Friday, August 14, 2009

Yonkers Tenants Win Reprieve from Eviction While Fighting Landlord's Electric Bills

Tenants at a former Mitchell Lama housing project in Yonkers, Riverview II, won a small victory in their struggle to overturn a New York State Public Service Commission (PSC) order that allowed the owner to shift electric bills for heat in an inefficient building to tenants. As a result, tenants were faced with huge electric bills they could not afford to pay. See
The landlord's form lease allowed charges for electric service to be "deemed" to be added rent, so eviction could be threatened and accomplished if tenants allegedly fail or refuse to pay the electric bill.

Tenants, represented by Nancy Marrone, Esq. of Lower Hudson Legal Services, petitioned the PSC for a stay of submetering, see Yonkers Tenants Ask PSC to Halt Submetering at Riverview Towers, but the Commission Secretary referred the case to the Office of Consumer Services (OCS) to be handled as an ordinary complaint, avoiding -- or at least delaying -- consideration by the PSC Commissioners themselves whether to stop the submetering. Review by OCS has taken more than a year in other cases just to get a first level determination in the three-stage PSC complaint process that culminates in a final decision by the PSC Commissioners with judicial review available after that under CPLR Article 78. See PSC Secretary Finds No Evidence of Delay in Handling Hazel Towers Tenant Complaints Regarding Submetering.

Meanwhile, during pendency of OCS review of the Yonkers tenants' petition, the landlord was free to evict tenants for not paying the disputed charges for electric service through eviction proceedings in the Yonkers City Court.

In an August 4, 2009 letter, OCS staff wrote that the landlord could not seek to evict tenants for nonpayment of electric charges only, but said that it would not prevent the landlord from seeking eviction if other charges were due.

This is a small symbolic step forward, though it may be evaded in practice.

For example, if a tenant pays all the rent but withholds the electric charges in dispute, the landlord may credit the tenant's payment that was intended to be for the rent to the electric charges first, and plead in a landlord tenant court petition for eviction that "rent" is still unpaid. The right of the owner to allocate partial payments is a standard condition in many leases and nothing in the PSC letter - which is not an enforceable order of the PSC -- stops this. Also, a tenant may have a counterclaim for unauthorized or excessive electric charges that would exceed the rent due. Under the PSC letter, the landlord with a dispute pending at the PSC over these issues could still evict.

Thus, the OCS letter, like many PSC orders allowing submetering containing cosmetic flourishes purporting to protect tenants, superficially looks like it protects tenants, but reality can be the opposite. See Top Ten Submetering Myths. The PSC has not been auditing charges of submeterers, or timely enforcing HEFPA consumer protections, except in rare instances and only when tenants are represented by counsel and forcefully push for rulings that still take a year or more just for the first agency determination.

Tenants may have other defenses and counterclaims in court in situations where the OCS allows owners to collect electric charges as part of the rent in eviction proceedings, but in all likelihood would need counsel to raise them. Many tenants, however, lack access to counsel in eviction cases because they cannot afford the cost and free legal services are a rarity due to chronic underfunding of legal services organizations that serve the poor.

For an example or other defenses available to a submetered tenant, under the Public Service Law, no charge for utility service is lawful unless the contract or tariff for service containing all terms and conditions of service is filed with and approved by order of the PSC. To enforce this filed rate regulation principle, Public Service Law Section 75 bars any recovery in a court if the case involves a claim for electric charges that have not been fixed by the PSC.

Deregulation became the rage with regulatory agencies in the Enron era, and the New York PSC and its OCS staff led the way, scrapping the rate filing requirements for ESCOs and submeterers, allowing evasion of HEFPA by new providers, making up unofficial and informal rules as they go along. (The New York Legislature rebuked the effort of the PSC to allow ESCOs to avoid HEFPA in 2002, and clarified that the PSC has no power to waive HEFPA for any seller of residential electric service).

In its deregulatory fervor, the PSC
The current deregulation of electric service provided by landlords to tenants is not recognized in the Public Service Law, which still requires a filed rate regulation system.

So if any part of the claim in landlord tenant court is really for electric charges, validity of which is disputed, the tenant may argue under PSL Section 75 that there can be no recovery at all by the landlord. This may require proof that the "rent" has been paid and that the case is really based on unpaid charges for electric service which are the subject of PSC disputes. There may also be other defenses or counterclaims to recover excessive or unlawful electric charges available to the submetered tenant whose landlord attempts to collect electric charges in court. See After Submeterer Can't Evict for Unpaid Electric Bills, Bay City Metering Asks PSC to Revise Order to Allow Service Termination, PULP Network, July 28, 2009.

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

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