agrees to make payments under a deferred payment plan of any amounts due for service to a prior account in his name and makes a down payment based on criteria to be established by the commission. No such down payment shall exceed one-half of any money due from an applicant for residential utility service, or three months average billing, whichever is less....Some of the applicants were homeless, living in shelters or motels at public expense, and needed to show a new landlord that they had utility service arranged in their name before they could take possession. Even though they could pay a significant down payment, some with the aid of charities, they were denied service, under Niagara Mohawk's "Grand Plan." The "Grand Plan" required full payment of arrears less than $1,000 and a $1,000 down payment if the arrears were owed for prior service exceeded $1,000, if the applicant had broken a minimum payment plan agreement during a prior period of service to a closed account.
Normally a utility is required to file all rules, terms and conditions of service as tariffs, subject to public scrutiny and PSC review, and no new rates, terms and conditions are valid unless they are publicly filed. The "Grand Plan" rules, however, were never filed.
The applicants got no relief when they called the PSC's Office of Consumer Services (OCS) Complaint Line and Emergency Hotline, which has the power to direct the utility to provide service.
This was not particularly surprising, inasmuch as National Grid had informally vetted the "Grand Plan" with OCS. OCS gave the green light and so its Hotline staff upheld the utility's denial of service when applicants could not come up with $1,000. Indeed, National Grid conducts training programs for the OCS staff who handle complaints against National Grid, indoctrinating the regulators regarding the utility's untariffed policies and practices.
Applicants were thus denied essential utility service and had no more remedies they could invoke without a lawyer.
PULP represented numerous denied applicants whose offers to pay part of the arrears they owe had been rejected by National Grid and OCS. They filed a Petition with the PSC itself for declaratory relief, seeking emergency one-commissioner orders directing National Grid to provide service. Examples of the effects of Niagara Mohawk's policy on the Petitioners included:
When the case was filed, National Grid provided service. On each occasion that an individual case of an intervenor was presented to the Commission, the utility reversed its position - which had previously been backed up by the OCS Hotline -- provided service, and the PSC referred the complaints to OCS. Eventually some of the denied applicants received $25/day bill credits for wrongful denial of service, under PSL Section 31.5.
- A household with a 14 month old infant was without service because they could not meet the demand for $1,000.
- A mother with four children was evicted and became homelesswhen the father halted child support payments. The family was living in a car, and was relocated to a possibly dangerous motel situation. The mother found an apartment, but was unable to move in because the landlord required utility service to be on before giving possession. She could not resolve her homeless situation because she could not meet National Grid's demand for $1,000. The PSC Consumer Services Division was made aware of the situation and did not provideany relief.
- A senior citizen receiving SSI and moving to a different apartment where utilities are not included in rent, had arrears dating back more than six
years from a prior episode of service, and was refused service unless he paid at least $1,000, which he did not have.
- A disabled amputee with seizures who was denied service due prior arrears because he could not satisfy National Grid's demand for $1,000.
The PSC issued a Declaratory Ruling March 20, 2008, invalidating the "Grand Plan" rule, holding that it was not sufficiently flexible. See PSC Nullifies National Grid's $1,000 "Grand Plan" Requirement for Utility Service.
But in the decision annulling the "Grand Plan" the PSC still allowed Niagara Mohawk to demand more than half the amount due and more than the amount of three months bills as a down payment, thus gutting the clear statutory language that "No such down payment shall exceed one-half of any money due from an applicant for residential utility service, or three months average billing, whichever is less...."
The obvious intent of the language, which immediately follows language giving the PSC power to set criteria for payment plan down payments, was to limit PSC discretion. There was good reason to do so, because in the past, prior to enactment of PSL 31.1 as part of HEFPA in 1981, which is the Bill of Rights for New York's utility consumers, the PSC had allowed utilities to require payment of 100% of arrears due as a condition of service.
HEFPA and its companion public assistance legislation, Chapter 895 of the Laws of 1981, were intended to overrule that past practice. See HEFPA History. HEFPA gave the PSC power to establish criteria for down payments in payment plans, which PSL Section 37 requires to be negotiable, fair and equitable.
To prevent the PSC from being recaptured by the utilities and reintroducing harsh down payment requirements for service, HEFPA limited the PSC's power with the proviso that "No such down payment shall exceed one-half of any money due from an applicant for residential utility service, or three months average billing, whichever is less...."
Thus, in the Declaratory Ruling, the Commission crossed the "bright line" set in the statute for maximum down payments on payment plans.
The Commission said applicants who previously broke a minimum DPA (typically the poorer customers) could be required to pay more than the statutory amounts, and were not eligible for a down payment within the statutory maxima.
The Commission also rejected as inflexible National Grid's $1000 requirement, told OCS to review National Grid's policies, and directed National Grid to meet with OCS regarding the issue of down payments on payment plans and the provision of written denial notices to persons denied service, which must advise applicants of their opportunity to seek review from OCS. (Many of the Petitioners denied service by Niagara Mohawk were not provided timely and adequate notice of their administrative remedies through the PSC Complaint Handling Procedures). The Commission also denied PULP's discovery requests. See footnote 8 of the Declaratory Ruling.
PULP petitioned for rehearing and clarification, and while rehearing was pending, discovery in another case, (the then-pending Niagara Mohawk natural gas rate case), revealed that the utility had adopted a sub rosa policy to demand, instead of $1,000, 80% of old arrears as a down payment on a deferred payment plan for applicants with arrears for service to a prior account. The 80% rule again resulted in denial of service to applicants who could pay the 50% maximum down payment allowed by the statute. The instructions to utility staff were not to reveal that a fixed percentage demand was being made, just to demand an amount equal to 80%. Persons denied by the utility under the 80% rule sought help from the OCS Hotline, which consistently backed up the utility even though the demand exceeded the limits of the statute. PULP again assisted denied applicants in seeking intervention and relief from the Commission. See National Grid's "Grand Plan" May Be Gone, but its "80% Solution" Remains. Again, once each intervenor's case was brought to the Commission's attention, the denial of service was reversed.
On June 25, 2009, the Commission issued its Order Denying Petition for Rehearing, But Granting Clarification in Part. The Commission huffed about how Niagara Mohawk could have replaced its rigid $1,000 down payment rule with a rigid 80% rule. It recites how Niagara Mohawk, in private conversations with OCS, discussed the 80% rule:
We note that OCS has been meeting with National Grid regularly since the Ruling was issued. Early in this process the utility said that it wished to request an 80% down payment initially from applicants owing money under prior broken minimum DPAs, and OCS informed the utility that this was inappropriate and should not be done. However, as PULP’s subsequent submissions have shown, OCS’s instructions were not initially followed. We find the utility’s failure to follow those instructions inexplicable given the language of our Ruling.The Commission adhered to its prior decision that it could declare applicants for service ineligible for a payment agreement if they had broken an agreement regarding service to a prior account:
It is only applicants who have arrears and have previously defaulted on a minimum DPA that are not eligible for DPAs. These applicants that have not adhered to a minimum DPA should not be given the same terms available to an applicant who owes the utility arrears, but has not broken a minimum DPA.This added condition for a deferred payment plan with a down payment limited by the statutory maximum -- 50% of arrears or three months' bills, whichever is less -- of course, is an invention of the PSC and is not in the statute. The statute imposes a duty on the utility to provide service to any customer with arrears who agrees to a payment plan; it has no added restriction on eligibility of those who broke a payment plan during a period of service to a prior account. The down payment maximums have no exception, they are intended to limit utility and PSC power to extract large sums through denial of service.
It is now up to the courts, the Legislature, or a future Commission to rectify this situation which allows utilities to deny service with the blessing of the PSC, imposing economic demands for payment plan down payments that exceed the statutory limits intended to advance the enlightened universal service values embraced by the Legislature when HEFPA was enacted.