Friday, July 31, 2009

Tiffany Mews Tenants Ask PSC to Halt Submetering with No Proper Order and No Filed Tariff or Contracts Approved by the PSC

Tiffany Mews is a 70-unit converted factory building rented to low-income rent stabilized tenants in 1995, after a lengthy effort to convert it into condominiums failed. See Unexpected Arrivals Settle a Casualty Condominium, New York Times, Jan. 8, 1995. The owner of Tiffany Mews, Related Tiffany, for many years has resold electricity to tenants.

The Tiffany Mews Tenant Committee (“TMTC”), represented by PULP, is petitioning the PSC today to halt submetering of electricity. Their Petition alleges that submetering is illegal because the owner lacks a valid order allowing it to resell electricity to tenants. When PULP investigated the matter, New York State Department of Public Service staff was unable to locate and provide a copy of a Submetering Order applicable to Tiffany Mews. Apparently, the PSC copy of an order was lost or destroyed.

Eventually, PULP obtained from another source a copy of a 1991 PSC order that had been obtained by a prior owner, which allows the resale of electricity, but only to condominium unit owners. It did not authorize resale of electricity to tenants.

The TMTC Petition alleges:
  • The Submetering Order did not authorize Related Tiffany to sell electricity to tenants, and is moot because it only granted permission to submeter electric service to owners of residential condominiums, which do not exist at Tiffany Mews, and because Related Tiffany failed to notify the Commission of resale to tenants or to seek modification of the prior order;
  • No valid agreement exists between Related Tiffany and Tiffany Mews tenants which contains Commission-approved rates, terms and conditions for the provision of electric service and which is filed with and approved by the Commission;
  • Neither Related Tiffany nor its predecessor provided the Commission with a full description of the type of submetering system to be used, and did not provide any validation of the reliability and accuracy of the submetering system, and the Commission made no finding that the meters are approved;
  • Submetering was not implemented at Tiffany Mews in compliance with the Submetering Order, Related Tiffany violated the customer protection requirements of the Submetering Order, and failed to apprise the Commission of a change in circumstances upon which the Order had been based;
  • The Submetering Order allows complaint resolution procedures which are inconsistent with the Home Energy Fair Practices Act (“HEFPA”);
  • Related Tiffany unilaterally changed the complaint resolution procedures without Commission approval or modification of the Submetering Order and the new complaint resolution procedures are inconsistent with HEFPA;
  • Related Tiffany’s lease provisions “deeming” electricity charges to be “additional rent” and its practice of evicting tenants for alleged nonpayment of such charges is a violation of HEFPA and its implementing regulations;
  • Related Tiffany is charging unlawful rates and is subjecting tenants to terms and conditions of submetered electric service under color of agreements not filed with and not approved by the Commission and that are not just and reasonable; and
  • Related Tiffany unlawfully imposed real time pricing experiments and assessed time-of-use charges upon tenants without their voluntary consent in violation of the Public Service Law.
The Petition asks the PSC to halt the allegedly unlawful submetering and refund charges paid by tenants for electricity.

If any future submetering is allowed, the Petition asks for
  • An order directing Related Tiffany to establish, prospectively, lawful terms and conditions for any approved electric service at Tiffany Mews;
  • An order directing Related Tiffany to obtain an energy audit performed by an independent auditor, and to remediate energy efficiencies and inequities before requiring tenants to pay for electric service and be burdened with the cost of energy inefficiencies that are rightfully the financial responsibility of Related Tiffany;
  • A declaratory ruling that the complaint procedure sanctioned by the Commission in 1991 for condominium owners is ultra vires and inconsistent with HEFPA, and issue an order modifying the Submetering Order consistent with that ruling;
  • An order directing Related Tiffany to implement complaint resolution procedures that comply with HEFPA, to provide immediate notice of those procedures to tenants, to modify tenants’ leases to include recognition of such rights, and to provide annual notification as required by HEFPA.
  • Undertake an audit of late fees Related Tiffany charged tenants from the commencement of submetering to date, and an order directing Related Tiffany to refund all excessive late fees charged;
  • Undertake an audit of Related Tiffany’s submetered electric charges from the inception of submetering to date to identify charges in excess of the rate cap, and to order Related Tiffany to refund to tenants all such overcharges.
  • Investigation of Related Tiffany’s unlawful time-of-use rate experimentation at Tiffany Mews conducted without tenant consent, and an order directing Related Tiffany to refund tenants all amounts charged for electricity at unlawful TOU rates, which also were not filed with or approved by the Commission.
  • Investigation of the type of submetering system to be used and its reliability and accuracy, including meter tests for each tenant to rule out defective, inaccurate and shared meter conditions;
  • An order directing Related Tiffany to cease violation of HEFPA by “deeming” electricity charges to be “additional rent” and to cease its practice of evicting tenants for nonpayment of such charges; and
  • An audit of unlawful Time of Use charges imposed without voluntary tenant consent and order Related Tiffany to refund all such charges paid by tenants.
For further information, see PULP's webpage on submetering.

FCC’S Inspector General Withdraws Finding That All Low Income USF Payments Were Erroneous

The Universal Service Administrative Company (“USAC”) collects Universal Service Fund (USF) revenues from surcharges on customers' phone bills. It then redistributes that money to local phone companies based on their claims for reimbursement of expenses for USF functions, such as high cost rural areas, low income assistance, schools and libraries, and rural health care telecommunications. The largest portion of the USF revenue goes to reduce bills for customers in rural and other high cost areas.

The new Inspector General (“IG”) at the FCC has pulled the plug on a determination made by the previous FCC IG that 100 percent of the $1.6 billion in payments from the low income programs (and Link-Up) were erroneous. In December 2008, the former FCC IG found that USAC was paying claims from local telephone companies for low-income Lifeline assistance based on their projections of discounts given to low-income customers rather than reimbursements based on actual assistance provided, and that USAC could not provide documentation to verify that each payment made was in reimbursement of actual discounts given to low-income customers.

The new IG, David Hunt, withdrew that finding and has called for further investigation as to whether the low income program disbursement system eliminates “fraud, waste and abuse.” USAC’s low income program employs Universal Service Fund monies to support Lifeline discount telephone service and discount connections through Link-Up.

The report released in December 2008 by Kent Nilsson, former Chairman Kevin Martin’s IG , which brought into question the integrity of the entire low income support program, was made without “an audit or other structured examination of the low income program disbursement system,” wrote acting IG Hunt . Upon completion of his audit of the low income program, he will prepare a report of his findings to the Commission and to Congress.

It is unclear how the “100% erroneous” determination could have been made when an investigation was never conducted. Had Nilsson’s determination not been withdrawn, there could have been consequences for low income telephone customers if reimbusement to telephone companies for Lifeline and Link-Up assistance were delayed or eliminated. There are significant issues percolating up, such as customers receiving a Lifeline discount from more than one provider at a time (such as wireline and wireless) and misuse of the eligibility verification system, but the low income program legitimately benefits way too many needy families to make the blanket statement made by Nilsson and unleash the unintended consequences it could have brought.

In addition to a further inquiry to assure accountability in the low-income telephone assistance programs, PULP believes there should be an additional FCC investigation into the low income programs: why do so many households that live in economic hardship and receive federal economic assistance which confers eligibility for Lifeline -- such as Food Stamps -- not receive any Lifeline telephone assistance?

For example, New York State's Office of Temporary and Disability Assistance report for May 2009 shows 1,267,045 New York households receive Food Stamps, but only about 300,000 New Yorkers receive any Lifeline telephone assistance, a number that has fallen from about 746,000 a decade ago even as the number of households receiving Food Stamps has dramatically grown.
  • What are the policy and administrative barriers to getting phone assistance benefits to families living in hardship?
  • What are the best practices? Why do some states like Texas do so much better than New York in enrolling their poor citizens in the Lifeline assistance program?
  • Are telephone companies limiting services available to Lifeline customers which are available to all other customers?
  • Why do some states like New York have narrower Lifeline eligibility standards than the FCC allows?
  • Why are Lifeline-eligible customers whose phone service is provided by cable companies suchas Time Warner or Cablevision not receiving any Lifeline assistance?
  • Why is there an emphasis on PR expenditures to encourage individual signups when there is no real policy and resource commitment to enroll every one of the easily identifiable eligible households efficiently through automatic enrollment?
  • Why is there insufficient commitment of some state commissions to get the job done?
New York's backsliding in Lifeline enrollment and failure to provide telephone Lifeline assistance to readily identifiable families living in hardship means that low-income New Yorkers continue to lose at least $100 million a year in available telephone assistance benefits. Meanwhile, New York continues to remit far more USF revenue to USAC -- collected from New York telephone customers as surcharges on their bills -- than New York phone companies receive from USAC to reimburse price discounts given to needy New Yorkers.

Tuesday, July 28, 2009

After Submeterer Can't Evict for Unpaid Electric Bills, Bay City Metering Asks PSC to Revise Order to Allow Service Termination

An interesting petition was recently filed with the PSC by a submetering company, Bay City Metering, apparently as an agent of a landlord, 430 Realty Company LLC, seeking to modify a 2007 PSC Order allowing submetering of electricity at 430 East 86th Street in Manhattan, a 131 unit apartment building. Bay City Metering asks the PSC to grant it permission to shut off electric service when a tenant does not pay.

From a review of the Petition and the 2007 PSC Order, it appears the landlord attempted, without success, to follow a strategy recommended in a NYSERDA Manual on Submetering to circumvent the Home Energy Fair Practices Act (HEFPA) remedies for utility consumers. See PULP Network, PSC and NYSERDA Spend Millions for Submetering Projects Violating Residential Tenants' Rights, Jan. 16, 2009.

In essence, the NYSERDA manual suggests a scheme in which landlords deal with tenants who have unpaid charges for electric service simply by evicting them in summary proceedings in landlord-tenant court. The NYSERDA manual suggests this is how owners can avoid providing "burdensome" utility consumer protections to their tenants. Under HEFPA, several important protections are triggered by a notice to terminate utility service; for example, these include
  • the right of the customer to avoid service termination through an affordable repayment agreement based on the customer's financial situation,
  • notice protections for vulnerable customers, and
  • required referrals of customers who have exhausted their HEFPA remedies to public assistance agencies for utility bill payment assistance.
Evidence that a landlord is trying to skirt HEFPA as suggested in the NYSERDA manual is a provision found in some leases purporting to "deem" charges for submetered electric service to be "added rent." Another telltale of the eviction strategy is language often seen in PSC orders granting permission to submeter, giving lip service to the principle that HEFPA applies, but also stating that the landlord will not terminate service for nonpayment. Indeed, the 2007 PSC Order which Bay City Metering seeks to amend on behalf of the owner has the following language:
The Applicant states that the building's management will not terminate electric service for non-payment of electric charges.... The Applicant certifies that the method of rate calculation, rate cap, complaint procedures, tenant protections, and the enforcement mechanisms will be incorporated in plain language in all current and future lease agreements.
Apparently, a funny thing happened on the way to the judicial forum. According to Bay City Metering's Petition, the owner attempted to evict a tenant for allegedly unpaid charges due for electric service, perhaps as "added rent" under a lease, but . . .
The court appearance with a housing court resulted in the judge stating that the housing court handles only the rental problems and informed the management representatives that this problem should be taken to the Public Service Commission.
This, of course, is no real surprise. New York judges who have grappled seriously with the submetering issue since 1930 have rejected efforts of landlords to evict residential tenants for nonpayment of utility service. See, for example,
  • 8284 Corporation v. Garey, 137 Misc. 197; 242 N.Y.S. 413 (Municipal Court of New York, Manhattan 1930) (It is not a lawful business purpose for a landlord not incorporated as an electric corporation to provide electric service);
  • Owners & Tenants Electric Co. v. Tractenberg, 158 Misc. 677; 286 N.Y.S. 570 (Municipal Court of New York, Manhattan 1936) ("Calling the charge for electricity rent does not change the nature of the transaction. Such a provision only arms the landlord with an additional remedy for the collection of the charges. The fact is the tenant buys electricity. He does not lease it. Indeed, under the lease, the landlord is not even compelled to sell electricity to the tenant");
  • Related Tiffany v Faust, 191 Misc. 2d 528, 743 N.Y. S.2d 802, Appellate Term, 2d Dept 2002)
  • Related Tiffany v. McConeyhead, (Kings Co. Civil Court 2004)
Most tenants, however, are not represented by counsel or, if they are represented, their counsel may not be aware of the separate system for regulation of all charges and disputes relating to electric service by the PSC. Also, in some cases, owners may have relabeled charges for electric service as unpaid "rent" in their eviction petitions, so judges may not be alerted to the underlying legal issues.

It remains to be seen if the PSC will cater to this landlord's request to modify the order. It can be argued that the PSC should not entertain the owner's petition to alter a significant part of the submetering order. The Order indicates that "No comments were received" during the 45 day SAPA comment period which preceded imposition of any charges for electric service. Tenants may have been induced to believe that submetering was benign under rosy or deceptive descriptions of the change when it was first proposed, and did not comment during the narrow SAPA notice period due to their reliance on incomplete information and a belief that their service would never be terminated over a payment dispute.

The online docket record for the case, No. 06-E-1391, indicates that a number of tenants did write to the PSC to appeal the submetering order, which had been routinely approved in April 2007 based on a PSC staff recommendation. The September 2007 appeals of the tenants were filed as petitions for rehearing, but apparently were not acted on by the PSC.

The Petition of Bay City Metering claims the owner complied with the PSC regulations on submetering, but does not mention whether the owner complied with requirements of the PSC's specific order that applies to the building. The PSC regulations mainly spell out what an owner must promise to do when it applies for permission to submeter, while the PSC submetering orders typically are more detailed. For example, they typically require creation of a revised lease agreement which creates and specifies the rates, terms and conditions of electric service and enforcement mechanisms. PULP believes such contracts or lease riders are essential to actually create the necessary contractual terms and conditions of service in the absence of any PSC-approved, filed tariff of the submeterer.

In the Order approving the application of 430 Realty Company to submeter, the PSC stated:
The lease agreement will summarize the information contained in the application to submeter. The Applicant certifies that the method of rate calculation, rate cap, complaint procedures, tenant protections, and the enforcement mechanisms will be incorporated in plain language in all current and future lease agreements. including the rate cap, method of rate calculation, and the HEFPA complaint procedures.**** The Owner will also disclose, as a component of the lease agreement, that a new §53 to the PSL took effect on June 18, 2003, imposing the requirements of PSL Article 2 on any entity that sells or facilitates the sale of electricity to residential customers.
The Petition contains a rather detailed description of a complaint procedure, but does not indicate whether the procedure described in the Petition is actually implemented and is included in all leases as part of the agreement for service.

Service termination is not the only way for an owner to collect from a tenant who has not paid for submetered service. If the owner has a valid contract containing rates, terms and conditions of service filed with and approved by the PSC, then the owner should be able to sue, like any other creditor, prove liability, and collect the debt if he can prevail over any defenses raised by a tenant. Also, as with any business, there is always some risk of nonpayment due to a variety of reasons, and there is no reason why the owner should not live with the terms and conditions it asked for when the order was first obtained.

Certainly, the PSC should require the owner to provide individual notice to each tenant regarding the petition containing accurate information about how the tenants may comment on the Petition before it is acted upon.

Before acting on the owner's Petition to amend the existing submetering Order, the Commission should conduct a review to determine if the owner has complied with it. This should include an inquiry to determine if the owner complied with all provisions of the prior PSC order before considering whether to grant the owner's request and allow termination of service. For example, the Commission should check whether the owner established valid service agreements for electric service in any lease rider or other binding document with all its terms and conditions filed with and approved by the Commission.

For more information, see PULP's webpage on submetering.

PSC Secretary Finds No Evidence of Delay in Handling Hazel Towers Tenant Complaints Regarding Submetering

We have previously chronicled the unresolved tenant complaints to the PSC Office of Consumer Services (OCS) regarding submetering of electricity at Hazel Towers in PSC Case Nos. 09-00841 and 00-E-1269. After a year had passed without resolution of their members' complaints, the Hazel Towers Tenant Association (HTTA) filed a Petition May 6, 2009 with the PSC seeking action. See Hazel Towers Tenants Association’s Petition for Investigation and Remediation of Noncompliance with Prior Order for Vacatur or Modification of Order Establishing Terms and Conditions of Submetered Electric Service at Hazel Towers and for a Stay. The tenants pointed at pages 6 - 10 of their Petition to the absence of any response by the owner, long delays in resolving their case, and the owner's retention of a former PSC Chairman's law firm as counsel, suggesting "regulatory capture" of the PSC by submetering interests. The Petition further stated:
Whatever the reason for the stasis at OCS, Hazel Towers tenant complaints regarding these and other matters have not been timely acted upon, resulting in continued violations affecting large numbers of tenants with no remedy, and unjustifiable aging of the complaints. It is clear that the Commission’s complaint handling procedures have gone awry in handling the Hazel Towers complaints, and the problem is ripe for Commission investigation, review and actions.
On June 5, 2009, the PSC Secretary issued a Notice establishing a comment period on the petition in a new case. See PSC Seeks Comments on Petition of Hazel Towers Tenants to Halt Submetering, PULP Network, June 16, 2009.

In a July 24, 2009 letter, the Secretary to the PSC, who is its ethics officer, reviewed the history of handling of the year-old Hazel Towers complaint by the Office of Consumer Services (OCS) and allegations in the petition relating to the representation of Hazel Towers by a former PSC Chairman's law firm:
You alleged that "HTTA is aware that the attorney representing Hazel Towers [the submeterer] is a law partner of former Public Service Commission Chairman William M. Flynn, and the records of the [Office of Consumer Services] OCS indicates Hazel Towers retained their law firm, Harris Beach, due to the former Chairman's familiarity with [OCS] inner workings." You further stated that [the] Director of OCS, was appointed to her position by Mr. Flynn, and you pointed to various OCS staff annotations in the Hazel Towers complaint files and concluded that the past affiliation of Mr. Flynn with the Department of Public Service (Department) and [the Director of OCS] may have used to influence OCS Staff [sic] to cause these complaints to linger without resolution.
The Secretary concluded that she found
no evidence to suggest that the processing of these complaints was purposely delayed by any OCS manager or staff. ... [T]he delays experienced in the processing of the Hazel Towers complaints is attributable to factors such as the overall case load assigned to individual OCS staff members and the prioritization assigned to, and resources and expertise available for, particular types of cases.

Friday, July 24, 2009

U.S. Senate Commerce Committee Chair Says FCC has been “Beholden” to the Telecom Industry it is Charged to Regulate

The normalcy of the Senate confirmation process was jolted recently when the Chair of the Senate Commerce Committee, Jay Rockefeller made some bold statements to open his Committee’s hearing on two FCC Commissioner designees, Mignon Clyburn and Meredith Atwell Baker. Senator Rockefeller said:
“Because we entrust our FCC Commissioners with such great power, we expect a lot from them.

But as I made clear to the new FCC Chairman at the nomination hearing that this Committee held a month ago, I believe the agency is broken.

Where it should be relying on the facts, it has been dependent on ideology. Where it should be open and transparent, it has been opaque and beholden to the industry it regulates.

Worse, I believe it has lost sight of its mission—helping all consumers benefit from the great explosion of communications technologies that are changing our economy and changing our world.

So I charge both of our nominees today with doing their part to repair this agency.”
Thus, not only did Senator Rockefeller describe the FCC as “broken,” a term commonly used during the past few years while Kevin Martin was Chair, but he characterized the agency as “beholden to the industry it regulates.”

Those are very strong words, but justifiable due to the FCC's disinterest in consumer protection, deregulatory tilt, and the rash of merger approvals during Martin’s reign, which reduced the number of major telecom competitors with weak or illusory consumer protections, which then went largely unenforced.

Rockefeller has high hopes for the new FCC, under the new leadership of Chairman Julius Genachowski, as it begins to tackle enormous issues such as affordable universal broadband deployment and fixing the universal service fund.

The designees are strong candidates. Clyburn is the former chair of the South Carolina Public Service Commission and Baker had run the National Telecommunications and Information Administration under President Bush.

Lou Manuta

Thursday, July 23, 2009

Parker Towers Tenants Still Waiting for PSC Action on Petition to Halt Submetering

Background - The Tenants' April 20, 2009 Petition to the PSC
On April 20, 2009, the Parker Towers Tenants Association (PTTA) filed a Petition with the PSC seeking investigation of submetering at Parker Towers and a stay to halt submetering of electricity pending the outcome of the investigation. The PTTA Petition, signed by 349 tenants, asks for the following relief:
PTTA believes that 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. We request that this matter be opened for rehearing and the Submetering Order be stayed or vacated pending an investigation into the reasonableness of submetering at Parker Towers, and if the Commission finds submetering to be reasonable, then an order that it be conditioned upon the following:
a. proper notice to tenants affording them an opportunity to submit comments to the Commission on implementation of any submetering plan;
b. remediation of building-wide energy inefficiencies that are not controlled by
tenants but for which they will bear the cost burden;
c. correction of any double-billing resulting from pre-existing electricity surcharges
embedded into base rents;
d. provision of adequate and timely shadow billing periods prior to actual billing;
e. prohibition of the deeming of electricity charges to be "additional rent",
f. 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;
h. Owner disclosure of the rate cap and compliance therewith, together with
disclosure to tenants on each monthly bill the comparable Con Edison SC-1 price
for electric service;
i. Elimination of different rates for different tenants;
j. Elimination of any shared meter conditions;
k. any and all other relief that the Commission deems appropriate under the
For more details, see PULP Network, Parker Towers Residents Petition PSC to Vacate Prior Submetering Order, April 22, 2009.

When the PTTA Petition to the PSC was filed, Parker Towers was temporarily barred from collecting charges under a court order in an unrelated proceeding against the State Division of Housing and Community Renewal, but that order has since been lifted. Parker Towers and its billing agent then began to charge tenants for electric service back to March, 2009, even though it had not provided two months "shadow bills" before then, as required by DHCR bills, and had not created any new agreements with tenants for electric service containing any rates, terms and conditions approved by the PSC.

Referral of the Case to the PSC's Office of Consumer Services (OCS)
The PTTA received no answering papers from the owner of Parker Towers, and the PSC's online electronic docket for PSC Case 07-E-0865 does not indicate any written response from the owner of Parker Towers was filed in answer to the PTTA Petition.

PTTA, now represented by PULP, wrote to the Commission on June 26, 2009 asking for action on the PTTA Petition for a stay of submetering:
The Commission has not yet issued a Notice Establishing Comment Period or taken other action on the Petition. Emergency circumstances have arisen warranting Commission review.

As noted in the Petition, Parker Towers contains 1,327 residential apartments, more than 60 percent of them are rent stabilized, and many of the tenants are elderly, disabled and living on fixed incomes. Under the submetering plan, tenants were to be charged for electricity commencing in April 2009. However, a Temporary Restraining Order was issued on April 14, 2009, which effectively stayed implementation of the New York Division of Housing and Community Renewal ("DHCR") Order Granting Permission to Terminate Rent Inclusion of Electricity and Change from Master metering to Submetering. On June 16, 2009, the Temporary Restraining Order was lifted. Parker Management New York, LLC ("Parker Management"), the management company for Parker Towers, advised tenants on June 22, 2009 that "Parker Towers will immediately proceed with the implementation of its submeter plans and you will be receiving the electric consumption invoices directly from AMPS, our third-party administrator."

PTTA requests the Commission to take immediate action to stay implementation of the submetering plan....
The above letter crossed in the mail with a June 25 letter from the Commission Secretary finding that the Petition was not timely (though the Commission has power under PSL § 22 to extend the time for good cause) and referring the matter to the PSC Office of Consumer Services to be treated as a complaint under HEFPA:
your petition for rehearing is untimely as it was not filed within 30 days of issuance of the above-referenced Order. The issues raised in the petition are more appropriately handled through the Home Energy Fair Practices Act (HEFPA) complaint procedures through our Office of Consumer Services. I am transferring this matter to our Office of Consumer Services Complaint Division for appropriate handling and follow-up.
PTTA responded, making the following points:
Some of the claims in this case involve PTTA's request to revise terms of the Commission's original submetering order issued by the Commission, which, for example, allowed complaint procedures at variance with those required by the Home Energy Fair Practices Act. OCS has no power to revise prior Commission orders. Also, OCS has taken more than one year to make initial determinations in other recent submetering cases; Parker Towers tenants in nearly 1,400 apartments would be substantially aggrieved by such delays.Therefore, we are again requesting that the Commission consider the request to stay submetering, if possible before July 1st, when payment will be demanded by the owner of Parker Towers for disputed charges for electric service. These charges will be deemed to be additional rent subjecting tenants to risks of eviction proceedings when they withhold payment of the charges in dispute.
The Commission has not acted on PTTA's renewed request for a stay, and no written response from the owner of Parker Towers is in the online PSC docket for the Parker Towers Submetering Case. The current posture of the case is that the Petition to reopen the Commission's rulemaking order allowing submetering is not under active consideration by the PSC Commissioners, and instead, the matter is being handled as an adjudicatory complaint proceeding by OCS under HEFPA rules.

Assemblyman Hevesi Asks PSC to Rule on Stay Request
On July 21, 2009, Assemblyman Andrew Hevesi - who resides as a tenant at Parker Towers - wrote to the Commission asking for action:
[I]t is my responsibility to inform you of a conflict of interest I have regarding this petition. I am a resident of Parker Towers and will be personally affected by the ruling of the commission in this matter. With that noted, there are hundreds of my constituents in this apartment complex who have the right to expect their elected official to advocate on their behalf. In this particular matter, the procedures and regulations established by the Commission and the Division of Housing and Community Renewal, which must be followed in all cases of submetering, have not been observed. For that reason, I file this letter in support of the Parker Towers Tenants’ Association’s request for a stay and rehearing, based on the following facts.

The Parker Towers Tenant’s Association has amassed evidence that the building management did not comply with the Commission’s regulations regarding the procedure through which to apply for submetering.... The tenants of Parker Towers were not afforded notice of a timely comment period by the submeterer.... Parker Towers Management ... informational meetings on their submetering plan ... were not held until after the closure of the comment period, shutting tenants out of their ability to comment on these proceedings. This willful exclusion of tenant input violates the intent and purpose of section 16NYCRR § 96.2(b)(5) of the Commission’s regulations.

****Jack Parker Corporation did send three informational notices to residents.... These notices, while within the comment period, did not inform tenants of the timeline for the comment period, the case number that identified their submetering petition to the Public Service Commission, or any information detailing how and where to submit written comments.....

In addition to structuring their notices and meetings so as to shut tenants out of the comment period with respect to their submetering petition, the Jack Parker Corporation also failed to conduct their shadow billing period in a timely and effective manner.... The bills were not provided to the tenants of Parker Towers until long after both of the shadow billing periods had concluded. The shadow billing executed by the Jack Parker Corporation clearly violated the intent of the shadow billing period, thus robbing tenants of the ability to learn about their electricity usage in a timely and effective manner.

As a result of these clear violations of both the letter and intent of the Commission’s submetering regulations, I respectfully request that the Commission stay the implementation of their order to submeter at Parker Towers to consider this evidence, as well as the petition filed by the Parker Towers Tenants’ Association.... The Commission should rehear this case in light of the facts presented here, as well as in the other aforementioned petitions, and then affect a ruling
Assemblyman Hevesi's letter is here.

Summary of Current Situation

As of this writing, as far as we know, the owner of Parker Towers has not filed any written response with the PSC or with OCS regarding the April 20, 2009 petition. (We surmise that Parker Towers management or their counsel or lobbyists have made ex parte contacts with the PSC or its staff, which are not barred under PSC rules). The PSC has not taken action on the merits of the April 20, 2009 Petition, beyond the Secretary's referral of the matter more than two months later, on June 25 , to be handled as a complaint under HEFPA through complaint handling procedures that can take up a year or more for OCS to issue even an initial decision.

In other cases where tenants have challenged submetering, owners appear to have slowed the cases down at OCS, and used the time to correct some of their policies and practices in an effort to avoid decisions on the merits by mooting some of the claims. See PULP Network, Lax PSC Enforcement of Submetering Orders Allows Landlords to Overcharge for Electricity Sold to Tenants and to Circumvent HEFPA Protections, November 6, 2008.

Customers can appeal initial PSC decisions if dissatisfied, by requesting informal administrative reviews or hearings (which can be conducted by telephone), and eventually they can seek decisions of the PSC itself on their complaints, and after that they may seek court relief under CPLR Article 78. Thus, eventually, claims and objections to submetering raised in the PTTA petition and by individuals can be decided by the PSC, and reviewed in State Supreme Court.

PULP has written to the PSC Office of Consumer Services on behalf of PTTA, emphasizing that in addition to other instances of noncompliance with the PSC submetering order, all the charges for submetered electricity are unlawful because the owner has not implemented an essential condition of the PSC submetering order, which required the owner to establish written agreements with the tenants which include PSC-approved terms and conditions for electric service. Without a filed tariff or contracts containing rates, terms and conditions approved by the PSC, PTTA argues, there is no lawful, enforceable contract for electric service to any Parker Towers tenant.

Are All Parker Towers Tenants Protected Against Late Charges and Service Termination if they Withhold Payment for Submetered Electricity Charges Pending Resolution of the PTTA Petition?
It is unclear at this juncture whether the treatment of the tenants' association Petition as a complaint under HEFPA, as directed by the Secretary, now prevents the owner from assessing any late charges or taking adverse action such as service termination against any Parker Towers tenant who withholds payment of the disputed charges for submetered electric service, under Commission Rule 11.20. A utility (including a submeterer, which is defined as a "utility" under HEFPA regulations) may not terminate, disconnect or suspend service for nonpayment based on disputed charges while a complaint is pending, nor impose late charges for any disputed charges, for 15 days after the complaint is resolved by either the utility or the PSC. l6 NYCRR §11.20.

Unlike other agencies, for example, the State Education Department (under 8 NYCRR § 275.2), the PSC has no rules allowing for class action procedures in its administrative hearing procedures. Whether the PTTA complaint confers HEFPA protections over all tenants at Parker Towers, including those who have not signed in support of the petition or made individual complaints, is unclear. A PSC representative indicated at the Submetering Summit held in May 2009 that the Office of Consumer Services might not treat a tenant association complaint as representing claims of any tenants who did not in writing support the association's complaint.

If so, as a result of the referral of the case to OCS as a HEFPA complaint, at a minimum, the 349 people who signed on to the PTTA petition when it was filed do have a group complaint pending under HEFPA which squarely puts into dispute all the charges being demanded from them for electric service.

Tenants who have not signed the PTTA Petition may want to take a cautious "belt and suspenders" approach, file individual complaints, first with the owner, and then with the PSC, to guarantee without any possible doubt that they will be protected under HEFPA against adverse action while their cases are being considered and that they will get the benefit of any favorable decision on the PTTA petition. A sample complaint form regarding submetered service is available from PTTA.

Can the Owner Evict Tenants or Bring Other Court Proceedings Against Tenants who Resist Payment of Disputed Charges for Electric Service?
A possible concern for tenants who withhold payment of the disputed charges for submetered electric service is that while the administrative complaints about submetering are pending at the PSC the owner might attempt an "end run" around the PSC proceedings, and seek to evict tenants in landlord tenant court or sue in court, under a questionable lease provision "deeming" any charges for electric service to be "added rent," before the PSC acts on the PTTA complaint.

Tenants represented by PULP have been successful to date in defending several court actions brought by other submeterers to collect charges for electric service in eviction cases and other court proceedings while those disputed charges are the subject of pending PSC complaints. When PULP has appeared for the tenant and interposed defenses in answers and motions to dismiss, demonstrating that the PSC has primary jurisdiction over the subject matter of disputed charges for electric service, and that the owner has no lawful filed rate or contract for electric service containing rates terms and conditions approved by the PSC, landlords have discontinued the court proceedings in every case. Of course, if tenants do not answer a court case a default judgment may be issued, so it is imperative that they seek counsel promptly if court papers are received and defend the case.

For further information see PULP's webpage on submetering.

Tuesday, July 21, 2009

Bronx Riverview Tenants Ask PSC to Halt Submetering

Tenants at 1600 Sedgwick Avenue in the Bronx, known as Riverview, a 25-story building containing 383 apartment owned by Starrett Corporation, have asked the PSC to halt submetering. According to the New York Times,
Claiming that electricity use is being measured incorrectly and that tenants are being evicted for not paying utility bills, residents of a Bronx apartment building filed a complaint with the New York Public Service Commission on Monday against their landlord's practice of billing residents based on their use of electricity.

The building, at 1600 Sedgwick Avenue, provides project-based Section 8 housing. Before last summer, tenants' rent included the cost of utilities. But in August, the building switched to electrical submetering, making the landlord a middleman between the tenants and Con Edison. The building's management pays bulk rates for electricity, then charges tenants for how much they use. The rent is supposed to be reduced in return.
Libby Nelson, Energy-Billing Practice Raises Tenants' Ire, NY Times City Room Blog, July 20, 2009. See also, NY1 News, Bronx Tenants Claim Faulty Meters Ran Up Massive Bills, July 20, 2009, including video clip.

The PSC issued its Order allowing submetering at Riverview on April 2, 2007. It appears, as is common, that the impact of submetering was not realized until much later, when it was actually implemented.

The Order indicates that NYSERDA would defray the cost of submetering with grants of System Benefits Charge funds. See PULP Network Jan. 16, 2009, PSC and NYSERDA Spend Millions for Submetering Projects Violating Residential Tenants' Rights.

Also, as is typical in such orders, the PSC recites that the owner promises to comply with HEFPA -- but then endorses clumsy evasions of the HEFPA customer protections. For example, the 1600 Sedgwick Order recites a representation of the petitioner that service will not be terminated for nonpayment.
The Applicant states that the building's management will not terminate electric service for non-payment of electric charges.
This sounds benign but is malicious and very dangerous to low-income tenants: the owner uses a court eviction route to displace a tenant who falls behind in paying electric bills. This practice is promoted by the consultant who was petitioner for Sedgwick's submetering order, who also wrote a NYSERDA Submetering Manual for landlords, and the PSC order winks at it. See NYSERDA Residential Electrical Submetering Manual (Oct. 2001). The NYSERDA manual suggests to owners that they just evict tenants for nonpayment of electric bills rather than provide the "burdensome" protections of HEFPA, some of which kick in when advance notice of intent to terminate service for nonpayment is issued:
New York State has extensive regulations in place to protect residents against their electric service being shut off. An owner seeking to continue the tenancy while discontinuing the service will most likely be required to comply with all tenant-protection regulations applicable to utilities for discontinuing the service. These include various notice and payout [Deferred Payment Agreement] requirements and protections for the elderly and disabled, which are time-consuming, burdensome to the owner, and inconsistent with continuation of the rental tenancy. Moreover, special arrangements with respect to electric charges are likely to cause confusion in billing and collection procedures. As a result, owners may want to consider legal action for eviction of the resident or recovery of unpaid amounts as the primary enforcement mechanism for nonpayment of submetered electric charges.
Thus, the NYSERDA manual - written by a consultant to submetering landlords - suggests that HEFPA consumer protections, such as the duty to offer negotiated repayment agreements to customers in arrears can be circumvented by evicting them or suing them in court for unpaid charges. Also, aid may be available for utility bills that is not available in summary eviction proceedings for nonpayment of rent.

It is appalling that the PSC and NYSERDA use System Benefit Charge money -- which they tout as being used to aid the poor -- to help landlords install submeters and add new costs and hardships, and to counsel owners to displace the tenants who cannot afford to pay the new charges. Also, in situations where the owner has an obligation to renew Section 8 leases at reasonable rents to low-income tenants, eviction for nonpayment of electric charges can displace the subsidized tenant and allow the landlord to re-rent the apartment at higher, market rate rents to new tenants. Tenants of another Starrett Corporation Project, Claremont Gardens in Ossining, have alleged in a pending petition that the advent of submetering there has led to displacement of low-income tenants through higher costs they cannot afford and eviction proceedings. See Submetering Challenged at Claremont Gardens in Ossining, PULP Network, May 15, 2009.

The PSC's Riverview Submetering Order also allows the landlord to include outside arbitration of disputes in its complaint handling procedures. Under HEFPA, when a customer's complaint to the provider of utility service is not resolved promptly to his satisfaction, he has a right to have the dispute decided by the PSC complaint adjudication system that can be invoked by customers with a phone call, letter, office visit, or an email or online complaint. There is no room for hired gun arbitrators in the statutory system. See Under HEFPA, the New York PSC Must Decide Complaints of Submetered Customers; Assembly Passes Bill to Correct Diversion of Complaints Regarding Submetered Electric Service.

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

Town House West Tenants Ask PSC to Halt Submetering

Tenants at Town House West, a former Mitchell-Lama project in Manhattan, petitioned the New York Public Service Commission on July 15, 2009 to vacate or modify its prior order allowing the landlord, Stellar Management, to resell electricity to the tenants. The petition alleges
  • Tenants were not properly or timely informed of the submetering plan and of the opportunity and ways to comment to the PSC prior to issuance of the submetering order
  • No charges are due because there is no valid filed tariff or agreed-upon contract for service containing the rates, terms and conditions of electric service, which were required to have been incorporated into THWA Tenants' leases by the PSC's submetering order
  • Complaint procedures required by the PSC submetering order do not comply with HEFPA
  • Proper Notice of Complaint Procedures was Not Provided to Tenants
  • The "No Termination" policy circumvents HEFPA protections
  • Violation of the Rate Cap
  • The owner's scheme for allocation of rent and electric payments, coupled with no complaint procedures and the "deeming" of electric charges as additional rent are a method to displace low income tenants
  • Energy inefficiencies of owner owned and controlled property increase tenants' costs for electricity
  • Tenants received no "shadow billing" prior to implementation of submetering
The DHCR schedule of rent reductions for apartments converted to submetering underestimates usage and price of electricity. As a result, when a landlord sheds responsibility for electric bills and shifts the cost to rent stabilized tenants, the DHCR rent reductions do not come close to offsetting the new charges. Rent stabilized tenants thus suffer out of pocket injury, and those with low or fixed incomes who lack savings or income sufficient to absorb the higher costs may face significant hardship and possible eviction proceedings. See PULP's Analysis of DHCR Rent Reductions for Conversion to Submetering, and PULP Analyzes DHCR Submetering Rent Adjustments.

The PSC has allowed owners to "deem" charges for electricity to be "rent" -- while DHCR does not consider electricity charges to be rent. In effect, the agencies have allowed "rent" increases in excess of the limits of the rent stabilization laws and enabled landlords to threaten eviction to collect unpaid or disputed charges, circumventing the procedures and utility customer protections of the Home Energy Fair Practices Act (HEFPA). This strategy to avoid the "bothersome" utility consumer protection laws and complaint procedures by "deeming" electric charges to be rent and evicting tenants for nonpayment is suggested to landlords in a NYSERDA manual for submeterers.

Tenants are represented by PULP. For more information see PULP's webpage on submetering.

Friday, July 17, 2009

Out of the Loop: FERC Finds No Gaming, No Manipulation, and No Remedy in Lake Erie Loop Flow Case

FERC issued an order on July 16, 2009 denying any significant relief that would affect consumers in the Lake Erie "loop flow" case. Last year, emergency action was belatedly taken the NYISO board asking FERC to approve on an emergency basis a ban on certain circuitous transactions made by energy traders. As one consequence, these now-forbidden gambits raised NYISO costs that were passed on to wholesale buyers and eventually to utility customers.

Instead of booking straightforward transactions, energy traders apparently booked a series of transactions to take advantage of lax and varying market rules and pricing variations in neighboring electric system control and market areas. Due to grid conditions, it was difficult to schedule the transactions which may have contributed to higher congestion pricing charges payable by all buyers in a congested area, and to a physical reversal of normal flows of electricity around Lake Erie. When the transactions, apparently only for the purpose of exploiting pricing differences under divergent market rules of NYISO and neighboring RTOs, led to the assessment of large charges by NYISO to buyers in New York, some municipal utilities objected and eventually the practice was halted. About $96 million was estimated by NYISO to be the added costs due to the circuitous electricity scheduling transactions; other estimates were much higher.

FERC found that the sellers making the circuitous transactions did it openly and for the purpose of exploiting price variations due to rules of the RTOs, and that they had not violated any existing tariffs, which at the time did not prohibit the particular transactions, stating
the circuitous transactions, by capitalizing on those [pricing] incentives, simply exposed rather than created a market inefficiency. The fact that a market inefficiency exists is not, in itself, proof that market participants engaged in market manipulation.
FERC seems to have addressed the question why would anyone sell electricity in a circuitous way in a series of transactions difficult to effectuate when straighter contract paths were available and more harmonious with the way electricity actually flowed with the answer that if they could profit from it and it wasn't forbidden and did it openly, it is OK.
In response to intervenors' assertions of tariff violations or market manipulation by market participants in the placement of scheduling requests, we thus find that no further action (including the awarding of refunds, disgorgement of profits, civil penalties, mitigation measures, or other requested remedies) is warranted.
FERC said the convoluted transactions purporting to schedule transactions out of New York and its NYISO system into Ontario and across its IESO system and then into Michigan and through and out of the MISO system and then into the PJM system in Pennsylvania, when electricity flowed differently, the transactions increased economic congestion prices shifting major cost burdens to others, and when more straightforward contract paths directly from New York to Pennsylvania were available merely took advantage of existing price signals and differentials "rather than artificially affecting them."

Apparently FERC believes that an opportunity to make a profit due to market inefficiencies will justify an anomalous transaction even if it otherwise makes no economic sense from a societal point of view and risks physical disruption of the grid, as the NYISO had stated in its emergency petition.

The Watertown Daily Times reported on the reaction of municipal utilities:
Many people who were affected by the process are not happy with the ruling.

"I certainly respect FERC's decision, but the fact that the eight trade paths were shut down and the counterflow costs came back under control indicates that there was in fact manipulation," said Andrew J. McMahon, supervisor of the Massena Electric Department. "There's no parallel universe, but ... it probably cost us about $1 million."
Lori Shull, FERC: 'Loop Flow' Wasn't Used to Raise Rates The New York Post reported on the response of Senator Schumer, who had urged FERC to take strong action:
"It is disappointing that FERC's ruling confirmed the exploitation of this loophole by greedy energy traders but did not help New Yorkers who got taken advantage of," said Sen. Chuck Schumer (D-NY).
Bill Sanderson, Electric $Hocker, New York Post, July 17, 2009.

Also, the FERC analysis did not report the amount by which the circuitous transactions may have affected market prices in the various RTOs or unregulated energy trading markets by increasing the congestion charges. As reported by Platts Megawatt Daily
However, largely absent from the FERC staff investigation report was any discussion about the possibility that the market participants engaging in these transactions were possibly benefitting from the congestion through financial transactions such as financial transmission rights or financial transactions done on Intercontinental Exchange.

In this area, market participants expressed concern that the FERC investigation did not take a holistic approach in its probing regarding financial transactions, to examine whether the market participants did certain trades in one market to benefit in another, as what has been argued in the Energy Transfer Partners natural gas trading case.

It “sounds like the FERC is going easy on traders and is not looking at the combination of activities to see the full extent of”the practices being investigated, said one trader.
Eric Weiser, FERC Says No Manipulation in Loop Flow Case, Megawatt Daily, July 17, 2009. In an intriguing footnote, the FERC decision states:
In its written referral [of the loop flow anomalies], the [NYISO Market Monitoring and Performance Department] also separately raised allegations of possible "wash" transactions into and out of New York. These allegations are distinct from its allegations involving circuitous schedules, and [FERC Office of Enforcement] staff is investigating them separately.
If the past is any guide, FERC's continuing nonpublic investigation of the alleged "wash" sales will be buried, or there will be a cryptic announcement of a wrist slap penalty due to "rogue traders" with no admission of wrongdoing, closure of the case, and sealing of the records.

It is anticipated that parties who sought a more consumer oriented approach will move for rehearing of the order.

The case also illustrates chronic problems in the design of the privatized rate-setting function in the wholesale markets operated by RTOS. The lack of any general tariff rule prohibiting anomalous transactions, coupled with FERC's approach, leaves New Yorkers without any refund remedy for overcharges flowing from the effects of gaming or anomalous transactions. Indeed, the FERC decision gives the green light to traders to engage in new circuitous transactions, and to exploit other market rules, as circuitous or other anomalous transactions are not prohibited; a few of the Lake Erie paths are banned as a result of the case.

In contrast, courts held refunds were possible when Enron and others manipulated markets in 2000 - 2001 in California, because the California ISO had a tariff rule prohibiting transactions that lacked a sound economic basis and simply gamed market rules to drive prices up. The NYISO needs to adopt such a rule to deter the inevitable future gaming invited by the FERC decision.

The primary purpose of the Federal Power Act, which FERC is charged to implement, is protection of the nation's electricity consumers. The law requires all rates to be reasonable, but FERC's approach seems to be to counteract unreasonable spot market prices not by regulating them, but by encouraging buyers to avoid them by "demand response" (not using electricity, which can mean shutting down factories when spot market prices go up), or by purchasing electricity elsewhere. See
The failure of FERC to do more is an embarrassment and abdication of its duty. It signals the need for more state oversight of the NYISO. See NYISO Needs State Visitation.

It also signals the need for the New York PSC to reconsider its policies that encourage retail utilities to buy more energy at spot market rates and just flow unreasonable spot market prices through to consumers, instead of acquiring electricity through long term contracts or traditional utility generation.

The PSC rationale for flowing through spiking and possibly manipulated prices was its effort to create competition: customers could seek relief from new retail electric companies, "ESCOs," and they would provide a market solution to the PSC-created problem of higher, spiking and unpredictable rates with alternative (often even higher) prices that provide the customer relief from the flowed-through spot market prices.

ESCOs, however, may just be reselling electricity at spot market prices, and offering a slight savings through tax subsidies, rather than providing a better value on the price of electricity. See ESCO Tax Subsidies: A Hidden $128 Million Cost of the New York PSC's "Retail Access" Scheme.

In an editorial, the Syracuse Post Standard said:

Last year, FERC closed the loopholes that allowed the trades to occur in the first place. But what's to prevent other traders from finding similar gaps to exploit? Are customers at risk of being overcharged again? Is the electricity grid at risk of being overwhelmed once again by traders taking advantage of flaws in the regulatory system?

The state of the wholesale electricity market seems eerily similar to the financial market before the meltdown on Wall Street. Most of what the big investment banks did before the system imploded was legal, too, but it caused a catastrophe just the same. Only after everything came crashing down did government move to impose more controls.

That must not be the fate of the electricity market. FERC and Congress need to review the law and the rules implementing it, identify potential weaknesses and exact tighter regulation with ratepayers in mind. Electric bills are too high as it is.

Shocking Outcome,, July 28, 2009

Powerless: Low-Income Households Facing Termination of Service with No Remedies

With New York's low-income home energy assistance program closed since mid-May, service to low-income natural gas and electric customers is being terminated for arrears they cannot afford to pay. The safety nets created by HEAP, the Emergency Utility Assistance Program, and HEFPA have become so frayed under the watch of OTDA and the PSC that many customers facing shut off now have no realistic remedies.

The federally funded HEAP program has been closed since mid-May. The OTDA vendor agreements with utilities and the New York State HEAP Plan, however, stipulate that when they receive HEAP crisis assistance - intended by federal law to "resolve" a customer's energy - they need only provide service for another 30 days. So the crisis in many situations is not really resolved, and it is punted forward into the next month. In recent years second Emergency HEAP payments have been available when the next termination notice comes in, while the HEAP season is still open. But when HEAP closed in mid-May, the remedies quickly began to evaporate. As reported by the Syracuse Post Standard,
Shut-off season is here.

After six months of cold weather, during which National Grid held off terminating service at that vast majority of households with unpaid bills, technicians hit the road in droves last month to shut off gas and electric service for nonpaying customers.

Click on graphic for a larger image.

The utility pulled the plug on 9,915 residences during May, according to the latest report filed with the state Public Service Commission.
Tim Knauss, National Grid Turns out the Lights for Central New York Nonpayers, Syracuse Post Standard, June 23, 2009.

Utilities balk at providing new payment agreements to customers in arrears. Termination notices are issued and backed up by the PSC when customers call its Office of Consumer Services Hotline (1-800-342-3377). Utilities insist on very large down payments or full payment, which the customer simply does not have.

With no effective remedy at the PSC, customers lacking the means to pay what is demanded are referred by the utilities (as required by HEFPA) to county social services departments or, in New York City, to HRA. The state-and-local funded Emergency Utility Assistance Program (EUAP), created by Section 131-s of the Social Services Law, requires local welfare officials to make a payment of up to four months' bills to maintain or restore service to a utility customer who cannot make alternative payment arrangements.

HEFPA and EUAP were enacted together in 1981 to create a utility service safety net that would keep service on through affordable payment plans with the utilities for people with temporary crises, and with public assistance when utility payment plans did not meet the need. Since then, however, OTDA has adopted administrative restrictions that result in denial of EUAP benefits.

So it is in summertime, when HEAP is no longer available, that the harsh consequences of the ill-considered OTDA restrictions are exposed.

Basically, upstate counties objecting to the "mandate" of EUAP won a legislative amendment to Social Services Law 131-s requiring applicants to repay it over 12 months, and allowing counties to sue to recover it as an ordinary debt, e.g., by using debt collectors, suing for judgments, garnishing wages, etc. Traditionally, New York law has always implied a contract to repay on the part of all public assistance recipients, when they are found to have property, so the Section 131-s amendment went a little further and more liberally allowed suits for recovery of assistance allowing court actions and judgments to be taken even if the former recipient didn't have property or wages immediately available for recovery. The provision probably created yet another deterrent so that the assistance would not be sought unless it was truly a last resort.

OTDA then went further, by adding a regulation with a restriction not contained in the statute. It provides that if an applicant had previously received assistance and had not repaid it, he could not get further assistance. The rule was lifted, at county option, last year, but only for the cold weather period. See
Bankruptcy, is an option that will wipe out indebtedness to the utility. Many cannot navigate the federal court system without a lawyer, who they cannot afford to pay, and the 2005 changes in the bankruptcy law have complicated matters further.

Unemployment is rising and more and more families are falling behind in their utility bills, and exhausting their resources. Many customers with utility shutoffs or shutoff notices are turning to charities, but charitable groups lack the resources to pay the large sums often demanded by the utilities as a condition of resuming service.

Due to the failures of the PSC and OTDA safety nets, an unacceptable number of New York households will be in the dark this summer, causing hardship, undermining the state's policy of continuous utility service, and increasing safety hazards. See

Wednesday, July 15, 2009

Report Highlights Costs and Consumer Burdens from "Cap and Trade" Greenhouse Gas Programs

A new report highlights the problem of overcompensation of electricity producers when a "cap and trade" greenhouse gas allowance program is overlaid on a restructured electricity market which pays all producers the same price. When the cost of allowances is added to the market-clearing price usually set by a fossil fuel plant, all producers are paid that price even when they have no need to buy allowances, thus benefiting nuclear, hydro, wind and other producers.
Unproductive costs represent costs for electricity consumers that provide little if any of these benefits. These unproductive costs will result, in part, from the underlying single clearing-price structure of deregulated electricity markets in the United States, in which an increase in costs for just a few generating plants can lead to an increase in revenues for all generating plant owners. While many analysts consider such “transfer payments” from consumers to producers as unimportant in assessing overall cost to society, they are harmful to consumers and thus to the economy as a whole.
Productive and Unproductive Costs of CO2 Cap-and-Trade: Impacts on Electricity Consumers
and Producers
, Synapse Energy Economics, Inc., July 2009.

See also, "Cap and Trade" Market System for CO2 Reduction Likely to Raise New York Electricity Prices, PULP Network, May 20, 2009; CO2 Cap and Trade Programs Inflate Electric Rates in Restructured States, PULP Network, March 13, 2009.

Inadequate Attention to Impact of Renewables Mandates on Low-Income Customers

A recent report draws attention to the cost impact of renewables mandates on low income electricity customers. Barbara R. Alexander, et al., Renewable Energy Mandates: An Analysis of Promises Made and Implications for Low Income Customers, June 2009.

In recent years, New York and other states adopted ambitious goals to increase the proportion of electricity obtained from renewable resources. Also, New York and nine other northeastern state formed an informal compact to create a market for greenhouse gas allowances, the Regional Greenhouse Gas Initiative (RGGI) which requires fossil fueled power plant owners to buy emission allowances and which raises the price of all electricity in the functionally deregulated NYISO markets, no matter how it is produced.

The new report loooks at three states and finds that such initiatives were undertaken with much optimism but little rigor and little regard to the impact of higher costs on low income consumers:
First, there is reason to question the reliance on many of the rosy promises and projections of public benefits that are likely to result from the adoption of the renewable resource energy mandates. Our analysis of several of the documents widely circulated in the various states typically concludes that these studies did not undertake any utility specific or customer class specific bill impact analysis.****

Second, proponents of state mandates for renewable resources should link their promises concerning future benefits to recovery of incentives * * * [which] should reward outstanding actual performance that is reflected in independent measurement and verification studies and not merely “bribe” the utility into taking the steps to assure compliance with the minimum statutory or regulatory spending objectives. Furthermore, renewable energy mandates that include utility incentives should also include penalties for failure to meet the targets.

Third, policymakers should require “bottoms up” integrated resource plans to determine the most cost effective generation supply portfolios under a variety of potential economic and fuel type scenarios. The role of renewable energy resources in achieving the most optimal portfolio should be identified and contrasted with the costs associated with compliance with the renewable energy mandates. The difference in costs should be recovered through a public benefit surcharge mechanism. ****

Fourth, renewable resources are likely to be expensive and states should be careful not to require a mandate to build new wind resources or subsidize solar installations for individuals unless there is an actual alternative traditional generation plant that will be avoided.****

Of the states evaluated in this report, only Massachusetts has in place a robust low income bill payment and efficiency program that is funded for full scale implementation. Another initiative missing from these case studies is the targeting of “green” jobs opportunities and working training and retraining to low income or disadvantaged populations.

Fifth, it would be reasonable to insist that any state mandates for investment in renewable resources and efficiency programs that rely on benefits that will occur late in the 20-year analysis of costs and benefits be accompanied by a robust low income bill payment assistance program to shield low use and low income customers from adverse bill impacts.

The report looked at Colorado, Michigan, and Massachusetts, and did not examine the advent of renewables surcharges and the RGGI program in New York. See
The New York PSC launched its renewables programs and a new surcharge to pay for them without express legislative authority, and has not addressed the impact on the poor of the higher prices that flow from the administrative initiatives.

It is perhaps revelatory of the New York Public Service Commission's values that it customarily takes an expansive (if not grandiose) view of its powers to act without legislation enabling its initiatives -- such as the system benefit charge, the renewables surcharge , and the "energy efficiency portfolio" now adding billions of dollars to electric bills for off-budget expenditure by NYSERDA and utilities under PSC direction -- but takes a crabbed view of its power when it comes to addressing issues affecting affordability of utility service to the poor. See PSC Implements 2% Assessment on Energy Utilities; Rebuffs PULP's Request to Protect Low Income Customers, PULP Network, July 2, 2009.