OTDA Requires Suffolk County to Provide Emergency Utility Assistance

The policy of the state favoring continued residential utility service was declared in 1981, with the enactment of the Home Energy Fair Practices Act (HEFPA), Article 2 of the Public Service Law, creating perhaps the nation's best utility consumer protection rules, and a companion provision under Section 131-s of the Social Service Law, creating an emergency utility assistance program to help prevent terminations of persons who lack the means to pay their utility bills. The latter program comes into play when utilities, after following HEFPA, are allowed to terminate service, and provides assistance when the customer has no alternative payment solution.

In a September 21, 2009 Decision After Emergency Fair Hearing, the New York State Office of Temporary and Disability Assistance (OTDA) reversed Suffolk County Department of Social Services' (DSS) repeated refusals to provide timely emergency utility assistance that had left a family of seven, headed by a 62-year old grandmother in the dark for weeks, following LIPA's shutoff of their electric service in August due to unpaid bills. In such circumstances, Section 131-s of the New York Social Services Law requires social services to make a payment in an amount of four months most recent bills, and section 65-b of the New York Public Service Law requires the utility to provide service.

Suffolk DSS initially refused to act on the application for emergency utility assistance because a prior grant of Emergency Safety Net Assistance (ESNA) had not been repaid. See Powerless: Low-Income Households Facing Termination of Service with No Remedies; OTDA Eases, but Continues, its Administrative Restriction on Assistance to Utility Customers with Incomes Above the Public Assistance Level; and OTDA Must Relax Its Administrative Restriction on Utility Assistance Loans for Persons with Incomes Above the Public Assistance Level.

The applicant was required to go to a separate DSS office to make the payment of the remaining $168 due. Upon her return to the first office to apply for aid, intercession by a Paralegal/Community Advocate from Empire Justice Center was needed to satisfy DSS that the receipt of the repayment -- given by the other Suffolk DSS branch office -- was genuine.

The application was next stalled because a grandchild of the applicant, who attends college upstate, had not been finger imaged. The advocate, using materials obtained from state OTDA, was able to show that the decision on utility assistance should be based on available income of persons actually in the household.

Finally, the Suffolk DSS acted on the application without regard to the grandchild absent from the household due to college attendance. DSS still denied aid, however, on the ground that their estimate of household income and expenses showed enough money available to make monthly repayments to LIPA of $175, along with payment of current LIPA bills. The applicant was referred by DSS back to LIPA for negotiation of a new deferred payment agreement (DPA).

Under HEFPA, however, utilities generally are not required to enter into new DPAs if a customer has just broken a minimum DPA. LIPA insisted on a down payment of $1,361 on arrears in order to revive a repayment agreement and have service restored. The applicant couldn't pay LIPA what it demanded, public assistance was denied, and so she requested an Emergency Fair Hearing to review the Suffolk DSS denial of aid.

Decision After Fair Hearing noted that in finding the applicant had income in excess of her needs that could be used for a new DPA, Suffolk DSS included in its calculation of household income unemployment insurance benefits (UIB) that had ceased. The OTDA Decision found that without the phantom UIB income, the household would not have had the funds claimed by DSS to be available to pay LIPA, and would have had a monthly deficit of income less than reasonable expenses. Also, the Decision found that Suffolk DSS had given no reasonable explanation for not including, in its estimate of household expenses, additional expense items including propane and children's school clothing. The OTDA Decision found the applicant was eligible in the EAF category for aid needed to restore utility service.

The OTDA Decision went further, to point out that the state and county funded category of Safety Net Assistance (ESNA)

is available to meet emergency/immediate needs of households not eligible for EAF, recurring TA [Temporary Assistance], and Emergency Assistance for Adults (EAA) or HEAP. * * * * There was no evidence that the Agency [Sufflok DSS] considered all available Emergency Programs, includ[ing] ESNA, to restore the Appellant's utility services. * * * * The Agency [Suffolk DSS] is directed to authorize EAF to the Appellant's household to cover the utilities for the [four month] time period set forth in 18 NYCRR 352.5(e).

Without the diligent assistance of an advocate from Empire Justice Center and a prompt Emergency Fair Hearing Decision from OTDA, the family would still be in the dark.

Staff Report Released after State Senate Hearing on Telecom Taxes; Acknowledges Need for Consumer Protections for Telecom Customers

As we reported on August 14th, the New York State Senate’s Select Committee on Budget and Tax Reform held a hearing on August 12th regarding the modernization of the state’s telecommunications tax system. The Staff Report of the hearing was issued on September 24th.

Witnesses at the hearing included PULP and representatives from the landline, wireless, cable, and satellite television industries. The New York State Department of Taxation and Finance and the state’s Office of Real Property Services testified as well. The primary purpose of the hearing was to address whether, after nearly 15 years, the time has come to redesign the state’s telecom tax structure, especially in light of new competitors using different technologies. PULP, whose testimony is quoted extensively in the Staff Report, added two additional issues to the mix which were incorporated into the final Staff Report, namely the need to examine surcharges in addition to taxes and the fact that the current tax policies and industry changes have led consumers to services (wireless and Voice over Internet Protocol, or VoIP) not presently covered by the state’s consumer protections for telephone service.

According to the Staff Report, the key findings from the hearing include:

(1) Tax Inequity. Providers of similar services face disparate treatment for tax and surcharge purposes. For example, cable companies do not pay property taxes on network equipment on private property, while telecommunications companies’ similarly sited equipment is subject to taxation. Also, traditional telecoms are exempt from paying property taxes on electronic attachments connected to cables in public rights-of-way, while cable companies are required to pay taxes on this similarly sited equipment. In addition, VoIP and wireless telephone service providers are not required to contribute to the Targeted Accessibility Fund of New York (which supports Lifeline discount telephone service, the relay service for the deaf, and E-911 access) while landline telephone companies must contribute.

(2) Tax Policy v. State Goals. The Staff Report found that “New York’s telecommunications tax policy runs counter to the goals of the state’s economic development and regulatory policies. High tax rates, unequal tax treatments and heavy administrative burdens threaten investment in broadband networks, which are crucial to attracting and maintaining businesses.” With the tax burden heavier on regulated utilities, the Staff Report acknowledged PULP’s concern that the “state is inadvertently steering New Yorkers toward non-regulated utilities that are not subject to the consumer protection provisions in the Telephone Fair Practice[s] Act.”

(3) Local Concerns/Federal Considerations. Industry representatives warned the Committee that the current level of tax revenue from regulated entities is not sustainable due to trends steering consumers toward services and providers that are not taxed. Such a trend will likely impact local governments significantly.

(4) Solutions & State Models. The telecom industry presenters were “largely in agreement that taxes should be based on the type of service – not the means through which it is delivered. There is also a consensus that functionally-equivalent services should be taxed the same way.” The witnesses went on to discuss developments in other states where telecom tax reform has already occurred.

The Staff Report concluded that the Select Committee will look for ways to simplify the telecommunications tax system in ways that will uniformly impose taxes based on the types of services provided rather than on their means of delivery. More details will be forthcoming after the state Department of Taxation and Finance and the Public Service Commission complete a report by October 1st on the current state of telecom taxation, as was required in the most recent state budget. Action by the Select Committee will be a strong first step to leveling the playing field between the different types of telecommunications service providers, but PULP believes this must be immediately followed by an extension of telephone consumer protections to all.

Lou Manuta

FERC Commissioner Kelly Quitting: Who Will Take Her Place?

President Obama reappointed FERC Commissioner Suedeen Kelly, but she has now announced that she will be stepping down, creating a vacancy. According to Dow Jones:

It is time for me to move on and pursue opportunities to advance these objectives in the private sector," Kelly said in a statement.

The Senate has still yet to confirm another FERC nominee, John Norris. If the Senate fails to confirm Norris and replace Kelly before it adjourns, it will have only three commissioners sitting: two Republican and one Democrat.

FERC spokeswoman Mary O'Driscoll said the agency could still function with three of five commissioners.

All sitting FERC commissioners are electricity deregulation and market rate enthusiasts initially appointed by former President Bush, some of whom (Kelly and Wellinghoff) were renominated by President Obama when their terms ended. See Wellinghoff Designated Chairman of FERC by President Obama, PULP Network, March 25, 2009.

None of the sitting Commissioners is from the 15 "restructured" states that embraced deregulation of the electricity generation sector by allowing utilities to form large holding companies and divest power plants, requiring energy to be bought at "market-based" rates, Those rates, under federal jurisdiction, were effectively administratively deregulated by FERC without congressional action to change longstanding filed rate regulation laws and without adequate consumer protection.

Those states, including New York, are now highly dependent on flawed FERC-approved spot markets for trading deregulated wholesale electricity, such as those run by the NYISO. Their electricity prices have risen higher than those of the majority of states that kept their utilities' power generation under state regulation and did not allow it to be divested to new wholesale merchant power companies under FERC jurisdiction.

It is time for the President to nominate a new Commissioner to serve at FERC with less allegiance to utilities and deregulation dogma and more commitment to protection of consumers, which is the primary purpose of the agency.

Update
The Senate Committee on Energy and Natural Resources has voted to confirm FERC nominee John Norris. See Embattled Mining Pick Given 'Benefit of the Doubt' by Senate Panel, October 8, 2009.

PULP Updates Telephone Consumer Protection Materials

PULP's purposes include being a resource center and educating the public about the legal rights of utility consumers. For many years, PULP published a desk reference manual for legal assistance lawyers and other advocates which covered in detail common legal issues faced by low income telephone and energy utility customers. Due to sharp funding cuts and resource limitations beginning in 1995, the PULP Manual is no longer published in hard copy. PULP is updating chapters of the Manual and gradually posting them online at the PULP website Help Center, with partial support received from the New York Bar Foundation. We are pleased to announce the September 24 posting of the updated telephone consumer protections chapter

Value of ESCO Service Questioned

A news story today suggests that energy cost savings may be available from ESCOs. See Con Edison Solutions offering O&R customers lower rates, Middletown Record, Sept. 22, 2009. A closer look past the headlines , however, indicates that a price lower than current charges for the same service from the traditional utility is promised only temporarily, "for the rest of September."

This promise of a temporary savings is possibly a "teaser" rate to induce customers to sign up for a long duration contract that typically locks in the customer with early termination fees, but allows the ESCO to raise its prices. See Think Twice Before Switching Utilities, PULP Network, September 28, 2006.

Due to state sales tax breaks, it is theoretically possible for ESCOs like Con Edison Solutions -- a corporate holding company affiliate of Orange & Rockland and Con Edison -- essentially to resell the same service at a profit, without adding value. See

• ESCO Tax Subsidies: A Hidden $128 Million Cost of the New York PSC's "Retail Access" Scheme, PULP Network, Jan. 12, 2009;
  
• ESCO Advertises 9.75% Tax Savings on Delivery Service, PULP Network, June 18, 2009.

In a closer look at ESCO utility service last week, a Syracuse, NY television station found customers who are not benefiting over time from having switched to gas or electric "commodity" service from ESCOs:

There are plenty of energy service companies, or ESCOs, out there, knocking on doors promising big savings if you switch over from National Grid.

But here's The Real Deal on what you should know before you sign on the dotted line.

We get a ton of calls and emails about door-to-door energy salesmen. They get paid to put the pressure on, to get you to switch from National Grid or NYSEG. They are the suppliers; the utility still delivers the gas and electric.

If an ESCO shows up at your front door, first make sure they have proper identification. They should all be wearing a photo ID with the name of their company on it.

Then, ask for written information about the company, their rates and their cancellation policy; tell them you'll think about, do a little homework and then contact them by phone if you're interested in switching.

If you do decide on the spot to switch, New York State law gives you three days to cancel the contract without penalty if you change your mind.

Be sure to read all the fine print; some of these companies lock you into a set rate for a certain number of years.

More often than not, the switch to an ESCO doesn't pay off.

This time last year, an energy salesman came a knocking at Matt Bishop's front door.

"I opened up the door, listened to what he said and it sounded like a good deal at the time, so I ended up signing up for a two-year commitment at their lock-in rate," Bishop says.

At the time, the lock-in for natural gas was $1.15 per therm, but that deal quickly soured as the market dropped.

The most National Grid has charged since Bishop locked in is 92 cents a therm. Right now, prices have plummeted to less than 40 cents, which means Bishop's now paying three times more than National Grid customers.

See Signing with an ESCO: The Real Deal, WSYR-TV, September 16, 2009. A video clip is here.

Customers of Con Edison, Orange & Rockland, and Central Hudson can now compare what they are paying for electric service from alternative ESCO providers with what they would pay as a full service customer of the electric utility, using PULP's electricity bill estimator.

For further information see

• PSC Makes ESCO Service Comparisons Difficult,
  
• PULP's Con Edison Bill Estimator, and
• PULP's website page on ESCO contracts.

Update
January 7, 2010 - PULP has not been able to revise its electricity bill estimator since March, 2010, due to the loss of state funding.

Utilities in a number of other jurisdictions, and regulatory bodies in other jurisdictions, have online bill calculators that make it possible for consumers to determine what a given amount of energy usage would cost if service were received from the utility.

Georgia Power

Tamil Nadu, India

Ontario Electricity Board

Duke Power (12 month ESCO price comparison)

Southern Maryland Electric Cooperative

NSTAR ("This three part tool can show you how your NSTAR bill will differ if you choose to sign an agreement with a Competitive Power Supplier").

Sri Lanka

District of Columbia Public Service Commission (Calculators for comparing ESCO service with direct service from PEPCO, and for estimating bill impact under a PEPCO's pending rate increase request)

Colorado Springs (calculator for estimating bill impact of pending rate increase request)

Nebraska Public Power

Calculators such as those above can be useful tools for consumers in a number of situations, for example:

• in evaluating the bill impact when considering whether to purchase energy saving appliances,
  
• in comparing the cost of ESCO service with full service from the traditional utility,
  
• in estimating the cost of utility service for prospective buyers or renters,
• in apportioning partial month utility costs between roommates or at real estate closings,
  
• in estimating the impact of a proposed utility rate increase, or
  
• in checking to see if a landlord is charging more for submetered electric service sold to tenants than the traditional utility would charge a customer for direct utility service.

Groups Ask Governor Paterson to Support Alternative Plan for Cohoes Falls Hydro Project

Riverkeeper, Scenic Hudson, Natural Resources Defense Council, Village and Town of Green Island, City of Watervliet, Capital District Regional Planning Commission, Friends of the Falls, New York Bicycling Coalition, and the Public Utility Law Project have written a joint letter to Governor Paterson urging him to lend his support to alternative proposals for the Cohoes Falls hydro project.

Click here for their September 15, 2009 letter to the Governor.

A recent decision of the United States Court of Appeals opens the door to improve future use of the hydro site. For more information see our prior post, Second Circuit Requires Further Consideration of Cohoes Falls Options, PULP Network, August 10, 2009.

Update

Fred LeBrun, Power Play on the Hudson, Albany Times Union, Dec. 20, 2009.

NYSEG, RG&E File New Rates for Electric and Gas Service Seeking Major Increases; Proposing Improved Low-Income Customer Protections

On September 17, 2009, NYSEG and RG&E filed new rates that, if approved, would significantly increase bills for electricity and natural gas customers. The utilities had not filed new delivery rates for many years.

When new rates with major increases are filed, the PSC customarily suspends them, opens a proceeding, conducts evidentiary hearings, and sets new rates in an eleven month process.

PULP is reviewing the filings, which include hundreds of pages of testimony and exhibits for each of the four cases. Although the newly filed rates would result in major increases, significant improvements in low income rate reductions and in programs for customers in arrears and energy efficiency are included. NYSEG is proposing reduced residential rates for low income HEAP customers that will cut bills by $15 per month, and RG&E is proposing an $8 per month reduction.

Typical residential bills of NYSEG and RG&E have been significantly lower than those of other New York utilities. RG&E, which resisted selling its power plants until agreeing to do so at the insistence of the PSC in a recent merger case with Iberdrola, the Spanish utility, has the lowest rates of any major investor owned utility in the state.

PSC Launches Proceeding to Examine Future of Universal Telephone Service

A packed house filled the 19th floor boardroom at the New York State Public Service Commission (“PSC”) on September 16, 2009 as Administrative Law Judges Howard Jack and Eleanor Stein kicked off a new proceeding to examine universal service. See PSC to Revisit Telecom Universal Service Policies. Everyone was there – PULP, Verizon, AT&T, Frontier/Citizens Communications, the state Cable TV Association, Verizon Wireless, T-Mobile, Sprint, the state Consumer Protection Board, the state Library Association, representatives of the independent local exchange carriers (“ILECs”), and at least16 PSC staff members. While the Judges kept the festivities moving along, it became abundantly clear that a quick consensus will not be had as to which universal service issues would be appropriate for discussion or how they should be resolved.

According to the PSC, this case hinges on two related topics – reasonably priced telephone service in high cost areas and assistance for all low income customers around the state to help afford the service. To assist the ILECs in providing service in rural, high cost areas at comparable rates to urban areas, a “Transition Fund” supported by the ILECs has been in place since 2005. The Transition Fund replaced the Access Settlement Pool, which was phased out at that time. Now that the Transition Fund is expected to run out of cash by early 2011, the time has arrived to examine what, if anything, should be done to replace it. If a new high cost fund is created, the questions arise as to which types of providers would pay into the fund and how would contribution amounts be determined. In addition, the Lifeline discount telephone service (as well as E-911 access and the telecommunications relay service for the deaf) is currently supported by local exchange carriers through the Targeted Accessibility Fund (“TAF”). Under the current intermodal environment, with both fixed and nomadic Voice over Internet Protocol (“VoIP”) and wireless providers competing for local telephone customers with the local exchange carriers, the question was asked as to whether the time has come to begin accessing these other types of providers through TAF.

Before these substantive issues raised by the PSC could be addressed, both Verizon and the Cable Television Association claimed that there were procedural infirmities when the case was launched which would need to be rectified. In addition, AT&T sought to include a pet issue – access charge reform – into the list of discussion topics. AT&T and the other wireless providers stated that the rates long distance providers pay to the local exchange carriers to access their networks to begin or terminate calls within the state need to be the same as the lower rates paid for interstate calls. They believe this topic is intertwined with any universal service discussion.

On top of these actions, the parties agreed that before the heavy lifting can begin, there needs to be a thorough accounting of both the Transition Fund and TAF. While parties will be more inclined to wholeheartedly participate if the need for action can be clearly demonstrated, this might have bogged down the process. Fortunately, the Judges agreed and this analysis is expected to completed in about a month.

The procedural challenges and the request to include access charge reform into the agenda for the case may be just noise to delay consideration of the substantive topics. We believe that the important issues which need addressing in the proceeding include:

1. The PSC should adopt a state policy to enroll all eligible customers in Lifeline.
2. The PSC should work with the state Office of Temporary and Disability Assistance (“OTDA”), TAF, and the providers to improve the Lifeline automatic enrollment process in a competitively neutral way. Currently, OTDA partners only with Verizon to confidentially match names of people on various forms of public assistance with the company’s list of Lifeline customers and, due to the substantial number of access lines lost by Verizon, thousands of potential Lifeline customers are missed.
3. The PSC should permit fixed and nomadic VoIP providers to offer Lifeline and allow VoIP and wireless providers to draw from the fund which supports Lifeline.
4. The PSC should ensure that all eligible telecommunications carriers which offer Lifeline assistance to customers do so without regard to the service package they have chosen.
5. In addition to universal service for dial tone, PULP believes that universal access to broadband should be supported by the state’s broadband providers.
   

It will take vigilance by the Judges overseeing the case, and the parties, to ensure the real issues of this proceeding – the future of service in high cost areas in the state and enhancing Lifeline participation – are properly addressed and not avoided by hurdles thrown in the way.

Lou Manuta

PSC Stops Submetering at Four Buildings, Sets Conditions to Address Tenant Concerns

At its September 17, 2009 session the PSC decided to grant rehearing of prior submetering orders, and halted implementation of electric submetering at four New York City buildings with a total of 2,800 tenants. Earlier, in February 2oo9, the Commission temporarily stayed submetering on an emergency basis to protect the tenants, who would have seen large cost increases for electric heat which many of them could not afford. (For background, see Submetering Slowed at Roosevelt Island - Temporary Stay of Submetering Conversion at Roosevelt Island and Three Other Locations, PULP Network, Feb. 12, 2009; and PSC Continues Stay of Submetering at Four Former Mitchell-Lama Projects, PULP Network, July 10, 2009).

The Commission issued a Press Release today, PSC Seeks Added Tenant Protections When Submetering - Focus on Rent-Assisted, Low-Income Households in Electric Heated Buildings, PSC Press Release, September 17, 2009. A full decision and order on the case will be issued.

Based on discussion at the webcast PSC meeting, this is a reprieve for the 2,800 tenants in four buildings, many of whom who would have suffered great hardship and possible displacement if submetering had been implemented. "Shadow" bills issued before the submetering was to begin indicated tenants would be faced with hundreds of dollars a month in added energy burdens because the premises are heated with electric resistance heating fixtures, the building is not energy efficient, and any downward adjustment to rent or housing subsidies would not offset typical new charges for electricity.

The owners will be allowed to request permission to submeter again only after meeting conditions, including

• an open process to obtain input from tenants and all parties to the cases
• a showing that as a whole, tenants are held harmless from submetering
• commitment to completion of energy efficiency measures in NYSERDA program
• installation of thermostats
• no "deeming" of charges for electric service to be "added rent"
• compliance with HEFPA
• education of tenants regarding comment to the Commission regarding any submetering proposal, about energy efficiency, and about HEFPA rights.

The Commission rejected the owners' contention that the rehearing petitions filed on behalf of tenants by Assemblyman Micah Z. Kellner, Congresswoman Carolyn B. Maloney, Manhattan Borough President Scott M. Stringer, State Senator Jose Serrano, and City Councilmember Jessica Lappin were untimely, with Commission counsel stating it was clear that the normal 30 day time for rehearing can be extended for good cause by the PSC.

Although the ruling does not have direct impact on other pending cases, in which tenants in other buildings have petitioned the Commission for relief and stays of submetering orders, concerns were expressed that tenants in other buildings where submetering has been implemented may suffer hardship.

For further information see PULP's web page on submetering.

Updates
-- Later on September 17, 2009, the PSC issued its Order Denying in Part and Granting in Part Petitions for Rehearing and Establishing Further Requirements. The order focuses on the submetering of electrically heated buildings, but indicates in a footnote that some of the principles it is adopting may also apply in other situations.

-- See Clare Trapasso, Mitchell Lama Tenants Win Out in Dispute Over Electric Bills, Daily News, September 18, 2009.

-- See $1000 Monthly Electricity Charges No Longer Feared By Roosevelt Island Eastwood Residents As Public Service Commission Halts Submetering Attempt, Roosevelt Islander Blog, September 21, 2009.

Updated Telephone Lifeline and Shared Meter Chapters Added to PULP's Online Manual

PULP's purposes include education of the public about the legal rights of utility consumers and to establish a resource center on the legal rights of consumers. For many years, PULP published a desk reference manual for legal assistance lawyers and other advocates which covered in detail common legal issues faced by utility customers, and particularly low income telephone and energy utility customers. Due to sharp funding cuts and resource limitations beginning in 1995 the manual is no longer published in hard copy.

PULP is gradually updating chapters of the manual and posting them online at the PULP website Help Center, with partial support received from the New York State Bar Foundation. We are pleased to announce the posting of the updated Shared Meter chapter to the well as an updated chapter on Lifeline discount telephone service.

In addition, the online PULP Law Manual includes an analysis of

• the Home Energy Fair Practices Act,
  
• telephone consumer protections,
  
• public assistance programs for utility and energy consumers,
• rights of heating fuel customers,
  
• the New York State Truth in Heating Law, and
  
• the Home Energy Assistance Program.

Additional chapters on topics such as New York State Public Service Commission complaint procedures, rights of water consumers, rights of submetered tenants, and an update on the Home Energy Assistance Program chapter will be posted in coming months.

Lou Manuta

Niagara Mohawk Withdraws Request to Delay Mobile Scanning for Stray Voltage in Upstate Cities

The PSC adopted an order in 2005 instituting new standards requiring New York electric utilities to conduct safety inspection of their distribution systems. In the 2004 order that led to the new standards, the PSC expressed concern that its regulatory policies favoring long term rate plans and reduced oversight had led utilities to cut costs in ways that threatened safety of the public, stating:

Over the past 10 to 15 years, we and other regulatory commissions across the nation have moved from traditional one-year litigated rate cases to multi-year performance-based rate plans. The purpose of these plans is to allow for rate stability while allowing the utilities greater flexibility in managing their operations. Staff's investigation into this matter suggests that the utilities may not have been placing enough attention and emphasis on safety matters. For example, we were surprised and disappointed to learn that three of the major electric utilities have conducted no stray voltage testing and have no plans to do so. **** The utilities are responsible for ensuring that they are maximizing the safety of their electric systems. The fact that some utilities have done nothing regarding stray voltage suggests that the focus of utility management may need realignment.

Niagara Mohawk's "Elevated Voltage Testing and Facility Inspection Report" for 2008 shows at page 81 that the utility found 178 instances of elevated voltage in its distribution facilities. Also, elevated voltage was found in 433 street light facilities, owned by municipalities.

In a December 15, 2008 Order Adopting Changes to Electric Safety Standards, the PSC revised the standards. Among other changes, the order required upstate utilities to conduct a mobile scan of their distribution systems in 2009, to better detect situations where people might be endangered by "stray voltage," stating

All utilities, with the exception of Con Edison, shall complete an initial mobile stray voltage detection survey of their underground electric distribution systems, in appropriate areas of cities with a population of at least 50,000 (based on the results of the 2000 census), during calendar year 2009 to positively identify those areas that can be effectively surveyed, and annually thereafter until further Commission action.

****Con Edison shall continue to conduct twelve complete mobile stray voltage surveys annually until directed otherwise by the Commission.

The mobile scans were required because in recent years, sensitive truck-mounted equipment has been developed which detects even slight "stray voltage" while driving slowly through the streets. It identifies facilities needing further inspection, repair or maintenance. It may be particularly effective in areas where the electric system is underground, because metal plates, covers, or streetlights, or even sidewalks and other public areas may become energized due to unseen insulation failures, poor connections, or corrosion in the underground system.

On August 28, 2009, Niagara Mohawk d/b/a/ National Grid petitioned the Commission to delay implementation of the new requirement in 2009, citing cost concerns and efforts to find additional bidders to provide the scanning service.

Comments opposing the petition were filed by the Jodie S. Lane Public Safety Foundation, pointing out the superiority of the mobile scanning process, and the need to protect the public:

The goal of energized object detection is to Look for energized objects, Find energized objects, and Mitigate energized objects in order to reduce shock events. The goal is “Reduce shocks”. In the last 5 years National Grid has performed manual testing and found few energized objects. Furthermore National Grid only mitigates about 25% of what they find. The impact of this anemic approach is as expected…they are ineffective at reducing shock risk for their rate payer. The shocks in their service area have not declined. What they are doing is ineffective. What they propose is a continuation of a failed approach.

Power Survey Company, the provider of mobile scanning services, stated in its comments that it did a partial scan of Niagara Mohawk facilities in the Buffalo area in the summer of 2008, and identified 320 stray voltage situations in just 32 hours -- 194% more than Niagara Mohawk found in the entire year in its entire New York system using manual scanning techniques.

The New York State Consumer Protection Board filed comments opposing the utility request, citing 48 shock incidents reported by National Grid in 2008 caused by company-owned facilities, and the overriding importance of public health and safety concerns.

On September 14, 2009, Niagara Mohawk withdrew its waiver request.

This is a very welcome development and to the credit of Niagara Mohawk that it reconsidered its position and will now go forward with the mobile testing this year. The company should also consider extending the mobile scans beyond the minimum required by the PSC, i.e., to areas other than the cities with populations greater than 50,000.

PULP still believes that the PSC should consider new performance metrics -- in addition to testing -- to incent utilities to reduce the number of shock incidents, fires, explosions, and property damage, as we stated in our comments in 2004, when the safety and inspection standards were initially under consideration by the PSC.

Lifeline Awareness Week Begins Monday – Is There Anything for New York to Celebrate?

National Lifeline Awareness Week begins September 14th. In a new White Paper issued today, PULP took the occasion of National Lifeline Awareness Week to critically examine New York State’s Lifeline policies and the impact they have had on enrollment. See Assistance Only For Some – Twenty-Four Years of New York State’s Lifeline Discount Telephone Program, written by PULP Senior Attorney Lou Manuta.

The New York PSC is participating, with activities to promote the telephone Lifeline assistance program for low income customers. In the 24 years since Lifeline discount telephone service became available in New York State, we’ve seen those eligible customers that participate in the program be able to save at least $15 a month on their phone service, money that can be used to help pay other utility bills, rent, groceries, or medicine.

However, over one million households in the state eligible to be on Lifeline do not participate. The PULP report looks into the critical role state agencies – including the New York State Public Service Commission and the Office for Temporary and Disability Assistance – play in the Lifeline enrollment process. It also stresses that in addition to outreach and education, improved automatic enrollment, policy and program changes, along with a commitment of regulators and the telephone industry to provide the benefit to all eligible customers, are necessary to improve participation.

PSC Tells FCC to Permit States to Assess VOIP for State Universal Service Funds

As the New York State Public Service Commission (“PSC”) prepares to launch a major proceeding to examine the state’s existing universal service policies, it has told the FCC that it should permit states to assess nomadic Voice over Internet Protocol (“VoIP”) providers, such as Vonage, for their own state universal service funds (“USF”).

The FCC had requested input on requests made by Nebraska and Kansas to clarify their ability to add nomadic VoIP providers to the list of eligible contributors to their state universal service funds. In Comments submitted to the FCC on September 9th, the PSC wrote:

The NYPSC recently initiated a proceeding that, in part, will consider modifications to the existing state regime to ‘address issues related to the sources of financial support for the state's incumbent wireline telephone companies, and how best to maintain or modify existing support mechanisms for socially-beneficial telephone services, such as Lifeline and 911.’ That proceeding, in part, will examine whether competitive neutrality and universal service are promoted by an intrastate USF assessment on nomadic VoIP providers terminating traffic in New York. Accordingly, the NYPSC supports the adoption of a FCC ruling that acknowledges a state’s right to assess USF contributions on nomadic VoIP providers' intrastate revenues, provided there is no conflict between the federal assessment of USF contributions and the states' assessment on the remaining intrastate portion.

Back in 2006, the FCC had determined that VoIP providers must contribute to the federal USF, in addition to traditional landline and wireless providers, because their customers benefit from being able to place and receive calls over the public switched telephone network. All traditional, VoIP, and wireless providers base their payments into the USF on a percentage of their interstate revenues, a percentage which changes quarterly. The FCC found that requiring participation from VoIP providers promoted “competitive neutrality” and stated that contributions would be based on one of the following formulas: (1) a safe harbor which set 64.9% of revenue as interstate; (2) a traffic study calculating the interstate usage; or (3) the actual interstate percentage based on actual revenue allocations. By setting the safe harbor, Nebraska and Kansas argued, the FCC created an intrastate contribution factor of 35.1%.

In addition, the 8th Circuit Court of Appeals determined earlier this year in Vonage Holdings Corp. v. Nebraska Public Service Commission that before states can assess universal service contributions on the intrastate revenues of nomadic VoIP providers, the FCC must issue an order allowing them to do so. With the petition from Nebraska and Kansas, this is the opportunity for the FCC to formally make this determination.

The PSC went on to provide some insight into its positions in its universal service proceeding, slated to begin on September 16th. It noted the substantial amount of line losses Verizon and the other incumbent local exchange carriers (“ILECs”) have suffered since 2000, primarily to the fixed VoIP services offered by the cable companies. The PSC recognized that these developments have resulted in decreased revenue receipts by the state’s existing fund, the Targeted Accessibility Fund (“TAF”), which is currently supported only by traditional ILECs. It added that “[p]rograms funded by TAF support fundamental public needs and benefit all telecommunication providers in New York, not just those that pay into it.”

As a result, the PSC understands that it will become more and more difficult to assure universal service into the future unless VoIP is added to its list of TAF contributors:

This unbalanced approach is not consistent with the FCC's universal service principles (47 U.S.C. §254(b)) and the federal requirement that state efforts to preserve and advance universal service be done in an equitable and non-discriminatory manner (47 U.S.C. §254(f)). New York's experience is not unique which is why it is critical for the FCC to declare that state commission efforts to implement an appropriate intrastate funding mechanism supported by revenues from all carriers conducting business within its borders, including nomadic interconnected VoIP providers, does not frustrate federal rule or policy but are fully consistent with serving the public interest.

Now we have a better sense of where the PSC intends to take its new proceeding. It wants to bring all providers of similar services together to support the mutual goal of universal service. The days of treating VoIP differently in New York from traditional ILECs may be about to change and the PSC is counting on the FCC to provide regulatory cover for its actions.

The FCC’s proceeding may only address the narrow issue raised by Nebraska and Kansas – the ability to assess nomadic VoIP providers for state universal service fund purposes. There should be no question that the PSC already has the authority to assess fixed VoIP providers, such as the cable television companies offering voice services. This much has already been done not only in Nebraska and Kansas, but in Missouri, New Mexico, and Maine as well.

PULP agrees with the PSC that bringing in nomadic VoIP providers is important to this process, but since they make up only a small percentage of the market, the PSC’s entire proceeding should not be delayed while we wait for the FCC to act. Let’s move quickly to bring fixed VoIP and wireless into the state universal service process now. The future of affordable service for all is at stake.

Lou Manuta

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Niagara Mohawk Allowed to Keep Cost of "Smart Grid" Proposal Secret

In a ruling yesterday, the PSC allowed Niagara Mohawk to maintain secrecy of the cost of its proposed "smart grid" projects. The costs of the "smart grid" projects would be split between customer funding -- through higher electric rates -- and possible economic stimulus funds requested from the federal government. The ruling states

In its initial request, the Utility sought an exception from public disclosure pursuant to POL §87(2)(d) for: Exhibit 2 (Substation SCADA Equipment Program) and Exhibit 3 (Subtransmission Circuit Breaker Program) of Volume 1; all pricing information in Volume 2 relating to the "Spine" of smart meters, communications technology, in-home energy management, and grid monitoring and automation, together with all information describing seven discrete "Green Modules" designed to take advantage of the Smart Grid services provided by the Spine; and Attachments 8 (Smart Meter Marketing Plan Budget - Spine and Modules), 15 (Hardware and Software Specification), and 17 (Financial Data). On May 18, 2009, the Utility limited its request regarding pages 48 to 65 of its Smart Grid Demonstration Program Proposal so as to prices associated with the Spine and Green Modules. In Volume 3, National Grid provided a compilation of all the allegedly confidential information. In its Appeal, the Utility argued that this information warrants an exception from disclosure under POL §87(2)(c)

The Secretary mainly adhered to her initial decision that the information should be public, but allowed it to be kept secret temporarily. As stated by the Times Union, the PSC Secretary

modified her original decision. She ordered that the smart grid information be kept secret until 60 days after National Grid filed its funding application with the DOE or when the DOE completes its review of the National Grid proposal -- whichever is later.

See Larry Rulison, PSC sides with National Grid -- Agency says financial details of "smart grid" project can stay secret, Times Union, Sept. 11, 2009.

See also, Niagara Mohawk Must Divulge Cost Data Regarding Proposed "Smart Grid - Smart Meter" Projects, PULP Network, August 18, 2009.

NYISO Admits its "Market Problem" Allows "100% Or More" Overcharges Due to "An Abuse of Market Power," Proposes Rule Change, No Refunds

Bad news about the NYISO's latest "market problem" spilled out late Friday afternoon, just before the Labor Day weekend, when the NYISO made a Filing Requesting Authority to Prospectively Apply New Mitigation Rules to Three Specifically Identified Generators, Requesting Limited Waivers of the NYISO’s Tariff and of the Commission’s Regulations, Seeking Expedited Commission Action, and Requesting Shortened Notice and Comment Periods. NYISO asked FERC for permission, on an emergency basis, to change its market rules due to price gouging by three electricity sellers.

According to the filing, sellers demanded prices that "reflected an exercise of market power and departs significantly from the conduct that [the NYISO Market Monitor] would expect to see under competitive market conditions.... The proposed measure is intended to apply to three generators that have recently been committed for reliability. . . . The generators are all located outside the New York City Constrained Area."

NYISO did not quantify the amount of the overcharges or the cost to consumers, how long the practice was tolerated. NYISO did not identify the sellers, consistent with its rules, approved by FERC, which mask the identities of sellers and their bids, stating:

"Disclosure of this information could cause commercial harm to each entity to which it relates, and could harm the markets administered by the NYISO."

As in prior market failure incidents, NYISO proposes no correction of prices or any disgorgement of the unreasonable overcharges: "the identified Market Parties will be subject to the mitigation measure proposed in this filing only on a prospective basis." The "mitigation measures" are a new formula designed to cap the maximum price that can be demanded by the three power generators.

The filing relies on an affidavit from its "Market Monitor" asserting that the sellers made anomalous bids that would not be expected in a competitive market, stating

(a) that Market Parties’ offering behavior typically departs from the conduct that would be expected under competitive market conditions (in particular, the Bids significantly exceed each facility’s marginal operating cost); (b) the Market Party’s offering behavior has increased the guarantee payments the Market Party has received for the relevant identified Generators by more than the 100% mandatory filing threshold specified in Section 3.2.3 of the MMM; and (c) that the Market Party’s offering behavior and associated guarantee payment are not attributable to legitimate competitive market forces or incentives.

This is similar to the type of conduct that NYISO - and its Market Monitor - flatly denied only a few months ago at hearings held by the New York State Assembly. See
Data Discredits NYISO and PSC Defense of Spot Market Rate Demands; 12% of Bids Exceed $900, PULP Network, March 31, 2009.

The lesson, again, seems to be that sellers cloaked with anonymity can exploit weaknesses in the NYISO rules by gaming them, and, if caught, they will be told to stop the gaming with no serious consequences.

For more about NYISO issues, see:

• McCullough Research, “New York Independent System Operators Market-Clearing Price Auction Is Too Expensive for New York”

• New Yorkers Lost $2.2 Billion Because of NYISO Practices: The Debate Continues.

• FERC, NYISO and PSC Watched While NYISO Gamers Looted Consumers, PULP Network, August 21, 2008;

• Assembly Committees Hold Hearing to Discuss NYISO Practices and High Electric Prices.

• Data Discredits NYISO and PSC Defense of Spot Market Rate Demands; 12% of Bids Exceed $900, PULP Network March 31, 2009;

• More Questions for the NYISO, PULP Network, April 9, 2009.

• NYISO Costs Skyrocket, Benefits Questioned, PULP Network, September 26, 2006.

• Out of the Loop: FERC Finds No Gaming, No Manipulation, and No Remedy in Lake Erie Loop Flow Case, PULP Network, July 17, 2009

• NYISO Needs State "Visitation", PULP Network, June 30, 2009.

Update
9/11/09 -- See Larry Rulison, 3 power generators may have cost consumers -- Agency looking into energy plants' actions, Times Union, 9/11/09

PSC Once Again Tells FCC to Let Market Take Lead on Broadband While the Market Continues to Fail Customers

In comments submitted to the FCC on Monday, the New York State Public Service Commission (“PSC”) , along with the state’s Chief Information Officer/Office for Technology (“CIO/OFT”) told the FCC in their comments that it should let the market decide broadband availability issues. This position should come as no surprise since the agencies took an even firmer stance against governmental intervention in comments submitted to the FCC in June regarding broadband deployment.

Specifically, on August 31st the PSC and CIO/OFT wrote:

“While faster speeds may be achievable in more densely populated areas, thresholds should not be set so high as to make it economically infeasible in rural areas. The FCC should consider the appropriate balance between regulation and reliance on competition. We recommend that the FCC rely on the market in the first instance and that government intervention be tailored to addressing important public policy issues that the market has not addressed.”

While the agencies did submit that the New York State Universal Strategic Broadband Roadmap, which was released in May 2009 by the state’s Council for Universal Broadband, calls for a minimum statewide speed of 1 Mbps, they acknowledged that this speed is not available in all areas today. Despite the failure of the market to bring this non-remarkable speed to rural as well as urban areas around the state, they continued to maintain that no governmental intervention should be necessary at this time. However, maybe the PSC and CIO/OFT actually believe that the “first instance” has already occurred and now due to market failures, the time has come for the government to “address[] important public policy issues.” While their actions indicate otherwise, PULP can think of two public policy issues that are ripe for consideration today: consumer protections and affordability.

For the past seven years, I have had DSL service at my home which is provided by Verizon. The company charges a “reasonable” $29.95 a month for 1.5 mbps download speed. From time to time – including this week – there have been problems with the service, ranging from inconsistent speeds to a total lack of access. When these occur, I must place a call to a toll-free number at which point I am sent from one robotic voice to another before I can speak with a tech who can test my line. Invariably, the trouble can not be repaired remotely and a service rep must be called to my home. I am then transferred to the dispatch desk and am informed that someone can be at my house in three days “sometime between 8 am and 6 pm.” Oh, and an adult must be in the home waiting to receive the magical call that the technician is on his way. Attempting to challenge the delay in repair is fruitless (as is demanding a credit for the days out of service) as there are no consumer protections in place for broadband customers in New York State. The option of leaving to a competitor (if there is one) is not even a remote possibility for most people as the provider realizes that the customer is not going to the trouble of changing e-mail addresses over a “minor” technical glitch.

When I was home the last time a service rep made his trip to my house, I was informed that my technical problems will go away as soon as FiOS, Verizon’s fiber-to-the-home offering, is available in my neighborhood. For years, Verizon has touted how network reliability improves exponentially with fiber over copper (See: Verizon Service Quality Performance Lags). Assuming this is correct, there is also a higher cost associated with this improved service, due to the greater speed and reliability. While this may be a viable solution for my situation, it begs the question of affordability – if New Yorkers are struggling to afford $29.95 a month for 1.5 mbps every month (which studies show is the case for about half the population), how are they going to afford FiOS? See The Broadband News Is In, but it Isn’t All Good; Is There a Need for a "Broadband" Universal Service Fund?

Today’s marketplace for broadband is one which lacks high speed, consumer protections and affordability. Yesterday a person attempting to telecommute from the Adirondacks checked his internet speed and found that Frontier's vaunted "high speed" premium DSL service was downloading at only 528 kb rate, little more than half the state agencies' overly modest goal of 1Mbs service. This is what the PSC’s “hands off” approach has wrought for New York’s consumers. See Test Your Internet Speed at CWA Website and Compare it with Broadband Speed in Other Countries, PULP Network, July 10, 2009.

What we need is a commitment to universal high speed broadband, and enforceable protections for broadband consumers – modeled on the state’s Telephone Fair Practices Act – as well as a mechanism to help low income families access broadband. We will not get there if the PSC and the CIO/OFT continue to push against governmental action, a hands-off policy that has caused the U.S. to decline to 15th in the world in broadband use, well behind other countries that have a real policy in this area. We need to examine these “important public policy issues that the market has not addressed” today.

Lou Manuta

Town House West Tenants Association Files Supplemental Complaint Against Stellar Management's New, Unfiled Conditions of Submetered Electric Service

Town House West Tenants Association filed a Petition with the PSC on July 15, 2009, seeking to halt submetering. The PSC Secretary deemed it to be an untimely rehearing petition, and referred the matter to the agency's Office of Consumer Services (OCS) to be handled as a complaint. See Town House West Tenants Ask PSC to Halt Submetering, PULP Network, July 21. 2009. The tenants association filed a motion to review the Secretary's referral of the case to OCS, pointing out facts that had arisen that justified a stay of submetering. See Town House West Tenants Association Interlocutory Appeal of Secretary's Referral of Stay Application to Office of Consumer Services, August 7, 2009, which has not been decided.

The landlord, represented by Harris Beach, a law firm joined by a former PSC Commissioner, has not served an answer to the July 15 petition, which is now deemed to be a complaint to be decided initially by OCS.

The landlord, Stellar Management, had started to charge tenants for submetered electric service. Recently, tenants were notified that the electric service bills they had received would now be regarded as mere "shadow" bills -- informational only -- and that they need not be paid. See Townhouse West Tenants Win Three-Month Reprieve from Submetering Charges, PULP Network, August 26, 2009.

Also, Stellar Management recently delivered to tenants new lease riders for electric service and new customer complaint procedures which had not previously been filed with and approved by the PSC. Today, PULP filed a Supplemental Complaint on behalf of the tenants' association with OCS pointing out continued serious deficiencies in the terms and conditions of submetered electric service.

For further information see PULP's web page on submetering.

NYPA Holding Hearings on Reduced Hydropower Allocation for Residential Customers

In a terse revised notice, the New York Power Authority announced hearings being held September 1 in Lewiston at the Niagara Power Project, and September 2 in Syracuse regarding proposed extension of contracts for the sale of inexpensive hydropower produced at its Niagara Project for the benefit of residential customers.

The Notice says the proposed contract extensions are for

a total of 455 MW of firm and 360 MW of firm peaking hydropower currently being sold to the Utilities for the benefit of domestic and rural consumers

When one follows links in the notice to the existing and proposed contracts with Niagara Mohawk d/b/a National Grid, NYSEG, and RG&E, we learn that the Authority reduced the allocation of hydropower to residential customers.

• The Niagara Mohawk contract for firm (24/7) power "will be reduced from 230 MW to 189 MW," a reduction of 41 MW;
  
• The NYSEG contract for firm power "will be reduced from 203 MW to 167 MW," a reduction of 36 MW;
  
• The R&E contract for firm power "will be reduced from 120 MW to 99 MW," a reduction of 21 MW.
  

Thus, the real deal is that under the old contracts, firm power from the Niagara project sold to these utilities for the benefit of domestic and rural consumers was 533 MW, and has been reduced to 455 MW, a net reduction of 78 MW, or 14.6%. This reduction first occurred when the contracts were previously extended, and the new one-year extension would continue the reduction.

Section 1005 of the New York Public Authorities Law provides that the primary beneficiaries of the Niagara and St. Lawrence hydropower should be rural and domestic customers.

such projects shall be considered primarily as for the benefit of the people of the state as a whole and particularly the domestic and rural consumers to whom the power can economically be made available, and accordingly that sale to and use by industry shall be a secondary purpose, to be utilized principally to secure a sufficiently high load factor and revenue returns to permit domestic and rural use at the lowest possible rates....

More specifically, the federal Niagara Redevelopment Act requires at least half the output of the Niagara Redevelopment Project to be allocated to residential customers. As described by FERC in its 2007 Order granting NYPA's application for relicensing of the Niagara Project:

Niagara Redevelopment Act section 836... authorizes and directs the Commission to issue a license to the Power Authority for the construction and operation of a project with the electric generation capacity to use all of the United States’ share of the Niagara River water available for power generation. It requires the Commission to include among the license conditions, in addition to those deemed necessary and required under the terms of the FPA, provisions to:

• Assure that at least 50 percent of the project power is available primarily for the benefit of consumers, particularly domestic and rural consumers, and to make such power available at the lowest rates reasonably possible to encourage the widest possible use, and to give preference to public bodies and nonprofit cooperatives within economic transmission distance.

The 2006 annual sales report filed by NYPA with FERC indicates that in 2006, 3,752,235 MWH of total Niagara Project 2216 firm sales of 7,488,640MWH, or 50.1%, were for the benefit of rural and domestic customers.

The 2007 NYPA report to FERC, dated August 25, 2007, indicates that 3,491,757MWH of total firm energy sales of 7,283,970, or 47.9%, were for the benefit of rural and domestic customers.

The FERC docket for the Niagara Project P2216 does not indicate that any 2008 NYPA report to FERC on 2007 sales has been filed.

It is not clear from the NYPA notice how continuing the reduction of hydropower away from residential customers will affect compliance with the requirements of the statute. If the 78MW shifted away from residential customers is multiplied by 24 hours times 365 days, it represents a reduction of 683,280 MWH on an annual basis. If that were added back in 2007, residential customers would have received more than 50% of the power, rather than less.

Where did the 78 MW of cheap power, costing less than one cent/kwh, go? The NYPA Notice does not explain.

In all likelihood the power is being reallocated to reduce electricity costs for large business customers who have lobbied vigorously to salve their largely self-inflicted wounds in the aftermath of the failure of New York's adventure with wholesale electricity deregulation, which large business customers clamored for a decade ago. Instead of fighting hard for reforms of the flawed and often manipulated market-based rate regime at FERC, the NYISO, and the PSC to fix the regulatory problems, as large commercial and industrial customers are doing with greater vigor in other areas, New York's largest business customers may have successfully diverted the stream of hydropower intended for residential customers.

The allocation of blocks of cheap power to large businesses is usually justified on a theory that it helps save or grow jobs and benefits the economy. Indeed, the Pataki administration appointed a commission - with no residential consumer representative - which advocated taking even more cheap hydropower away from the residential customers. See Tim Knauss, State Panel Wants You to Pay Electric Bills For Businesses, Syracuse Post Standard, December 1, 2006; Tim Knauss, Clock Ticks on Cheap Power: Panel Recommended Passing Benefits to Industrial Customers, Post Standard, July 29, 2007. The promises of more jobs for cheap power, however, may be illusory, and the notion that greater economic good is achieved by taking away the power from residential customers (who may be much more likely to spend the savings in the local economies) and giving it to large companies is questionable. See NYSEG/RG&E's testimony to the hydro commission, pointing out that the putative benefits of giving cheap power to business is offset by the economic losses due to taking that benefit from residential customers and raising their costs.

Another issue is how the utilities that receive the cheap power transfer its benefit to residential consumers. We think the utilities resell the power into the NYISO spot markets, which set the price based on much higher prices usually set by fossil-fueled plants. The profit from the sale is then used to reduce total power purchasing costs. Today, the utilities include a bill message that indicates the value to the customer of NYPA hydropower, based on an opaque methodology.
The benefit is based on the number of kilowatt hours used, so the more a customer uses, the greater the benefit from the Niagara hydropower. A sounder and more egalitarian approach to distributing the benefit of the Niagara project would be to give the same benefit to all customers.

By distributing the benefit on a per kWh basis, a price signal is created to support increased consumption. If the benefit were distributed on a per customer basis, a stronger economic message encouraging energy conservation would be created.The decision to distribute the benefit in this way, benefitting the consumers who use the most, rather than on a per customer basis, is a policy choice made by the utilities and NYPA, and is not required by the statutory scheme or the related decisional law. The proposed contracts contain no provision to modify the existing method for distributing the hydro benefit.

Under New York Public Authorities Law ("PBL") § 1009, all proposed NYPA hydro contracts must be submitted to legislative leaders for their review and eventually must be approved and signed by the Governor.