also see a net increase in their payments to their landlord.

The DHCR schedule may be premised upon an unrealistic assumption regarding typical usage, and an unrealistic assumption that the bulk rate for electric service to a submetered building is much lower than direct Con Edison service to residential customers. Although once true, it appears that is no longer the case. According to papers filed in a pending case at the PSC to "streamline" the submetering process for landlords, the bulk rates to submetered buildings at times exceed the rates Con Edison charges to its direct service residential customer. See Submetering Landlords Clamor for More PSC Deregulation of Electric Service.

State subsidization of submetering landlords
Parker Towers appears to have received significant subsidies and funding from NYSERDA for its electricity systems. NYSERDA lists Parker Towers as receiving a $955,390 grant for a combined heat and electricity cogeneration system intended to save on electricity costs. A 2008 NYSERDA presentation indicates, however, that investment did not turn out well:

Parker Towers installed 9 recip engines 1350 kW total, Original plant built w/o sound attenuation, Developer installed enclosures later, complaints continued, Generators failed due to winding failures, poor packaging, project eventually shut down.

Parker Towers may also have received subsidies from NYSERDA to underwrite some of the cost of installing submeters. According to the PSC order allowing submetering at Parker Towers, "through participation in the New York State Energy Research and Development Authority's (NYSERDA) energy conservation programs further savings will be available because of incentives offered by NYSERDA reducing the cost of the submetering."

The PSC approves the use of system benefit charge ("SBC") funds used by NYSERDA to make grants to landlords for submetering projects. The SBC is collected through surcharges on utility bills under a PSC order. See PSC and NYSERDA Spend Millions for Submetering Projects Violating Residential Tenants' Rights.

For further information about submetering, see PULP's webpage on submetering.

Bill Would Bar Landlords from Deeming Charges for Submetered Electric Service to be "Additional Rent"

Some landlords have won approval from the PSC to resell electric service to their residential tenants. Although the PSC orders typically contain a reference to compliance with the Home Energy Fair Practices Act (HEFPA), landlords have been skirting those requirements by deeming unpaid charges for electricity as additional rent, and threatening eviction. A NYSERDA handbook for landlords actually suggests to them that they avoid the requirements of HEFPA by not pursuing termination of service for unpaid charges and using eviction proceedings instead. The eviction route may also be attractive to landlords who can re-rent the premises at market rents after a low-income tenant whose rent is limited by a subsidy program is displaced.

Many, but not all, HEFPA protections come into play when a utility threatens to discontinue service. By evicting, or threatening to evict the tenant, landlords are circumventing the protections of HEFPA. As a result, tenants with a temporary budget crisis who need a deferred payment plan required to be offered when service termination is threatened, or who need emergency public assistance to pay the charges for electricity to prevent a shutoff, cannot receive benefits intended by the legislature, and they are put at increased risk of eviction and homelessness.

Assembly Bill A07353, introduced by Assemblyman Micah Kellner, would prohibit charges for landlord-provided residential utility services from being deemed to be "additional rent."

For further information see PULP's web page about submetering.

PSC Tells FCC Low Broadband Speeds Are OK for New York’s Unserved and Underserved Areas

As a follow-up to its comments recently filed at the FCC regarding the federal rural broadband strategy, see PSC Files Comments with FCC on Federal Rural Broadband Strategy, Forgets Affordability Issue for Low-Income Households, the New York State Public Service Commission (“PSC”), along with the state’s Office for Technology (“OT”), submitted a second set of comments focused on definitions used in the granting process for broadband projects under the American Recovery and Reinvestment Act (“ARRA”) .

The PSC and OT emphasized the need for flexibility in order to “allow for providing and enhancing connectivity to the broadest spectrum of users based on their service needs.” While PULP generally supports flexible application of requirements to ensure, for example, that small customers are not unduly burdened by rules placed on larger customers, the PSC and OT missed the point in this regard. The comments looked at several of ARRA’s broadband definitions, including “unserved” areas and “underserved” areas.

Currently, an unserved area is defined as an area which either has no Internet access or service below 768 kilobits per second (“kbps”). By today's standards, this is a laughably slow speed, and only a fraction of what is considered to be “broadband” in other parts of the world.

According to a 2007 report of the Information Technology and Innovation Foundation, in Japan, for example, over 75 percent of NTT East’s customers receive speeds of 100 megabits per second (“mbps”) (at about $27 per month, compared to about $30 per month for 1.5 mbps in the United States), which is more than 100 times faster than what passes for broadband in the United States under this outdated definition and at a fraction of the price.

The PSC and OT argued that if there are no other providers offering Internet service in a particular area, then applicants for ARRA funding should be able to receive a grant for speeds below 768 kbps. Basic digital subscriber line (“DSL”) service over existing copper loops offered by every local exchange carrier in many but not all areas of the country generally offers speeds in excess of 1.5 mbps – twice the PSC's proposed definition of broadband for unserved and underserved areas.

There is no reason to look backwards and deprive people in primarily rural areas an opportunity to receive true broadband, even if this “true broadband” does pale in comparison to speeds offered in other countries. There is a significant amount of grant money available under ARRA for broadband deployment in rural areas. Permitting it to be allocated to providers who would not be required to provide even a modest broadband speed as the PSC has proposed would violate the spirit of the law and defeat the purpose of bringing all Americans across the digital divide with affordable broadband service.

The need for broadband is noted by an Associated Press article on April 16th reporting that Time Warner Cable is seeking to begin billing customers not only for a particular rate of speed, but for how much bandwidth they use. In other words, customer who download movies on a regular basis would end up paying more every month for broadband than someone who uses their broadband Internet connection primarily to exchange e-mails.

If systems were designed using the PSC and OT’s proposal for a 768 kbps definition of broadband, customers in rural areas who can not download large files today will not be able to download large files in the future either, be they the latest movie or a giant database or spreadsheet for a home-based employee or small business.

The PSC and OT’s apparent position that it is acceptable for some residents to have inferior (molasses slow) broadband is especially surprising since the New York State Council for Universal Broadband, in its March 9, 2009 report, defines broadband to mean “Internet access of at least one megabit per second (1 Mbps) for upload and download, as well as the infrastructure or means necessary to provide such Internet access.” This definition was not limited to non “unserved” or non “underserved” areas. The PSC comments obviously are out of harmony with voices of the same state government most concerned with broadband.

The PSC and OT comments hit closer to reality with regards to the definition of underserved areas. They argued that the definition of such areas must be flexible since there are multiple reasons why an area is deemed to be underserved. Does it have a population in excess of 250,000 people and only one or two broadband providers? Are there multiple providers, but no one is offering a service in excess of 768 kbps? Are there multiple broadband providers reaching over 90 percent of the households, but only 30 percent can afford to subscribe to the service? All of these situations are and should be considered “underserved.” The PSC and OT acknowledge this flexible definition of an underserved area and also correctly recognize that a community where the residents lack the education or skills to take advantage of broadband is an “underserved” area as well.

Where PULP differs with the PSC and OT is their statement: “Similarly, underserved can be based on a need for greater speeds and bandwidth to meet particular needs of a community such as for economic development, educational and institutional needs, and for libraries and community technology centers. Examples of applications that require higher speeds and greater bandwidth include, but are not limited to, the following: telemedicine; university research and supercomputing centers; technology centers; e-government applications being provided remotely through kiosks or satellite offices.” While these identified applications certainly do require broadband speeds in excess of 768 kbps, PULP believes that all communities need to have true broadband speed in order to fully participate in the global economy. What community doesn’t need broadband for economic development or for educational needs? – all of them do. What the PSC and OT are proposing is a continuation of the digital divide, which is the exact opposite purpose of the broadband provisions in ARRA.

State agencies from around the country submitted comments to the FCC on the topic of defining key broadband terms. The New Jersey Division of Rate Counsel's got it right when it stated in its comments:

In terms of reasonable technological expectations for consumers in the early 21st century, broadband should be defined to be offered at speeds of at least 3 mbps downstream and 1 mbps upstream, with that definition evolving frequently. However, in determining where to provide grants, those communities that do not even have broadband access at one of the three lowest tiers reported in the new Form 477 (the first tier is greater than 200 kbps but less than 768 kbps; the second tier is equal to or greater than 768 kbps but less than 1.5 mbps; and the third tier is between 1.5 mbps and 3.0 mbps) should be given priority for grants over those communities that have access to “low” broadband speeds (between 200 kbps and 3 mbps).

The establishment of a minimum threshold for speed is critically important to prevent future waves of “digital divides” where some communities’ broadband access is vastly superior to other communities’ broadband access.

For ARRA to be successful in creating jobs and boosting the economy, all Americans need to have an opportunity to be connected to the Internet with broadband speed. The lack of a clear national policy and directive during the Bush Administration, with its “goal” of universal Internet access but no “path” to get there, illustrates the need for the broadband grant provisions in ARRA. It is now official federal government policy to deploy broadband nationwide and it has backed up this priority with cash to build out in what are considered to be otherwise uneconomically viable areas. Yes, flexibility is in order, including examining policies from various states that have been successful. However, accepting 768 kbps (or slower) as an appropriate broadband speed in some areas, or believing some places may not “need” the economic development benefits or the educational aspects of broadband, grossly distorts the facts. If a company requesting a grant can not offer broadband speeds at least as fast as current DSL speeds, or, even better, the 3.0 mbps speed proposed by New Jersey, they should be rejected out of hand.

As FCC Commissioner Adelstein recently stated in the pending FCC proceeding on A National Broadband Plan for Our Future:

Broadband is no longer a luxury. It is essential if we are going to maximize the potential of every citizen to contribute to our social, cultural and economic life. We need the full input of every citizen, whether they live in rural, insular or other high-cost areas, whether they live in economically challenged sections of our inner cities, whether they are persons with disabilities, whether or not they speak English, and regardless of their income level.

Lou Manuta

Success Is a Relative Term for National Grid’s “Affordability Program”

National Grid released the first quarter 2009 results of its revised AffordAbility Program in its Niagara Mohawk service area on April 10th and the results are, optimistically, mixed.

The AffordAbility Program is a PSC-approved “arrears forgiveness” program designed by National Grid for customers with arrears, to encourage regular and larger payments. A major component is the application of a participant’s Home Energy Assistance Program (“HEAP”) benefit to the customer’s arrears. As a result, the HEAP grant does not help the participating customer meet obligations for current utility service. In addition, $20 of a customer’s arrears are forgiven each month that bills are paid, but the bills are $16 higher. See PSC Approves Grid "Affordability" Program in Which HEAP Payments Do Not Reduce Current Winter Bills. Other program components include referral of customers with arrears to ratepayer funded NYSERDA energy efficiency programs.

The PSC, in a June 2008 order, approved program modifications to provide a monthly, instead of annual, arrears forgiveness credit, to eliminate the portion of the deferral to arrears balances attributable to energy efficiency measures, and to limit participation to 24 months. Even with these modifications, PULP still has significant concerns with the design and operation of this program. See National Grid Misses Point with its Low Income Program.

The quarterly results indicate that 5,400 customers participated in the program. Of this total, only about eight percent, or 439 customers, successfully completed the program by eliminating their arrears. On the positive side, over $678,000 was forgiven by National Grid in 2008, but the vast majority of that amount was a result of the HEAP payments that were used to pay back arrears from seasons past and not to assist customers in meeting their current heating season obligations.

In addition, more people defaulted off of the program in 2008 than were added, 4,049 to 3,943. As a percentage, the number of customers defaulting off the program jumped in the first quarter of 2009 (924 defaulted to 609 new participants). The large number of defaulting customers could be directly attributable to the fact that participant’s bills went up by $16 a month for those customers transitioning to the new (improved?) AffordAbility Program. That is a significant amount of money to come up with every month, especially for a struggling family.

PULP supports innovative solutions to avoid termination of service and to reduce arrears, but using a low income customer’s HEAP payment – designed to keep their home warm during the winter months – to reduce money owed from seasons past, is not consistent with the principle that HEAP funds should be used primarily to defray costs of home heating for the current winter season. That, combined with the small number of participants in the program and the fact that little more than eight percent of participants “graduate,” equates to less than a stellar success.

Meanwhile, in 2008 National Grid terminated service to 60,617 customers as a bill collection measure. Last year, service to nearly 11,000 customers was interrupted for collection purposes in the month of May alone. With worsening unemployment in 2009, service is likely to be terminated to more households unable to afford their National Grid bills. However success is defined for participants in the "arrears forgiveness" program, it is not reaching even 10% of customers whose service is shut off due to arrears.

Time for the PSC to go back to the rate design drawing board to make service more affordable to the poor?

Lou Manuta

FCC Grants Tracfone Waiver of DTV Consumer Education Requirement

The FCC has regulations in place which require all Eligible Telecommunications Carriers ("ETCs") to notify their Lifeline and Link-Up customers about the digital television ("DTV") transition through the use of bill notices or monthly stand-alone mailers and publicity campaigns. See FCC Orders Telephone Lifeline Providers to Include Digital TV Transition Information in Customer Bills. ETCs are entities authorized to receive federal Universal Service support through the Universal Service Administrative Company to offer Lifeline discount telephone service and Link-Up discounted installations. TracFone, which has received ETC status in several states for its wireless SafeLink Lifeline service, including New York, (see TracFone Launches "Safelink" Wireless Lifeline Service in New York) had sought a waiver of this requirement.

The FCC previously required monthly DTV transition notices to contain, at a minimum, the following message:

The nationwide switch to digital television broadcasting will be complete on June 12, 2009, but your local television stations may switch sooner. After the switch, analog only television sets that receive TV programming though an antenna will need a converter box to continue to receive over-the-air TV. Watch your local stations to find out when they will turn off their analog signal and switch to digital-only broadcasting. Analog-only TVs should continue to work as before to receive low power, Class A or translator television stations and with cable and satellite TV services, gaming consoles, VCRs, DVD players, and similar products.

Information about the DTV transition is available from your local television stations, www.DTV.gov, or 1-888-CALL-FCC (TTY 1-888-TELL-FCC), and from www.dtv2009.gov or 1-888-DTV-2009 (TTY 1-877-530-2634) for information about subsidized coupons for digital-to-analog converter boxes.

As a prepaid wireless service provider which does not send monthly bills, TracFone's waiver request told the FCC that it can not meet the notification requirements as written. Instead, it offered to provide DTV transition notices with every handset sent to its Lifeline customers. In addition, in lieu of sending monthly stand-alone notices, TracFone proposed to send text messages to its Lifeline customers twice monthly, at no charge to those customers. However, due to size limitations of text messages, TracFone proposed that these messages would not include the minimum information required, but would instead state "Be ready for the DTV transition 6/12/09. Call 1-888-CALLFCC for add'l information." TracFone claimed that its "alternative notification proposal will reach consumers more effectively than mailing notifications because its Lifeline customers will view the messages directly on their wireless handsets and will likely read the contents of the text messages before deleting them."

In a decision released on April 10th , the FCC held that good cause exists to grant the waiver request. The FCC found that

TracFone's circumstances are unique because, unlike other ETCs, it automatically adds prepaid airtime minutes to its Lifeline customers' handsets. As such, it does not have an opportunity to provide the minimum information required. . . in a traditional billing statement. Furthermore, it is unable to provide the minimum information via text message to its Lifeline customers' handsets, the manner in which it usually communicates with its customers, because of the capacity limitations of text messaging.

The agency did amend TracFone's request by asking the company to change "DTV" to "digital TV" in the text message to avoid confusion. It also supported TracFone's efforts to reach its customers about the DTV transition twice a month, rather than the required once a month.

The DTV transition is slated for June 12, 2009.

Lou Manuta

Bill Would Require PSC to More Closely Scrutinize Area Code Changes

Assemblywoman RoAnn Destito (D-Rome) and Senator Joseph Griffo (R-Rome) have reintroduced legislation to better ensure that the New York State Public Service Commission (“PSC”) conducts a full investigation as to the need to add new area codes prior to beginning the implementation process. The bills, A. 1064 and S. 3260, were reported on April 7th.

While the bills would not prevent the PSC from creating new area codes when necessary, it would require that an on-the-record hearing be conducted by an administrative law judge (“ALJ”) to examine evidence supporting the need for a new area code and to determine whether previously allocated 10,000 telephone number exchange codes can be reclaimed in order to avoid or reduce the cost and expense to consumers associated with area code changes.

PULP has reported extensively on the wasteful allocation of many exchange codes, resulting in multiple exchange codes being allocated more than 50 rural communities throughout the 315 area code region in Central New York, stranding hundreds of exchange codes where they are not needed, creating an artificial “exhaustion.” Subsequently, the PSC significantly reduced the assignment of exchange codes in this manner, greatly increasing the life of the 315 area code.

PULP Submits More Evidence to PSC Showing that a New Area Code in 315 Region is Unnecessary;

ALJ Recommends "Overlay" Telephone Area Code Requiring 11-Digit Dialing, Despite Plentiful Numbers and Exchange Codes in Central New York's 315 Area;

315 Area Code Number Exhaust Pushed Back Another Year: No Need to Add New Area Code Now;

PSC Halts 315 Area Code Changes For Now, But Denies PULP Petition for More Aggressive Telephone Number Conservation and Reclamation;

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

Bill Would Require PSC to More Closely Scrutinize Telephone Area Code Changes;

PULP Asks PSC to Reconsider Refusal to Investigate Alternative to New Area Code in 315;

PSC Denies Request for Open Inquiry and Continues with 315 Area Code Changes;

PSC Puts 315 Area Code Changes on Hold Pending Investigation;

PULP Asks PSC to Investigate Need for New Telephone Area Codes in the 315 Region;

PSC Considering "Area Code Relief" For 315 -- Where Did All The Numbers Go?

In the pending case involving the 315 area code, the PSC appointed an ALJ to determine how an area code should be changed (such as a split or an overlay), but not whether a change is really necessary now.

The added procedural protection would develop a record based on evidence and would not add significantly to the cost or time involved with area code “relief” because it only requires appointment of a staff ALJ to develop a record and issue a recommended decision regarding infrequent area code changes. According to the Sponsor’s Memorandum in Support, “[t]he cost of such added review and protection is far outweighed by the enormous cost and inconvenience to telephone customers if it can prevent or significantly delay implementation of a new area code.”

The bill would apply to pending area code proceedings, including the current proceeding examining the need for a new area code in the 315 region. The Memorandum added that “[t]he additional hearings and investigations required by this bill will not interfere with implementation of new area codes in 315 if ultimately they are required because the estimated time for exhaustion of number resources within 315 has been extended three times since the proceeding was initiated, allowing ample time for the investigation of number reclamation alternatives.”

Lou Manuta

More Questions for the NYISO

The New York State Assembly Committees that recently held hearings on the NYISO. In the aftermath of the hearings, the NYISO defended its anonymous bidding system and the practice of one of the market participants to demand $1,000/MWH for part of its output, and criticized the report of McCullough Research which indicates that the NYISO system of setting wholesale electricity prices is raising prices unnecessarily.

The response of McCullough Research rebuts the defenses of the NYISO and the New York PSC, and points to additional evidence of possible hockey-stick bidding and market manipulation:

In the twelve months of bidding data currently available from the New York ISO, 585,043 bids – approximately 12% of the total – had prices above $900/MWh. Since natural gas units at standard efficiencies would not normally have marginal costs above $200/MWh, this is a surprisingly high number of anomalous bids.

The Assembly Committees have now asked the NYISO to provide answers to additional questions. See NY probe of electricity market digs deeper, Times Union, April 9, 2009.

PSC Reports on Devastating Termination Statistics

At the New York State Public Service Commission (“PSC”) monthly agenda meeting on April 7th, the Director of the Office of Consumer Services provided an update on the winter heating season’s termination statistics by the electric and natural gas utilities. The PSC Chairman thanked the energy utilities for going “above and beyond” what is required by law with regards to their cold weather disconnection policies. These policies prevented terminations on days where the air temperature drops below 32 degrees.

Nonetheless, service to more than 330,000 New York customers and their families was interrupted by the utilities in 2008 as a collection effort, probably affecting the lives of more than one million persons, and increasing the risk of harm from lack of safe service. See Candle Fires: A Symptom of "Rolling Blackouts" Affecting Low-Income Households.

The Commission heard some sobering statistics:

(1) For the just concluded winter heating season (November 1st through February 28th), the number of customers with arrears over 60 days rose eight percent from the same period last year.

(2) The amount of money owed by the customers with arrears over 60 days jumped 19 percent from last year, to over $587 million.

(3) Final termination notices were up 16 percent from last year.

(4) The number of active deferred payment agreements grew by nine percent.

(5) Total terminations were up 19 percent for all of calendar year 2008 over 2007, even with a nine percent reduction in terminations during the winter heating season due to the cold weather disconnect policies.

(6) March 2009 represented the eighth consecutive month of double digit increases in calls to the Commission’s call center.

Although the economic downturn is a major factor in the growing number of customers who cannot meet their payment obligations, there are many measures still to be taken by the PSC to address the problem. For example,

• reform of its policies which currently favor volatile pricing and unpredictable bills;
• ratemaking reforms such as inclining block rates and low income rates; and
  
• more vigorous enforcement of HEFPA.
  

Also, as we recently pointed out, if New York did even half as well as California in enrolling eligible low-income telephone customers in the Lifeline discount rate program, they would have $100 million in cost savings that could help ends meet in their constricted family budgets.

Lou Manuta

2-1-1 Service to Be Launched in Greater Capital Region

Under the auspices of the United Way, a new resource for accessing community services is slated to go on-line in the next couple of weeks.
According to an article in the April 7th Albany Times Union, the United Way and the Family and Children’s Service of the Capital Region have teamed to offer a service that by dialing 2-1-1, the 1.2 million residents of the 12-county greater capital region (Albany, Columbia, Fulton, Greene, Hamilton, Montgomery, Rensselaer, Saratoga, Schenectady, Schoharie, Warren, and Washington) will have easy access to a database of agencies and organizations offering assistance in a wide variety of areas, including housing and food assistance, unemployment and job training, legal and financial services, and health and mental health assistance, as well as care for the elderly and children.

The 2-1-1 service is available in 41 states and throughout much of New York State. There are 10 regions established in New York for 2-1-1 and all are operational other than the north country (serving Clinton, Essex, Franklin, Jefferson, Lewis, and St. Lawrence counties), two in central New York (serving Cortland, Herkimer, Madison, Oneida, Onondaga, and Oswego counties) and the southeast region of the state (serving Broome, Chenango, Delaware, Otsego, and Tioga counties).

While the 2-1-1 project initially received funding from the state, under the current economic climate, the United Way increased its efforts to secure donations from private and corporate contributors in order to properly train their call specialists.

Lou Manuta

A Year Passes with No PSC Decision on Submetered Tenant Complaints of HEFPA Violations and Overcharges

On April 7, 2008, PULP assisted an elderly tenant who resides at Hazel Towers, a 286 unit apartment building in the Bronx, in making a complaint to the PSC against her landlord regarding charges for submetered electricity. See Under HEFPA, the New York PSC Must Decide Complaints of Submetered Customers.

The PSC had allowed submetering in an order issued in 2000, but it was not implemented until April, 2007. When the submetering was initiated, her rent stabilized rent was reduced a little by DHCR because the landlord no longer included electric service in the rent, but the electric bills she received were erratic and much higher than the rent reduction. Her efforts and the efforts of other tenants to get explanations of unusual and disputed bills were unavailing.

The building has on-site cogeneration equipment which produces both electricity and heat used by the landlord for hot water and heat. The equipment and the submetering were funded with grants from NYSERDA.

The complaint included assertions that

• the bills are not understandable and not compliant with the plain billing requirements of the Public Service Law and PSC regulations implementing the Home Energy Fair Practices Act (HEFPA)
• disputed charges are treated as late, and late charges are excessive, contrary to HEFPA requirements
• the owner failed to offer levelized billing;
  
• the owner failed to provide annual notification of HEFPA rights
• the owner failed to compare charges with the rate cap established in the PSC order, which provides that in no event will the submeterer's chargeds exceed the charges that would be paid by a direct customer of Con Edison;
• termination procedures were in violation of the submetering order and HEFPA;
• the owner's complaint procedures are contrary to HEFPA.
  

PULP successfully defended the tenant in court, when the landlord's metering agent sued in Bronx County Supreme Court for an injunction to enable a shutoff of her power due to her nonpayment of charges. See AMPS, a Submetering Company, Withdraws Request for Court Injunction to Shut off Tenant's Electricity.

On May 13, 2008 the complaint was supplemented with assertions that the landlord’s charges for submetered electricity exceeded the Con Edison charges for a direct metering in at least seven months. For example, according to PULP's website electric bill estimator, Con Edison would have charged approximately $99 for service she used in September 2007, but her landlord charged $179.

The PSC case file indicates that the attorney who first appeared for the landlord said they might retain additional counsel which is more familiar with "our inner workings." The owner is now represented by the law firm where a former PSC Chairman now practices.

A year has now passed since the complaint was made.

Even though the issues of compliance with the PSC submetering order and HEFPA can be determined from the face of documents, leases and by comparing the tenant's bills for submetered service with tariffed utility charges, the PSC Office of Consumer Services has not yet made its initial decision this case. It has not decided the cases of several other tenants from the same building. It has not required the landlord to respond to the complaint of the tenants association.

For more background information see PULP's web page on submetering.

Yonkers Tenants Ask PSC to Halt Submetering at Riverview Towers

On April 8, 2009, tenants of Riverview Towers, an 18 story high rise apartment building in Yonkers, filed with the Public Service Commission a petition for a stay of submetering, and for rehearing and vacatur of the Commission's prior order allowing the owner to resell electric service to the 343 tenants.

After two months of "shadow" bills, tenants received their first actual bills for submetered electric charges in March, 2009. The bills were high, and far in excess of adjustments in the housing subsidies of most tenants.

The tenants' petition asserts that the Commission overlooked, misapprehended, or was not apprised of relevant facts and law when it granted permission to submeter, in that

• the premises have costly electric baseboard heat;
• residents are predominantly low-income families;
• the premises are not rent stabilized as the Commission indicated in its order;
• the owner did not reduce the Gross Rents and Market Rents at the project to reflect the reduction in services but rather the rents were increased;
• housing subsidies received by most tenants will not offset the high cost of submetered electric service;
• some tenants receive no subsidies or rent offsets;
• lease provisions deem electric service to be "additional rent" and allow eviction in the event of nonpayment;
• residents cannot obtain HEAP because the owner is not a HEAP vendor;
  
• the premises are subject to agreements obligating the owner to provide heat;
• the premises and the electrical fixtures are not energy efficient;
• residents did not receive adequate notice of the consequences of submetering;
• residents did not receive adequate notice of their right to comment to the Commission on the owner’s submetering petition; and
  
• the rates, charges, terms and conditions of submetered electric service, including the deeming of electric charges to be rent and circumvention of HEFPA remedies, are not just and reasonable.

A stay was requested because the Commission's submetering order is causing confusion, actual and potential hardship to the homes and welfare of low-income tenants. A stay of submetering was issued recently by the Commission in four cases involving similar circumstances, where low-income tenants also received high electric bills from their landlords far beyond their means to afford without hardship. See Submetering Slowed at Roosevelt Island: Temporary Stay of Submetering Conversion at Roosevelt Island and Three Other Locations.

The tenants are represented by Legal Services of the Hudson Valley.

For more background information, see PULP's web page on submetering.

Time for the PSC to Reconsider its Policy of Volatile Pricing of Natural Gas

Today's Newsday story, Natural Gas Prices to Plummet in May, draws attention to the gap between current high utility charges for natural gas and much lower wholesale rates, such as the NYMEX monthly rate. The utility rates are expected to drop soon, but the change will not occur until after the heating season.

Utilities have a portfolio of supply for their retail residential and small customers, purchased in advance. Typically, the supply portfolio is made up of a combination of gas in storage bought previously, gas bought under contract in advance, and short term purchases for cold spells. Utilities may also use other methods, such as financial derivatives, to lock in future prices. Thus, it is normal and to be expected that there will be a gap between short term wholesale prices, which could be higher or lower than the utility price. When short term prices go up, the utility price should go up slower (due to the part of the portfolio purchased in advance at lower prices) and when short term prices go down, as they now have, the utility price will come down slower, again, due to the part of their portfolio that was acquired when prices were higher.

What few people realize is that over the past decade, the Public Service Commission, in a misguided effort to drive customers into buying gas from ESCOs, adopted policies to flow through short term price swings to utility customers, starting first with the largest customers, and eventually planning to do the same for all residential and small business customers. This deliberate introduction of price instability, volatility, and price spikes in order to foster competition is contrary to principles long embedded in statutes which militate for glacial changes in utility rates, least cost gas purchasing, and price predictability. The destruction of price transparency and predictability to promote "competition" is roundly condemned by NASUCA in its resolution on introduction of competition and provider of last resort pricing.

the introduction of competition does not diminish the essential role which continued electric or natural gas service plays for residential households or the unacceptability of any customer having fewer opportunities to obtain service or greater hardship than would have existed before the introduction of competition ****residential customers participating in these competitive markets should have access to a regulated service that is comparable or equivalent to the service previously available **** [Utilities should] not simply pass through wholesale spot market rates for the energy or gas commodity portion

A major advocate of exposing all customers to volatile, spiking, and sometimes manipulated short term wholesale gas markets was Enron. After the demise of Enron in 2001, the New York PSC put on hold its plans to roll out price volatility. Then, in 2004 the Commission again renewed its deregulatory thrust, and issued an order in which it recommitted to the Enronian vision of driving all utility customers to ESCOs for deregulated electricity and natural gas. As stated by then PSC Chairman WIlliam Flynn

[I]n January of this year, I revived the "competitive markets" proceeding and the Commission made key policy decisions in August 2004 in the following areas:
· Its vision of the end state, which includes utilities becoming primarily transmission and distribution providers over time; **** and a transition of default commodity service toward a pass through of short term market prices for all customer classes, starting with the largest customers. Ultimately, we see ESCOs providing hedges. Utilities that enter into long-term contracts to retain market share will do so at their own risk.

In its August 2004 Statement of Policy on Further Steps Toward Competition in Retail Energy Markets, Provider of Last Resort, Retail Competitive Opportunities, the Commission recognized that moving immediately to a system of flowing through spot market natural gas prices to residential customers would not be acceptable to the public, giving lip service to the notion that small customers should be protected by continuation of portfolio purchasing practices, but then said at page 33 of the order that the maximum advance purchase of natural gas should be only for "a year or so."

In fact this was not really a continuation of traditional gas portfolio purchasing practices but was a major deviation from them.

To their credit, National Fuel Gas and Con Edison sought rehearing, pointing out that natural gas prices are cyclical and that to achieve the goal of least cost purchasing, and to provide the price predictability and stability needed by residential customers, they needed to smooth out spikes (and dips) in the volatile wholesale short term markets, requiring significant longer term purchases three or four years in advance.

National Grid, still an adherent of the Enron model, did not join the other utilities in their protest. (Testimony in the Niagara Mohawk gas rate case, now pending, indicates that Grid does not arrange for gas purchasing more than one year in advance, following the guidance of the PSC).

The PSC rejected the rehearing requests of NFG and Con Edison in 2004. As a result, when short term natural gas prices skyrocketed last year, utilities were buying much of their supply for the 2008 - 09 winter at those very high prices. If they had a more balanced portfolio with some long term supply, the effects of the 2008 short term price spike - which some believe was not due to fundamentals of supply and demand, but to hedge fund speculation - would have been dampened.

For many natural gas customers living on fixed incomes, without savings to absorb the cost of price spikes, the result is disastrous for their family budgets. It should come as no surprise that utilities are experiencing unprecedented arrears balances, that utility terminations exceeded 330,000 in 2008, and are likely to increase in 2009.

With natural gas prices much lower now, this is a good time for the utilities to again act in the interest of their customers and begin prudently to acquire a portion of their wholesale supply for more than "a year or so" in advance.

To be sure, short term prices could go down even lower than they are today . But the potential for further downside movement is limited, while volatility and the upside price risk are likely to cause far greater harm to customers in the future. And it would be a good time for the PSC to reflect on policies and the harm they cause to residential and small business customers by introducing unpredictable prices in the name of helping ESCOs, and to reconsider its ratemaking philosophy.

Much $$ for Energy Efficiency Included in Stimulus Package

The recently enacted American Recovery and Reinvestment Act of 2009, or ARRA, includes significant funding amounts for energy efficiency and weatherization projects. According to a presentation of the National Association of State Energy Officials, reports, billions of dollars have now been made available.

State Energy Program
$3.1 billion has been allocated for the State Energy Program ("SEP"). By comparison, SEP received $44 million in federal fiscal year 2008. These funds are provided to state energy offices and governors must send a letter to Energy Secretary Chu regarding utility regulatory policies on energy efficiency and upgrading of building energy efficiency codes. Funding can be used for a wide variety of programs, projects and policies, including energy efficiency, renewable energy, and alternative transportation programs.

Energy Efficiency and Conservation Block Grant
$3.2 billion has been provided for the Energy Efficiency and Conservation Block Grant ("EECBG"). The EECBG had not previously been funded. Of the $3.2 billion,
$400 million will be distributed through a competitive program among state, local, and tribal entities. Of the remaining $2.8 billion, funds will be distributed:
68 percent directly to over 1,700 of the larger cities in the US;
16 percent through the states to counties of under 200,000 and towns of under 35,000;
12 percent directly to state energy offices for SEP;
2 percent for competitive program; and
2 percent available to tribes.

Weatherization Assistance Program
$5 billion has been provided for the Weatherization Assistance Program ("WAP"), a program which received only $227 million in federal fiscal year 2008. The amount that can be spent on each home increased from $2,500 to $6,500, to allow more comprehensive energy efficiency measures to be implemented. Also, the eligibility level was increased to 200 percent of the federal poverty level, from 150 percent.

A detailed review of the energy provisions of ARRA is contained in a Congressional Research Service report.

Lou Manuta

PSC Files Comments with FCC on Federal Rural Broadband Strategy, Forgets Affordability Issue for Low-Income Households

Recently, the New York State Public Service Commission (PSC) , along with the state’s Office for Technology (OT), filed comments with the FCC regarding the creation of a federal rural broadband strategy. The FCC was looking for input on means to coordinate the various federal agencies involved with the broadband deployment effort and to streamline and improve broadband strategies.

The PSC took non-controversial, often obvious positions.

The PSC/OT called for the creation of a single point of contact for all involved federal agencies and programs to “simplify the efforts of concerned citizens, communities, and broadband providers seeking information and funds to address broadband deployment issues.” They supported the call for improved broadband mapping to determine the areas of greatest need in terms of availability and speed and urged the FCC to look at statewide initiatives when developing broadband strategies. “This will not only save the federal agencies time and money,” the Commission wrote, “more importantly it will increase the likelihood of success of a national broadband plan and speed the deployment of broadband services to rural areas.”

The filing cited to the efforts of the fledgling New York State Universal Broadband Council and a study by Commission Staff on access in rural areas to telecommunications services. Creating a catalog of contact names within each state was recommended as well.

While these are laudable points, they lack insight and ignored possibly the largest hurdle of all – unaffordability of broadband service to many low-income New York households. Indeed, many low-income households cannot afford computers needed to use broadband. The state Broadband Council has insufficient resources to address these problems.

Generally, New York is recognized as being ahead of other states when it comes to deployment of broadband infrastructure. Between the local exchange carriers (DSL) and the cable television providers (cable modem service), broadband is available to most residents from at least one provider (Satellite-based broadband is conceivably available everywhere, but can be prohibitively expensive).

However, what percentage of the population can afford DSL or cable modem service even if it has been delivered to their doorstep in a rural community of the state?

Nowhere in the PSC’s comments does it mention affordability.

Yes, federal stimulus money will be available to telecom service providers to bring broadband infrastructure where it is missing (unserved areas) and where it is only partially available (underserved areas). Criteria will be established to best ensure that “shovel ready” projects are funded to bring broadband to rural areas (and inner cities as well), but the Commission had an opportunity to address affordability and failed to do so.

Due to mileage considerations, the cost to bring broadband to all rural areas can understandably be enormous and the business case has, in some instances, not been made to make rural universal broadband commercially viable. Therefore, federal assistance has been made available to help support the running of high-speed lines. However, where is the support to maintain these connections, once built, and to help people afford to use the service?

A program similar to the Lifeline discount telephone service may be the best solution to achieving access to broadband in low-income households.

Perhaps the PSC opted not to mention affordability as a barrier to broadband use due to its own abysmal record with telephone Lifeline assistance enrollment. The program has seen a drop of over 450,000 subscribers in New York over the past decade and only about 300,000 customers receive Lifeline today, out of an eligibility pool exceeding well over one million.

By way of contrast, California has seven times as many people receiving Lifeline telephone assistance as New York, even though California has fewer households receiving SNAP (Food Stamps) assistance than New York. SNAP is one of the eligibility-conferring programs for Lifeline. If New York’s telephone Lifeline assistance program simply reached the more than one million SNAP households, those households would have their phone bills lowered by more than $100 million, they would have more available to meet their household expenses, and some might then be able to afford a low cost broadband service.

Lou Manuta