Thursday, August 06, 2009

Are Utilities Overreaching and Terminating Service to Collect Old Bills After Welfare Payments are Received?

This week PULP received several calls involving the attempts of utilities to terminate electric service after receiving partial payments of arrears from local departments of social services ("DSS") under New York Social Services Law ("SSL") Section 131-s. The law requires DSS officials to make a payment of up to four months' bills to eligible applicants to forestall termination of utility service, even if that amount is less than the total amount owed. Section 65-b of the New York Public Service Law in turn requires utilities to supply or continue to supply service to persons who receive a SSL 131-s grant, even if there still "may be money due to the utility corporation or municipality for services previously furnished...."

After receiving the four-month payments, the utilities again sent bills demanding the entire remainder of the past due bills and attempted to terminate service again, seeking to recover the same arrears that had been owed when the four-month DSS payment was made. This we believe is unlawful.

Chapter 895 of the laws of 1981 established the emergency utility arrears assistance program under SSL § 131-s and a complementary provision in PSL § 65-b requiring continuation of service when a payment is made or promised by DSS. The legislative history of Chapter 895 shows it was enacted to put a stop to efforts of utilities to extract payment by DSS of more than four months' bills as a condition of restoring or continuing service, and to legislatively overrule a court decision that had allowed Con Edison to do that.

The letter of the PSC Chairman in support of Chapter 895 urging the Governor to sign it recognized that the utilities cannot reuse the collection club of service termination after receiving a 131-s payment of four months' bills. The unsatisfied arrears not covered by the DSS payment may still be collected through conventional means other than utility service termination (such as lawsuits), and shortfalls in collection of the debts must be addressed in the PSC rate setting process, which makes allowances for uncollectibles as a utility expense when rates are set. The utilities thus cannot engage in an endless series of terminations for the same arrears that would require DSS to pay more than the amount of four months' bills to obtain continued service to a person eligible for the grant.

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