Assembly Passes Bill to Correct Diversion of Complaints Regarding Submetered Electric Service

The Basics - The PSC Decides Customer Complaints over Utility Service
The Public Service Law and the Home Energy Fair Practices Act (HEFPA), enacted in 1981, have always provided for administrative adjudication by the Public Service Commission of customer complaints regarding residential utility service and bills. HEFPA was a major reform tantamount to a utility consumer bill of rights, and part of the package was a more customer-friendly PSC complaint adjudication system that can be invoked by customers with a phone call, letter, office visit, or an email or online complaint.

HEFPA Applies to Submeterers
The PSC administratively revived the practice of residential submetering in the late '70s, allowing owners permission on a case by case basis to resell electricity to occupants, a practice generally forbidden since 1951. In its submetering orders, the PSC repeatedly includes a statement, as it did in a February 2009 order, wrongly suggesting that HEFPA's coverage of submetered service was something entirely new that came about only in 2002:

Prior to the amendment of PSL Article 2 (HEFPA) by addition of PSL §53, HEFPA only applied to the provision of residential service by natural gas, electric and steam corporations and municipalities.

The above revisionist statement is completely belied by the fact that the PSC's own submetering regulations, on the books since the 1980's, allow waiver of the prohibition against resale of electric service only if the submeterer 's application provides for "complaint procedures and tenant protections consistent with HEFPA."

When the Legislature clarified HEFPA with the Energy Consumers Protection Act of 2002 (ECPA), it should have been crystal clear to all, including the PSC, that nontraditional providers of utility service like ESCOs and submetering landlords must comply with HEFPA. Most critically, ECPA clarified PSL Section 53 so that the PSC has no power whatsoever to waive HEFPA requirements, a power it had previously asserted regarding ESCOs, and apparently has done with submeterers. Perhaps prior to 2002 the PSC thought it could waive some HEFPA requirements, and that illusion ended with the Legislature's clarification.

Waterside Plaza, one of the first large rental buildings to be converted to submetering, claimed that it could have an alternative system for deciding complaints of its 1400 submetered tenants but this was rejected in 2006 in a court decision which stated

Those who submeter electricity for sale to residential end-users are utilities within the meaning of Article 2 of the PSL. Accordingly, those entities must provide all HEFPA protections.

Those protections, of course, include the right to get a PSC decision on a dispute.

The PSC's Submetering Regime Fosters Diversion of Complaints
Despite the clear statutory requirements, for years, both before and after the 2002 ECPA the PSC has allowed landlords to evade and escape HEFPA requirements. [One of the methods, discussed elsewhere, is to allow landlords to "deem" charges for electric service to be rent, and to avoid many HEFPA protections like deferred payment plans, which are triggered by utility termination notices, by evicting the tenants in landlord tenant court if they did not pay in full the electric charges demanded].

Another way around HEFPA's reach was to approve terms and conditions of owner-provided electric service that diverted complaints to owner-hired private arbitrators rather than telling tenants about the opportunity to obtain PSC determinations.

Even after the 2002 ECPA clarification, the PSC routinely issued - and continues to issue - orders that provide a route for landlords to divert customer complaints about their electric service to private arbitration before owner-paid arbitrators. For example, in a decision issued in May, 2009, the PSC discussed the submeterer's internal grievance procedures -- which require written complaints not required by HEFPA's simplified procdeures -- and stated:

Thereafter upon receipt of the protest, the matter may be submitted to arbitration under the provisions in the Bylaws of Argyle Condo by the Applicant or the resident, to resolve the grievance. All residents can also contact the New York State Public Service Commission if they are dissatisfied with either the managing agent or Board’s response to their complaints.

The process described thus approves time-consuming arbitration of utility service issues. In a January 2009 decision the PSC allowed the landlord to commence court proceedings against the tenant for eviction or for damages to decide disputes over electric bills instead of direct customer access to the PSC complaint determination function:

If dissatisfied, the tenant may request a review of the determination by filing a written protest to the Applicant within fourteen (14) days from the date of the property manager’s response. Upon such protest, the property manager will initiate, at no cost to the tenant, a proceeding in either Small Claims or Housing Court in New York City. All tenants can also contact the New York State Public Service Commission if they are dissatisfied.

The orders merely say that "all residents" or "all tenants" can "contact" the PSC -- but there is never an actual reference by the PSC to its duty to decide individual complaints under Public Service Law 43.

Wishy washy PSC orders such as this allow submeterers to discourage and deter complaints with the spectre of formal and risky arbitration and court proceedings, and encourage landlords to evade full disclosure of the real decisional function and duty of the regulatory agency.

The confusing PSC orders issued over the past decade affect more than 28,000 tenants. For detailed examples of these orders, see Under HEFPA, the New York PSC Must Decide Complaints of Submetered Customers. Even worse, if tenants check their leases or information provided by landlords when they submetered, they will typically find misleading gibberish about having to arbitrate disputes before landlord-hired arbitrators in formal arbitrations, or being taken to landlord/tenant court, and no solid information at all about the PSC complaint handling procedures and detailed information about how to access them.

The PSC's Laissez Faire Approach
Generally, we have found that landlords with PSC submetering orders never provided adequate notice to their tenants of their statutory right to have their complaints about electric service decided by the PSC, just as landlords never implemented other requirements of the orders, such as including essential terms and conditions of utility service in agreements signed by the tenants, as riders to their leases. See Lax PSC Enforcement of Submetering Orders Allows Landlords to Overcharge for Electricity Sold to Tenants and to Circumvent HEFPA Protections.

A consequence of this subversion of utility customer rights is that PULP's research cannot identify a single PSC complaint determination involving submetered electric service, even though an estimated 28,000 rental apartments have been submetered in the past decade, and even though there is considerable tenant dissatisfaction with chronic billing errors, high bills, defective meters, shared meters, miswiring, violation of the rate cap provisions of submetering orders, and other service issues. Parenthetically, we also note that even though the PSC's Office of Consumer Services logs a high level of complaints lodged involving ESCO service, we cannot find a single PSC decision in a case against an ESCO. Shifting customers to unregulated utility providers, a legacy of the Enron era, still remains part of the New York PSC deregulation agenda: at least circumstantially, it appears that part of that deregulation agenda may be never to issue a precedental decision regarding the service of the new providers of utility service, i.e., ESCOs and submetering landlords.

Pending Legislation to Require Notification to Submetered Tenants of PSC Complaint Remedies
Assemblyman Micah Kellner sponsored a bill, A.7867, as part of a five-bill package to address submetering issues. A.7867 requires all submetering landlords to notify their tenants annually of their right to have disputes over landlord-provided electric service decided by the PSC. As stated in the Memorandum of Support for A.7867:

These alternative venues for complaint adjudication all involve time consuming and comparatively formal proceedings. They may also prove to be expensive and risky, for example, if an eviction case is the forum for resolution. These factors may serve to deter customers with meritorious complaints from making them, and reduce awareness at the Public Service Commission of the nature and quality of customer service actually provided by certain utilities.

Assembly Passes A.7867
Today, the New York State Assembly passed A.7867. A counterpart bill is pending in the State Senate, S. 5252.

For more information see PULP's website page on submetering.