PSC Continues Stay of Submetering at Four Former Mitchell-Lama Projects

Background
In a November 25, 2008 letter to Urban America, the owner of the 1,003 unit Eastwood apartment complex located on Roosevelt Island at 510-580 Main Street, Roosevelt, New York (Eastwood), elected federal, state and local officials -- U.S. Representative Carolyn B. Maloney, New York State Senator Jose M. Serrano, New York Assembly Member Micah Z. Kellner, and New York City Council Member Jessica S. Lappin) -- representing constituents at Eastwood, objected to submetering. Apparently the owner had begun to install submeters prior to receiving PSC permission to resell electricity, and tenants were generally aware of its intent to submeter. The officials' letter asked the owner not to petition the PSC for permission to submeter unless the impact on tenants was assessed and mitigated and until measures were taken to assess and address energy inefficiencies in the building:

As of the date of this letter, it is our understanding from the New York State Public Service Commission that Urban American has not yet submitted its petition for approval of submetering at Eastwood. For the protection of the building's tenants, we ask Urban American not to submit the petition until the above steps have been taken.

However, a submetering petition had been filed in June 2008 and PSC had already approved it in an Order dated October 28, 2008 and issued November 21, 2008. The officials' letter to Urban America was received and docketed by the PSC as a comment after the order had been issued, on November 28. During a "shadow billing" period preceding actual charges for electric service, a myriad of problems were identified in a second letter from the elected officials dated January 9, 2009, which was sent to the PSC and was also docketed as a comment.

On February 6, 2009, Assemblyman Kellner and the other elected officials, long with Manhattan Borough President Scott Stringer, submitted a Petition for Rehearing to the PSC, based on information that came to light during the "shadow bill" period and errors of fact in the Petition for submetering and the Order approving it, which did not address the large low-income population, which misapprehended the applicable rules regarding rent adjustments, and which did not address the fact that electric heat was being submetered in premises that are not thermally efficient and not equipped with modern controls. The rehearing petition states:

Ultimately our current perspective is that given all of these factors, Eastwood is not an appropriate candidate for submetering. As long as Eastwood continues to utilize an outdated baseboard electric heating system we have a hard time envisioning a safe and reasonable way in which significant conservation efforts on the part of tenants could bring the submetered bills into any acceptable range.

The petition was supplemented by Assemblyman Kellner, who pointed out that the added charges for electricity were not being offset by increased housing subsidies or lowered rents, and that under the leases, charges for electric service were "deemed" to be "rent" so that tenants could be evicted:

While the applicant may have promised that HEFPA will be adhered to for all residents, the lease written by the applicant defines the utility costs as rent. Since the procedures agreed to by the applicant, specifically references housing court, it is clear that any unpaid utility bills will result in tenants being hauled into court for eviction proceeding. This will inevitably lead to elderly and disabled tenants thrown out of their homes and into the streets. Had the Commission been informed of this information, we believe there would have [been] a different outcome to these cases.

The Orders Staying Submetering
On February 12, 2009 PSC Chairman Garry A. Brown issued a one-Commissioner order staying the submetering at Eastwood, and submetering stays were issued in three similar situations in other buildings. The stays were issued as emergency rules under SAPA because a failure to act immediately would be "detrimental to the health, safety and general welfare of tenants who are low income, require electricity for life support, are elderly, and/or are disabled." See PULP Network, Feb. 12, 2009, Submetering Slowed at Roosevelt Island. The stay order was confirmed by the entire Commission, and readopted as an emergency rule under SAPA on May 12, 2009. Discovery was initiated by Assemblyman Kellner and by PSC Staff, and is still underway.

Extension of the Stays
On July 10, 2009, another Order was issued by Chairman Brown extending the stay another 60 days, noting that "[f]urther readoptions may be necessary prior to a Commission determination on the petition for rehearing and the stay."

Similar extensions of stays were adopted in the cases affecting three other America buildings -- Schomburg Plaza, Metro North Apartments, and KNW Apartments.

Other Cases
Tenants in several other former Mitchell-Lama projects also sought rehearing of the submetering orders in their cases. But in those cases, their Petitions for rehearing, modification, vacatur and stay of prior submetering orders were recently rejected by the PSC as untimely, and the cases were simply referred to the PSC Office of Consumer Services (OCS) as complaints, without action on the stay requests. OCS may take a year or more to decide a complaint.

For further infomation visit PULP's web page on submetering.

Update
On July 16, 2009 the entire PSC acted to confirm the one-commissioner orders, continuing the stays of submetering at Roosevelt Island Eastwood, Frawley Plaza, Metro North, and KNW Apartments.