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.