Virgin Mobile Latest to Offer Lifeline in New York, but Will its Customers Be Protected?

On October 29, 2009, the FCC issued an order approving Virgin Mobile USA's compliance plan , which was submitted as a condition of its designation as a “Lifeline-only” eligible telecommunications carrier (“ETC”) in its licensed service areas in New York, Virginia, North Carolina, and Tennessee.

Virgin Mobile now joins Verizon Wireless, Sprint , and TracFone as authorized providers of wireless Lifeline service in New York State. As such, their ETC status permits reimbursement from the Federal Universal Service Fund for discounts provided to low income customers.

In the Order, the FCC granted Virgin Mobile’s request for forbearance from the requirement that Lifeline providers offer service at least partially over their own facilities. In so doing, Virgin Mobile agreed to:

(1) Provide its Lifeline customers with 911 and enhanced 911 (“E-911”) access, regardless of activation status and availability of prepaid minutes;

(2) Provide its Lifeline customers with E911-compliant handsets and replace, at no additional charge to the customer, non-compliant handsets of existing customers who obtain Lifeline supported service;

(3) Comply with conditions (1) and (2) as of the date it provides Lifeline service;

(4) Obtain a certification from each Public Safety Answering Point (“PSAP”) where Virgin Mobile provides Lifeline service confirming that Virgin Mobile provides its customers with 911 and E911 access or if, within 90 days of Virgin Mobile’s request for certification, a PSAP has not provided the certification and the PSAP has not made an affirmative finding that Virgin Mobile does not provide its customers with access to 911 and E-911 service within the PSAP’s service area, Virgin Mobile may self-certify that it meets the basic and E-911 requirements;

(5) Require its customers to self-certify at the time of service activation and annually thereafter that they are the head of household and receive Lifeline-supported service only from Virgin Mobile; and

(6) Establish safeguards to prevent its customers from receiving multiple Virgin Mobile Lifeline subsidies at the same address.

The rates that Virgin Mobile will charge, how many minutes will be included in the Lifeline package(s), and what kinds of phones will be included are yet to be determined.

While PULP supports the addition of new Lifeline providers to offer discounted service to New York State’s low income population, we remain concerned that with the proliferation of individuals “cutting the cord” and receiving their telephone service from wireless providers only, that the state’s consumer protections for telephone customers will lose their impact. New York’s Telephone Fair Practices Act still applies only to traditional landline telephone companies, not voice service provided by cable television companies or to wireless carriers, and has not been updated to follow the customers as they take service from providers using different facilities to provide essentially the same service. With Verizon-New York claiming that it has lost over half of its access lines in recent years to these intermodal competitors, the majority of New York’s phone customers lack these important consumer protections regarding billing, termination, and notices. With the entry of yet another wireless Lifeline provider, we expect this number of unprotected, vulnerable New Yorkers to increase. What will happen to a Virgin Mobile Lifeline customer who runs out of minutes before the end of the month or who has difficulty paying his or her bill?

For more information see PULP's web page on wireless consumer protection.

Lou Manuta

Hazel Towers Tenants Association Seeks Review of PSC Submetering Decision

We previously reported on the saga of the Hazel Towers Tenants Association complaints to the PSC regarding submetered electric service. See, e.g.,

• Hazel Towers Tenants to Receive $20,000 Credits of Landlord's Overcharges for Submetered Electric Service, PULP Network, August 26, 2009;
• Hazel Towers Tenants File Reply to Owner's Request to Dismiss Petition Seeking to Halt Submetering, PULP Network August 18, 2009;
• PSC Seeks Comments on Petition of Hazel Towers Tenants to Halt Submetering, June 16, 2009;
• Motion to Recuse OCS Hearing Officer for refusing to consider issues raised by Hazel Towers complainants, August 17, 2009
  
• Response of Hazel Towers Tenants Association, August 17, 2009,
• PSC Secretary Finds No Evidence of Delay in Handling Hazel Towers Tenant Complaints Regarding Submetering;
• Hazel Towers Tenants Ask PSC to Act on Submetering Complaints, PULP Network, May 6, 2009; and
  
• Hazel Towers Tenants Association’s Petition for Investigation and Remediation of Noncompliance with Prior Order for Vacatur or Modification of Order Establishing Terms and Conditions of Submetered Electric Service at Hazel Towers and for a Stay, May 6, 2009.
  

On August 21, 2009, the PSC's Office of Consumer Services took an Initial Decision ("ID") in the case, which had been pending for more than a year. The Initial Decision acknowledges that in the first year of submetering the owner

• overcharged tenants by more than $20,000 above what Con Edison would have charged based on the owner's admissions,
  
• had not complied with the Home Energy Fair Practices Act, and
  
• did not decide issues raised by the tenants concerning noncompliance with the PSC's order allowing the owner to submeter electricity.

The Hazel Towers Tenants Association requested an informal hearing under to review the ID before a hearing officer not previously involved in the case. In their October 27, 2009 Statement for the informal hearing, the tenants make the following points:

• The ID erroneously approved a defective, proposed lease rider to govern the rates, terms and conditions of submetered electric service;
• Complaint procedures changed without notice and still violate HEFPA;
• The ID was tainted by ex parte contacts with the submeterer and its counsel who made submissions upon which the ID was based without notifying PULP, as counsel to HTTA;
• The ID erroneously permits submetered customers to be billed for electric service without the prerequisite compliance with the Public Service Commission's Submetering Order;
• The ID erred in approving unaudited charges and only making "spot checks" for rate cap violations where there was evidence of widespread overcharges;
  
• The ID erred in approving a defective, proposed Notification of Rights and Procedures;
• The owner charged a late payment fee of $25 instead of the 1.5% per month provided by Con Edison's tariff;
• The owner's proposed termination procedures are not in compliance with the Home Energy Fair Practices Act;
• The owner failed to provide the low income electric rate to eligible tenants and failed to notify them of the availability of a low-income rate;
• Tenants with arrears were not offered a written deferred payment agreement, were not offered budget billing, and were not offered quarterly billing for elderly customers;
• The owner did not reduce the tenants' regulated rent as stipulated by the Commission Order and by the New York State Division of Housing and Community Renewal (DHCR);
• Lack of transparency and rate disclosure that would allow comparison between submetered charges and what Con Edison would charge;
• Failure to audit all charges where there was evidence of widespread overcharges;
• Failure to phase in submetering with tenant consent when leases are renewed, and not all at once;
  

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

Ninth Circuit: AT&T Wireless Can't Bar Class Action Suits

When you sign up for wireless telephone service and receive a "free" cell phone in exchange for a two-year contract, if you'd like to challenge the carrier's ability to collect sales tax from you on the "free" phone, can the carrier force you into arbitration and prevent you from seeking a class action suit? On October 27th, the federal Ninth Circuit Court of Appeals said no.

In Laster v. AT&T Mobility LLC (No. 08-56394), a couple signed a Wireless Service Agreement ("WSA") with AT&T Mobility in 2002 and received two cell phones without charge because they agreed to a two-year contract. However, AT&T charged them $30.22 in sales tax for the two phones calculated at both phones' full retail value. The WSA includes both an arbitration clause, which requires any disputes to be submitted to arbitration, and a class action waiver clause, which requires any dispute between the parties to be brought in an individual capacity. Subsequent to the signing of the agreement, AT&T revised the arbitration agreement to add a new premium payment clause. Under this change, AT&T will pay $7,500 if the arbitrator issues an award in favor of a California customer that is greater than AT&T's last written settlement offer made before the arbitrator was selected.

On March 2006, before the premium payment clause was added, the couple filed a complaint in the US District Court for the Southern District of California, alleging the practice of charging sales tax on a cell phone advertised as "free" was fraudulent. This case was consolidated with a related case in September 2006 and the District Court ruled that the class waiver provision of the arbitration agreement is unconscionable under California law and that California unconscionability law is not preempted by the Federal Arbitration Act. AT&T appealed.

The Court of Appeals found that under California law, the class action waiver provision is unconscionable because:

1. The WSA is a contract of adhesion because it "is a standardized contract imposed on the subscribing party without an opportunity to negotiate the terms;"
   
2. The dispute involves a small amount of damages; and
   
3. The petitioners alleged that AT&T had developed this scheme to cheat large numbers of customers out of small sums of money.
   

The Court went on to hold that even though AT&T eventually added the "premium payment" clause, the WSA is unconscionable. The Court wrote:

The $7,500 premium payment is available only if AT&T does not make a settlement offer to the aggrieved customer in a sum equal to or higher than is ultimately awarded in arbitration, and before an arbitrator is selected. This means that if a customer files for arbitration against AT&T, predictably, AT&T will simply pay the face value of the claim before the selection of an arbitrator to avoid potentially paying $7,500. Thus, the maximum gain to a customer for the hassle of arbitrating a $30.22 dispute is still just $30.22.

The Court also found that the Federal Arbitration Act does not preempt California unconscionability law.

PULP reported on a similar case in the federal District Court of Washington state back in May. In that case, the Court found that a class action waiver provision in a Cingular/AT&T Wireless arbitration agreement to be substantively unconscionable. The Court wrote:

Defendants are effectively exculpated from any liability as a result of the provisions contained in their [Wireless Service Agreements]. This conduct contravenes Washington's fundamental public policy favoring the availability of class actions as a mechanism for enforcing a consumer's rights.

In New York State, PULP does not believe that the question has been addressed as to whether mandatory arbitration clauses in telecommunications contracts are permissible, but such clauses are prohibited in credit transactions .

Lou Manuta

Pennsylvania Regulators Halt Expensive "Smart Meter" Plan

In a wide ranging overhaul of laws affecting electric utilities and their duties in a "restructured" system that allowed utilities to form holding companies, sell off power plants, and rely on markets to buy electricity for customers, the Pennsylvania legislature enacted "Act 129", signed by Gov. Ed Rendell on October 15, 2008. Among other things, Act 129 required utilities to acquire electricity for customers at least cost (rather than rely on the deregulated wholesale spot market rate as some had urged should be done under prior laws).

Act 129 also embraced the idea of replacing existing meters with "smart meter" for all electric utility customers. The law required the major electric utilities to file plans with the Pennsylvania Public Utility Commission (PAPUC) for installation of "smart meters" and for making "time of use" and "real time pricing" available to all customers, upon their request.

West Penn Power Company d/b/a/ Allegheny Power Company (a subsidiary of the Allegheny Energy holding company), filed a plan to implement the "smart meter" requirements of Act 129 on an expedited basis for 93,000 customers in 2010. The PAPUC, however, held it up for further review, when the cost of the proposal to consumers became apparent:

An administrative law judge urged the PUC to stall implementation until he reviews Allegheny Power's plan by Jan. 29. The commission agreed.

Opponents of Allegheny Power's plan welcomed the delay.

"We had opposed the expedited filing; we felt they were trying to put smart meters into place very quickly, while all other electric utilities were using the 30-month grace period," said state Consumer Advocate Irwin "Sonny" Popowsky.

Popowsky said he opposes the costs Allegheny Power would impose on customers. According to the company, all customers beginning in February would pay a monthly surcharge of $5.86, which would increase to $14.34 a month by June 2011, $15.57 a month by June 2012 and $15.77 each month by June 2013.

"At $15 a month — that's a massive rate increase for consumers," Popowsky said.

Rick Stouffer, Allegheny Power's Smart Meter Startup Delayed, Pittsburgh Tribune-Review, October 29, 2009.

This is yet another illustration of how massive "smart meter" deployment touted by deregulators and many utilities nationwide is running into resistance when the sketchy putative benefits of "smart meters" are weighed against the large, real costs of installing them for every customer. Adding another $5 to $15 to monthly utility bills to indulge state and federal deregulators -- who fantasize that exposing small customers to extreme spiking prices in deregulated spot markets will stimulate a "demand response" to control unregulated prices, avoiding the necessity of rate filing, rate review, and fixing of reasonable rates -- is unconscionable. See Consumer Uprising Against California Smart Meter Program, PULP Network, October 28, 2009; PSC Requires More Study Before Allowing Major Investment in "Smart Meters", PULP Network, January 11, 2008;

Proponents of expensive "smart meter" deployment and "real time pricing" schemes seem to have little appreciation of the hardships faced by the substantial segment of the population living without significant savings, from check to check. Their fixed incomes do not fluctuate with spot market prices; indeed, they often run out of money at this time of the month and are going without necessities, falling behind in utility bills, and looking for help at food pantries. In New York state last year, utility service to 330,000 customers was shut off due to their inability to pay bills, affecting about one million people. Adding to the bills of economically vulnerable utility customers will only aggravate this situation.

Those who advocate expensive measures such as "smart meters" in the name of energy efficiency and the environment should be required to take into account the potential impact of higher prices on vulnerable human populations in required environmental impact statements. Also, they should examine more closely cost effectiveness and environmental impact of the latest price-raising environmental "solution." If "smart meters" actually worked to shift significant electric loads away from peak hours when natural gas turbines add output to meet the demand to off-peak hours when more coal might be burned, they could cause more carbon emissions. See Not so Smart? High Tech Metering May Harm Low Income Electricity Customers, PULP Network, April 16, 2007.

Consumer Uprising Against California Smart Meter Program

Background
The latest utility fad is large capital investments for massive deployment of so-called "smart meters" in residential homes. The "smart meter" hype is coming from utilities, marketeers, and some greens, but it is not something consumers are seeking. Indeed, any consumer who wants to pay different rates based on when they use electicity can do so by calling the utility and asking to switch to time of use rates. Very few do.

The devices are promoted on various theories, such as that they will

• address the unreasonable deregulated wholesale electricity prices set in ISO and RTO spot markets without effective FERC regulation by exposing customers to extreme high prices on hot days in order to facilitate their "demand response" of turning off air conditioners,
  
• reduce costs for meter reading and disconnection of service for nonpayment, using electronic communication with the meter,
  
• provide meaningful real time, usable information to customers about their usage and costs, and
• encourage conservation and improve the environment
  

As H.L. Mencken observed:

there is always a well-known solution to every human problem — neat, plausible, and wrong.

Researchers at Carnegie Mellon looked at the cost benefit of smart meters and have concluded that

today the optimal strategy is not to give every customer an expensive real-time meter, but rather to introduce them selectively to the larger more flexible customers.

M. Granger Morgan, Jay Apt, Lester B. Lave, Marija D. Ilic, Marvin Sirbu, and Jon M. Peha, The Many Meanings of "Smart Grid", Carnegie Mellon University, Department of Engineering and Public Policy Briefing Note, July, 2009.

Similarly, others who have taken a hard look at utility claims of cost effectiveness of universal "smart meter" deployment have found them to be spurious. See

• PSC Requires More Study Before Allowing Major Investment in "Smart Meters", PULP Network, January 11, 2008; and
  
• Testimony of Consumer Affairs Consultant Barbara R. Alexander, linked in AARP Opposes PEPCO Plan for Spending on "Smart Meters", PULP Network, June 19, 2009
• Michael Hawiger, Energy Savings Can be Achieved Without PG&E's Disastrous SmartMeter Device, The Bakersfield Californian, September 21st, 2009, and
  
• Barbara Alexander, Smart Meters, Real Time Pricing, and Demand Response Programs: Implications for Low Income Electric Customers, 2007.

California Screaming
"Smart meter"deployment by California utilities is now running into strong consumer resistance:

More than 100 people packed a town hall meeting in downtown Fresno to vent their frustration with PG&E's newest metering technology -- SmartMeters -- that customers say has led to faulty spikes in utility bills.

"The meters, in my opinion, are not very smart," PG&E customer Joe Riojas told Senate Majority Leader Dean Florez, D-Shafter.

The meeting lasted 4 1/2 hours. No one spoke in favor of the SmartMeters.

Florez held the hearing at the Hugh M. Burns State Building amid concerns that the SmartMeter technology -- funded largely by consumers -- failed to deliver on promised savings.

Pablo Lopez, Crowd vents on PG&E meters at Fresno hearing
Customers at meeting say readings are faulty, Fresno Bee, October 21, 2009.

Another story illustrates how these rosy scenarios are not reality:

After Pacific Gas and Electric Co. installed one of the devices at her house this past spring, Shaughnessy's monthly bills started to climb. In August, her bill hit $458. Throttling back the air conditioning didn't help.

"I kept the AC at 85 degrees, to the point I had sweat running down my nose while I was inside my house," said Shaughnessy, 44, who teaches junior high school. "Bottom line is, my bills went through the roof."

Across Bakersfield, other PG&E customers experienced the same shock. And like Shaughnessy, they started questioning the SmartMeters' accuracy.

PG&E now faces a revolt in Bakersfield over the SmartMeters, which the company has been installing throughout its territory since late 2006. Angry homeowners repeatedly booed PG&E representatives during a public hearing on the meters earlier this month. State Senate Majority Leader Dean Florez has demanded a moratorium on their installation. State energy regulators last week agreed to investigate the meters' accuracy, although they stopped short of agreeing to a moratorium.

"People think these meters are fraud meters," said Florez, D-Shafter (Kern County). "They feel they're being defrauded. They're getting no benefit from these things."

David R. Baker, Customers say new PG&E meters not always smart, San Francisco Chronicle, October 18, 2009.

As summed up by Mark Toney, Executive Director of TURN, a leading California utility consumer advocacy group:

Smart meters, a cornerstone of the smart grid that we hear so much about these days, are a prime example of an unnecessary and expensive change that will have little impact on global warming.

So far, the meters have struck fear in the hearts of consumers concerned about their privacy (because they transmit data on individual electric use), have already cost utility customers more than $2 billion (spent by the California Public Utilities Commission to launch the program) and are blamed for inexplicably higher bills in California's Central Valley. These high-tech, high-cost new devices were supposed to connect us all to our electric company, our appliances and the fight against global warming. So far, they've missed the mark on all three counts.

Mark Toney, Smart Consumers Trump Smart Technology, San Francisco Chronicle, Oct. 23, 2009.

New York
In New York, National Grid requested a large ARRA federal economic stimulus grant to subsidize a proposed ratepayer-funded smart meter pilot project in its Niagara Mohawk service area. The New York PSC promised to make ratepayers pay half the cost if federal stimulus grants were given, and had kept the cost details of National Grid's proposed project secret. See Niagara Mohawk Allowed to Keep Cost of "Smart Grid" Proposal Secret, PULP Network, September 11, 2009.

Yesterday, the federal government denied National Grid's request. See Larry Rulison, Saratoga County project shut out of federal smart grid funding, Times Union, October 27, 2009; Tim Knauss, Lack of federal funding means no smart grid for Syracuse, The Post-Standard, October 27, 2009.

Perhaps denial of the federal grant to install "smart meters" was a good thing, in that the federal dollars may go to more cost effective uses, ratepayers will not be made to pay more for the experiment, and Niagara Mohawk customers are spared from paying for costly human experimentation on how much more they could be made to pay for energy and how they would react to unreasonable spiking prices. See Not so Smart? High Tech Metering May Harm Low Income Electricity Customers, PULP Network, April 16, 2007.

Illinois Governor Appoints Community Action Leader to Illinois Commerce Commission

Illinois Governor Pat Quinn has announced the appointment of John Colgan, a leader of the Illinois Association of Community Action Agencies, to the Illinois Commerce Commission ("ICC").

According to Governor Quinn's Press Release

Colgan has more than thirty years experience in community organizing and administration, serving for 12 years as founding executive director of the Illinois Hunger Coalition, prior to accepting a position with IACAA in 2001. At IACAA, he worked tirelessly for affordable energy for Illinois’ low-income families.

In 2004, Colgan co-authored the Affordable Energy Plan, which was used as the basis for the creation and passage of the Illinois Percentage of Income Payment Plan (PIPP), which Governor Quinn signed into law on July 10 (Public Act 096-0033). The PIPP helps low-income families, seniors and other fixed-income households pay their utility bills by modernizing of the Low Income Home Energy Assistance Program (LIHEAP).

The ICC regulates the rates of Illinois utilities.

Telephone Lifeline for Residents of Homeless Shelters

On July 17, 2009, TracFone Wireless sent a letter to the FCC raising an interesting question: Since the FCC’s Rules specifically limit Lifeline discount telephone service to “one-per-household,” how can residents of homeless shelters receive Lifeline? This may not have been an issue when Lifeline was only offered by traditional landline telephone companies, but now that TracFone, Sprint, and Verizon Wireless are all offering wireless Lifeline service in New York, it has become a potential matter of concern. The FCC was intrigued enough with the request to issue a Notice for Comment on October 21, 2009. Comments are due by November 20th, with replies due by December 7th.

TracFone has been offering Lifeline in New York since March 2009. Their “SafeLink” service provides a 68 minute calling plan on a monthly basis at no cost to qualifying customers as well as a free SafeLink wireless phone. Additional minutes beyond the first 68 free minutes can be purchased directly from TracFone in various plans, which cost in the neighborhood of 20 cents per minute.

TracFone explained the basis of their concerns:

The rule is the ‘one-per-household’ rule. Pursuant to that rule, only one telephone line (wireline or wireless) per household may receive Lifeline support from the federal Universal Service Fund and Lifeline applicants are required to certify under penalty of perjury that they comply with that requirement. The rule is intended to prevent so-called ‘double dipping’ whereby families or households obtain multiple Lifeline benefits. As indicated by the attached informal complaint recently sent to TracFone by the Commission's Consumer & Government Affairs Bureau, the one-per-household rule is having an unintended adverse impact on residents of homeless shelters. The complainant's name and address are redacted from the attached copy and TracFone will respond to the complaint in conformance with the Commission's complaint response requirements. However, there can be little doubt that homeless shelter residents are among America's most needy and should be entitled to Lifeline benefits.

In other multiple dwelling situations, such as apartment buildings, there are individual room or apartment numbers and TracFone’s concerns are a non-issue. As a result, the situation described by TracFone is unique to locations where unrelated people live without individual addresses. As such, TracFone concluded by writing that it wants the FCC “to clarify that the one-per-household rule is not intended to limit the availability of Lifeline-supported service to more than one otherwise qualified low income resident of homeless shelters . . .”

In its Notice, the Commission expanded on TracFone’s inquiry and wrote:

In addition to homeless shelters, the clarification and guidance sought by TracFone may be applicable to other group living facilities, such as nursing homes, assisted-living facilities, apartment buildings, trailer-home communities, halfway houses, and group homes. As such, we seek comment on the effects of the one-per-household rule for Lifeline support in the context of group living facilities. . . . Finally, we seek comment on whether and how ETCs [Eligible Telecommunications Carriers] that provide Lifeline-supported service to homeless individuals who do not use shelters could comply with the one-per-household rule.

TracFone has been specifically targeting shelters and homeless people in their marketing. PULP has received numerous contacts from residents and managers of shelters and SROs over the past few months asking the same questions. In each instance, it was mentioned that TracFone representatives had visited the shelter and were looking for people to bring the issue to the FCC for clarification.

A person should not be denied Lifeline assistance just because they are homeless or live in a building without individual units identified in their street address. Resolving this issue could be an important tool for helping homeless persons communicate.

In the pre-wireless-Lifeline world, this really was not an issue. Consumer advocates generally supported the one-per-household rule because the Lifeline and Linkup programs were initially designed to provide an affordable link to every household, not multiple connections. Now, this issue may be clarified by the FCC in an environment when personal communication through wireless devices, and the expectation of communicating by telephone with people outside the home is becoming the norm.

According to the Coalition for the Homeless, there were 35,486 individuals living in New York City homeless shelters in September 2008 . The Youth Service Opportunities Project reports that 2,700 soup kitchens across New York State serve two million New Yorkers annually . Providing discount telephone service to this most needy population is a worthy proposition, but TracFone may not be the right entity to provide the service.

While TracFone’s phone itself and the first 68 minutes a month are "free," those minutes are for both incoming and outgoing calls. They can be used up very, very quickly and then the customer must either wait until the next month in order to use their phone again, or pay regular TracFone pricing, where 100 additional minutes costs $19.99. PULP is concerned that residents of homeless shelters will sign up for the "free" service, with Tracfone receiving its reimbursement from the federal Universal Service Fund as an ETC, leaving the customer saddled with charges for minutes that they can not possibly afford and phones shut off without sufficient notice or any of the protections of the New York Telephone Fair Practices Act, which the New York PSC has not extended to cover wireless service. Yes, the ability of homeless people and shelter residents to have Lifeline telephone service is an important question worth pursuing, but not through providers whose rates are not policed by the FCC and whose terms and conditions of service are not regulated by the New York PSC.

In the bigger picture, bringing Lifeline discount telephone service to all for whom the rising cost of telephone service is a hardship continues to be a major concern. Lifeline enrollment has been shrinking in recent years: now there are are over 800,000 readily identifiable Lifeline-eligible Food Stamps households in New York State who do not receive the benefit. Meanwhile, all New York's telephone customers are paying more in universal service charges than come back to benefit New Yorkers, and low income New Yorkers living in hardship are paying hundreds of millions of dollars more to phone companies than necessary, with the result that they cannot spend the savings for other essentials of life in the local economy.

Lou Manuta

City Water Customers Need HEFPA Protections

Section 50 of the New York Public Service Law extended the protection of the Home Energy Fair Practices Act ("HEFPA") to residential water customers, but omitted a major portion of them -- those whose water comes from a municipality or public authority. Many of the major cities in the state own and operate their own municipal waterworks utilities, and have been exempted from PSC regulation by statute. As a result, the Public Service Law only applies to water customers of large private water utilities. This is an anomaly, in that under Article 2 of the Public Service law, municipal gas and electric utilities must provide HEFPA customer protections to their natural gas and electric customers, but not their water customers.

With the rising costs of water service and home foreclosures, many low-income homeowners, or low-income tenants living in properties going into foreclosure due to defaults of the owners, find that the municipality abruptly shuts off the water service without giving the customer a chance to repay bills through a payment plan or for a hearing to raise any factual, legal, or equitable defense to termination. Municipalities have a backup way to collect unpaid water bills by adding them to property tax bills, filing liens, and collecting the amount due either through tax foreclosure proceedings or at closings when the property is transferred, but some are using the shortcut of water termination to coerce payment.

The water shutoff is sometimes made even more harsh when the municipality immediately posts the building as uninhabitable -- due to the lack of water -- and demands immediate evacuation of the premises as a health hazard. This basically allows summary eviction of occupants without the normal court processes available to owners or tenants.

Without HEFPA, customers' rights are not well articulated, and are based on city ordinances, common law, and constitutional limitations, such as the due process obligation of a government-owned utility to provide notice of an opportunity for a hearing prior to termination. See Municipal Water Companies Exempt from HEFPA Must Still Provide Due Process and Equal Protection to Tenant Users, PULP Network October 3, 2008.

PULP is aware of growing problems across the state as municipalities resort to harsh methods to collect water bills and evict occupants through termination of their monopoly water service followed by swift condemnation. PULP is representing an individual in a federal case seeking declaratory and injunctive relief and damages involving a city's effort to turn off water service and oust a tenant who could not satisfy the City's demand that she pay arrears owed by her landlord for water and sewer service. See Municipality Restores Water Service After PULP Files Federal Lawsuit and Seeks Preliminary Injunction for Tenant in Property Subject to Foreclosure, PULP Network, October 16, 2008.

Today's Buffalo News mentions the problem of high late charges for water service:

****at least 4,400 properties were still in danger of being auctioned for back taxes and fees. The number included more than 2,500 residential properties and about 350 commercial structures. The other properties were vacant lots.

The city will continue to work today and Friday with outside groups and court officials to help arrange payment plans with people who have delinquent property taxes, water bills, sewer charges and garbage fees.

****Attorney Loran M. Bommer said a few dozen residents who have fallen behind on water bills have hired him to try to block the foreclosures. Bommer attacked Water Board policies that impose late penalties and interest charges that amount to 84 percent a year. Bommer argued that with fees that amount to “usury,” it’s easy for property owners to fall behind in payments.

“It is onerous. It is outrageous,” Bommer said of the fees.

Brian Meyer, Foreclosure auction may set record, Buffalo News, October 23, 2009.

If HEFPA were amended to apply to customers of municipal water utiliites, those who fall behind in paying water bills could obtain deferred payment plans prior to termination, based on their financial circumstances, and any late charges would be limited by the Public Service Commission. See PULP's website page on HEFPA.

OTDA Implements Amendment Easing Repayment Terms for Emergency Utility Assistance

We have previously discussed the erosion of the public assistance safety net created by the legislature under Section 131-s of the New York Social Services Law for utility customers facing service termination. See OTDA Must Relax Its Administrative Restriction on Utility Assistance Loans for Persons with Incomes Above the Public Assistance Level, PULP Network, July 29, 2008. Basically, a major problem arose after the Legislature required persons who are not recipients of ongoing monthly public assistance grants to sign agreements to repay emergency utility assistance grants in equal installments over the next 12 months. The state agency, OTDA, added a restrictive provision to its regulation, stipulating that no aid could be provided to an otherwise qualified applicant if prior aid had not been repaid:

Subsequent assistance to continue or restore utility service must not be provided unless any prior utility arrearage payments have been repaid or are being repaid in accordance with the schedule of payments contained in each prior repayment agreement as of the date of application for such subsequent assistance....

18 NYCRR § 352.5(e). Many low income workers with incomes slightly above the low public assistance need standard fall into the category of those who must sign a repayment agreement in order to get emergency utility assistance. In order to qualify, they must show they lack any other resources to pay the utility bill and could not get another deferred payment plan from the utility. (The utility can terminate service if the customer has breached a minimum payment plan agreement to repay the utility on terms as low as $10 per month plus the current bill).

The public assistance repayment requirement required a person to repay the department of social services in 12 months, so a $480 grant of aid meant a $40/month repayment requirement. For persons having difficulty paying high utility bills, and who could not pay the utility $10/month under its payment plan, and who lack savings and often run out of money for food and other essentials between paychecks, the public assistance repayment requirement was unrealistic.

This year, the Legislature changed the repayment requirement to stretch out the term of repayments from one year to two years. Thus, a recipient of a $480 grant to restore utility service would have a $20/month repayment requirement. OTDA issued instructions to local social services districts this week, 09-ADM-17, implementing the new statutory requirement. This will ease, but not solve the problem.

The problem is particularly acute during the summer and fall, when assistance under the federally funded seasonal HEAP program is unavailable. Powerless: Low-Income Households Facing Termination of Service with No Remedies, PULP Network, PULP Network, July 17, 2009.

Also, during the period November 1 - April 15, OTDA now allows counties, at their option, to provide emergency utility assistance to those who have not repaid previously granted assistance on schedule. OTDA Eases, but Continues, its Administrative Restriction on Assistance to Utility Customers with Incomes Above the Public Assistance Level, PULP Network, October 5, 2008. Some, but not all, counties have done this.

The change in the duration of the public assistance repayment agreements represents some movement on the part of OTDA in recognition of the failure of the existing program. OTDA apparently proposed the statutory change to the repayment period, but the OTDA administrative disqualification continues to cause great hardship, and may result in tragedies. See

• No Electricity: Middletown Residents in Critical Condition from Lantern Fire;
• Candle Fires: A Symptom of "Rolling Blackouts" Affecting Low Income Households.

Recipients of 131-s utility arrearage payment assistance may wish to make the installment payment to the County Department of Social Services first, before paying the utility, if they are are at risk of not being able to afford utility service in the future, in order to preserve their eligibility for future assistance grants.

For more information, see PULP's website page on utility assistance programs.

Should There Be a Legal Right to Broadband? Finland Thinks So.

For the past week, there has been a buzz in the technology trade press, as well as in publications as diverse as Business Week and the Huffington Post, about the Finnish Ministry of Transport and Communications’ decision to give every person in Finland the right to a one-megabit broadband connection by July 2010. Come next summer, Finland will be the first country in the world which will have made guaranteed broadband access a civil right. While the Finland press agency YLE added that arrangements to achieve this goal may be made through alternative means, such as through mobile connectivity, the decision to move forward with this program has garnered attention all over the world.

And there’s more. The Huffington Post added that the Finnish government had already decided to make a 100 Mb broadband connection a legal right by the end of 2015.

According to the International Telecommunications Union, a branch of the United Nations, Finland had approximately 3,286,000 Internet users as of September 2005, comprising 62.3% of the population. In 2007, Finland ranked 8th worldwide in broadband penetration at 28% . By comparison, the United States ranks 19th with 21.4% penetration. While Finland’s broadband penetration is likely somewhat higher since last reported in 2007, the fact remains that Finland has a long way to go to not only bring broadband to its entire population, but to make it a guaranteed right. How can this be accomplished and how will it be paid for? What happens if the customer can’t afford the service? And, what impact does Finland’s decision have on us?

Finland is a republic with a parliamentary democracy. According to the official Finland Statistics web page, it is suffering through the global recession along with many other countries. Its unemployment rate stands at 7.3% and its Gross Domestic Product is -9.2%. It does not appear that within the next eight months Finland will be in a position to throw money around to reach the more than half of its population currently lacking broadband. There is no publicly available information as to how this will be paid for or accomplished. Higher taxes? Subsidies to broadband providers? There are multiple broadband providers in Finland, so a single solution seems unlikely.

While Finland is further along with its commitment to broadband deployment than the United States, it faces many of the same issues we have here, such as the rough state of its economy to the existence of multiple providers. Could we as a nation mandate broadband connectivity as a right for every man, woman, and child? In New York State, between DSL and cable modem service, deployment is at or above 90%, but the subscription rate hovers around 50%. Of course, the right to a broadband connection includes the right to decline the connection, but many New Yorkers who do not have broadband in their homes simply can not afford the service. To make actual use of broadband a “right,” financial support to the customer and/or the provider will become necessary. Where will this money come from?

PULP wholeheartedly supports the creation of a low income program for broadband access similar to the telephone Lifeline program. See PULP Applies to NTIA for Stimulus Funds to Expand Broadband Opportunities for Low and Fixed Income Consumers. Under PULP’s proposal, eligible households would receive a discount on their broadband access, as they currently do on their telephone service, and the funding for this program would come from either a surcharge on broadband customer bills or would be a percentage of the provider’s intrastate revenues.

What we’re talking about accomplishing in the United States – universal broadband – is essentially the same concept as Finland’s individual right to broadband. The universal service framework deals with the obligation of providers to provide service to all upon request, while the individual rights approach bestows on each citizen a claim of entitlement to the service. In both countries, financial help will be necessary to ensure all who want broadband can afford it.

Access to broadband may not (yet) be a right in our country as it is in Finland, but PULP’s low income proposal will help to achieve the universal broadband goal in the United States.

Lou Manuta

PULP Urges Assembly to Reject Governor's Proposal to Cut PULP Funding

PULP submitted testimony today for hearings being held by the New York State Assembly Ways and Means Committee on Governor David A. Paterson's "Deficit Reduction Plan" to reduce current year expenditures, which was announced last week. The Governor's proposal for cutting local assistance appropriations includes PULP, along with many other programs that serve low-income New Yorkers.

PULP submitted testimony of its Executive Director, Gerald Norlander, addressing Committee questions regarding the impact of the proposed cuts and alternatives. The testimony

1. Opposes the Governor's proposal to cut PULP funding and asks the Assembly to continue in its longstanding support for PULP, as it has in past years with prior governors.

• See Governor Proposes To Slash Civil Legal Services, PULP Funding, PULP Network, October 20, 2009; PULP, Legal Aid, Homeless Advocacy Groups Targeted by Governor for $2.8 Million Cut, PULP Network, Nov. 12, 2008

2. Proposes to end the ballooning cost of utility sales tax anomalies now amounting to $154 million/year in lost state revenue from utility customers when they switch to ESCOs.

• See ESCO Tax Subsidies: A Hidden $128 Million Cost of the New York PSC's "Retail Access" Scheme, PULP Network 2008; ESCO Advertises 9.75% Tax Savings on Delivery Service, PULP Network, June 19, 2009.

3. Proposes to end the anomaly that exempts telephone service provided by cable companies from utility assessments paid by other providers using conventional phone lines.

• See Governor's Budget Raises Utility "Assessments," Hurting Low Income Customers, but Gives Break to Cable Telephone Service Providers, PULP Network, December 18, 2008

4. Proposes to use a portion of previously unappropriated RGGI funds transferred from NYSERDA to provide additional support to PULP. See PULP Urges NYSERDA to Use RGGI Auction Revenue to Support Low Income Energy Efficiency Programs, PULP Network, January 07, 2008; $128 Million of RGGI "Cap and Trade" Revenue Unspent, PULP Network, June 22, 2009.

The State Senate will hold two hearings next week on the Governor's deficit reduction proposals, in New York City and Farmingville. According to a Senate Press Release, Senate President Malcolm A. Smith said,

"New York was among the states hit hardest by the national recession, and any plan to balance the budget must be deliberate with an eye toward our economic future. While our staff is reviewing the implications of the Governor's proposals, we're also bringing the public into the legislative process to hear what these cuts would mean to programs and services, and determine if there are better ways to close the budget gap."

Senate Holds Public Hearings on the Governor's Proposed Deficit Reduction Plan.

Governor Proposes to Slash Civil Legal Services, PULP Funding

Governor Paterson's "Deficit Reduction Plan" for reducing local assistance proposes that the legislature enact revised appropriations for 2009 - 2010 that would slash funding for civil legal services and the Public Utility Law Project ("PULP") by $595,000 and $23,000, respectively.

In every year since 1981, state budgets have provided core funding for PULP. PULP has been has been omitted from Governors' proposed budgets, however, every year since the beginning of the Pataki administration in 1995. This makes legislative additions to the budget essential for PULP's survival. On several occasions in the mid to late 1990's, funding for PULP was cut, vetoed, and delayed. After 9/11, PULP received a 25% funding reduction in 2001, which has since been frozen.

As a result of the current funding constraints, PULP staffing has been reduced to less than 1/3 of its pre-1995 level, making it impossible to participate on behalf of low income consumers in many important utility proceedings. Due to the static funding, rising costs, and cash flow difficulties requiring more borrowing to sustain PULP, earlier this year a decision was taken by the PULP Board of Directors, on my recommendation, to halt all contributions to the PULP employee pension plan.

The state has yet to finalize PULP's contracts and thus has provided no funding reimbursement to implement the April legislative appropriations intended to support for PULP for the state fiscal year from April 1, 2009 to March 31, 2010. Last week PULP was required to re-execute a still unprocessed contract -- because it is being renumbered by the Department of State. At the moment, PULP is surviving only with a bank loan, and must, of course, pay interest on that, and is rapidly reaching the credit limit.

Gerald Norlander

Past Recipients of Regular HEAP Can Mail In 2009 - 2010 HEAP Applications

Last year there were delays in some counties as low-income households attempted to apply for one-time "Regular" benefits in the Low Income Home Energy Assistance Program. See Slow Processing of Applications for HEAP Benefits; OTDA Receiving Comments on Next Year's HEAP Program, SNAFU in OTDA's Administration of the HEAP Program; State Tells Suffolk County to Handle Energy Emergencies; Unmanned HEAP Hotline Fails to Serve the Blind.

According to the OTDA website, applicants who received "Regular" HEAP benefits during last year's HEAP program will be able to mail in their applications for this year's "Regular" HEAP benefit in advance of the program starting date, which is November 2, 2009:

Regular benefit applications are being mailed to all households that received a HEAP benefit in 2008-09. These applications may be mailed back to the local social services district or alternate certifier in advance of the opening of the 2009-10 HEAP program; however, regular HEAP benefits will not be paid until on or after November 2, 2009. Regular HEAP applications for households that did not receive a HEAP benefit in 2008-09 will not be made available until November 2, 2009.

The mail-in option for those who received "Regular" HEAP last year may be very helpful in reducing long waiting times and repeat visits to overwhelmed HEAP certification offices.

This year, benefits for "Regular HEAP" (as distinguished from "Emergency" HEAP) are as follows, according to OTDA:

Regular HEAP Benefit Amounts 2009-2010

Benefit Amount	Living Situation
$1	Eligible households that live in government subsidized housing or a group home setting with heat included in their rent.
$40 or $50	Eligible households responsible for their shelter costs but do not pay directly for heat.
$600 + applicable add-ons	Eligible households that pay directly for heat with their main source of heat being oil, kerosene, wood, coal, pellets, corn, propane or other non-utility fuel.
$400 + applicable add-ons	Eligible households that pay directly for heat with their main source of heat being natural gas or electric heat provided by a PSC regulated utility company
$200 + applicable add-ons	Eligible households that pay directly for heat with their main source of heat being electric heat provided by a municipal electric company

Regular HEAP Benefit Add-Ons

+ $50 if the household’s gross income is in the Tier 1 income range (e.g., at or below 130% of the Federal Poverty Level)

+ $50 if the household contains a vulnerable individual (i.e., household member who is age 60 or older, under age 6 or permanently disabled)

For further information on the HEAP program see the OTDA web page on this year's program.

NY PSC Mum on FCC Telecom Consumer Information Proceeding

Back on August 27th, PULP reported that the FCC released a Notice of Inquiry (“NOI”) to examine and evaluate the communication customers receive about their telephone service. Specifically, the FCC sought information as to whether consumers are being empowered and protected with the level of information they currently receive when it comes to choosing a service provider, selecting a service plan, managing use of that plan, and deciding whether (and when) to switch providers. Comments on the NOI were due this week. Several states submitted their suggestions, but the New York State Public Service Commission (“PSC”) chose to not file anything, wasting an opportunity to address serious consumer issues.

PULP participated indirectly in the FCC’s proceeding through our membership in the National Association of State Utility Consumer Advocates (“NASUCA”) . NASUCA wrote that

Broadly speaking, in these and other proceedings, NASUCA has consistently urged the Commission to require communications providers to give consumers timely, detailed, accurate and – most importantly – non-misleading information regarding the rates consumers pay for service, other fees and charges imposed in connection with that service, the terms and conditions that govern their service, the availability and quality of service they can expect to receive from their service provider, and any penalties or other adverse action they may experience if they terminate or modify the communications service they receive.

NASUCA urged that stronger consumer information requirements be implemented and extended to all providers – landline, wireless, and Voice of Internet Protocol (“VoIP”). In addition, NASUCA wrote:

To the extent consumers have received protection or redress from carriers' misleading, deceptive or abusive billing practices or charges, that relief has come chiefly at the state level. State utility commissions or similar agencies, state attorneys general, and state courts have generally been far more accessible to the country's consumers of communications service, and far more responsive, than the Commission. States have also generally been more nimble than the Commission in responding to evolving industry practices that are unreasonable, misleading or deceptive.

The states that submitted comments followed a similar theme: ensure that states are not preempted from protecting consumers and that all providers must fairly and accurately communicate with their customers.
For example, The District of Columbia Public Service Commission (“DC PSC”) comments stated:

The DC PSC first notes, as a general matter, that concern for the telecommunications consumer is shared between the FCC and state public service commissions, like the DC PSC. Indeed, as was noted in a Resolution adopted by the National Association of Regulatory Utility Commissioners (‘NARUC’) in 2008, ‘state utility commissions have proven to be valuable partners to the Federal Communications Commission as the 'laboratories of democracy' for ensuring consumer rights in a timely manner. In addition to enforcing federal consumer protection policies, states have established their own protections and have worked with consumers directly to assure that their concerns are being met. The DC PSC agrees with NARUC that a state and federal partnership, together with uniform national standards, would give consumers throughout the Nation a clear and consistent set of enforceable consumer rights that they may not have today.”

Along the same vein, the Massachusetts Department of Telecommunications and Cable (“MDTC”) stated in its comments:

The MDTC urges the FCC to expand the existing federal Truth-in-Billing rules for wireline and wireless providers to include additional consumer information disclosure rules and to adopt similar consumer protection and disclosure rules for providers of broadband, VoIP (i.e., Voice over Internet Protocol), subscription video (cable and satellite), and bundled services. Finally, the MDTC urges the FCC to permit states to enforce federally mandated consumer protection requirements; and also to supplement federal regulatory requirements, if and when the need arises and to the extent such state standards are not inconsistent with federal requirements.”

The California Public Utilities Commission comments discussed the need to expand the existing requirements to new types of providers, stating:

We propose new steps the FCC should consider to ensure that consumers can meet the challenges posed by an evolving communications marketplace. We also recommend that the FCC consider applying disclosure requirements and billing rules where traditional voice and video services are bundled with broadband Internet access and VoIP, so that consumers can comparison shop more effectively.

The Virginia State Corporations Commission comments added:

The advent of telecommunications competition, as well as advances in, and convergence of, technologies have provided consumers with many new options for their communications needs. Such options offer considerable consumer benefits; however, the number and variety of such choices also require consumers to be better informed. The VSCC Staff supports the FCC’s efforts to ensure that consumers have the necessary information to make good purchasing decisions for their communications services.

Expanding and enforcing reasonable consumer information requirements to VoIP and wireless and ensuring that the states have a strong role in enforcement are necessary changes which should come out of this proceeding. Consumers have a right to complete and accurate information about the service they are considering subscribing to, regardless of the technology used. Unfortunately, the New York PSC chose to remain on the sidelines and not let its voice be heard on behalf of the state's telecom consumers and in support of preservation of the state role in protecting them.

Lou Manuta

Ohio Governor Halts Utility "Free" Efficient Bulb Program after Customers Get Smart About "Revenue Decoupling"

With a great wave of PR fanfare that sloshed into the New York Times, Ohio utility FirstEnergy announced in early October that it would distribute four million efficient compact fluorescent light (CFL) bulbs to its 3.75 million residential customers. See FirstEnergy Ohio Residential Customers Get Bulbs, N.Y. Times.com, October 5, 2009. John Funk, FirstEnergy to Give Away 3.75 Million Low-Energy Light Bulbs, Cleveland Plain Dealer, Oct. 5, 2009.

The FirstEnergy notice to customers provided with the bulbs did not reveal, however, that the utility would actually collect all the cost of the program -- and more -- from utility customers. It later emerged the two-bulb plan was no "give away." The utility would have charged its customers for

• the cost of the bulbs,
  
• the cost of their delivery to each residential customer,
  
• the program administrative costs,
• plus an amount to compensate the utility for estimated future reduction in electricity used, based on assumptions that customers would actually use the CFLs to displace less efficient ones that are in regular use.
  

The FirstEnergy plan had been approved by the Public Utilities Commission of Ohio (PUCO), which regulates rates and charges of Ohio utilities. Like Ohio, the New York PSC joined in the "revenue decoupling" fad when it issued an order in 2007 requiring New York utilities to include "revenue decoupling" proposals in their future gas and electric rate case filings. Like the Ohio plan now suspended, New York's regulator would allow utilities to raise prices based on estimates of customer conservation due to utility funded efficiency programs. New York, however, has a third party energy efficiency program operated with SBC utility bill surcharge funds paid over to NYSERDA that is not dependent on utility sponsorship and administration. There seems to have been no real need to coax New York utilities into spending on customer efficiency with "revenue decoupling" candy.

Ohio customer reaction to this utility "revenue decoupling" fad, which pays utilities more based on the assumption customers will be using less electricity by installing and using the bulbs for an estimated number of hours each day, was swift and furious.

The PUCO approved the plan last month without comment, though it did not approve the exact rate increase the company has announced.

The CFL bulbs use one-quarter of the power of a standard 100-watt incandescent bulb, so FirstEnergy said consumers would save $60 in energy costs over the bulbs' lifetimes - far more than the extra charges of $21.60.

Thousands of enraged customers didn't buy the argument and swamped the PUCO's call center as well as FirstEnergy on Tuesday and Wednesday demanding that the program be halted or significantly changed.

Most irritating to the more than 100 who called The Plain Dealer was that customers would have to pay for light bulbs they did not request and, in many cases, didn't want. Many callers said they already had CFL bulbs in their homes. Others said they feared them because of the mercury they contain, though it is far less than the mercury in a standard fluorescent tube.

The Ohio Governor asked the Chairman of the Ohio PSC, which, embarrassingly, had previously approved it, to stop the FirstEnergy CFL program:

A plan by a Midwest utility to distribute energy-efficient light bulbs to customers backfired when it was learned that the recipients would not only have to pay for the bulbs, but also pay the utility for the electricity they wouldn't be using.

Ohio's governor sent a letter to regulators who pulled the plug on the program for now, or at least on the charges that caught consumers off guard.Total planned charges for unsuspecting customers for two light bulbs was $21.60, though it cost only $3.50 to buy and distribute them. To make up the cost plus lost electricity sales, FirstEnergy planned to charge customers using an average amount of electricity 60 cents a month for three years.

Mark Williams, Light Bulb Program has Some Customers Seeing Red, AP October 9, 2009.
Following the math, if the cost of bulbs is $3.50 each, the utility would collect an additional $14.60 per customer, totaling $54.75 million, which would be added to future customer bills.

In response to the Governor's request, the Chairman of PUCO, Alan Schriber, postponed the program :

The PUCO has received a large volume of calls and emails in response to the compact fluorescent light bulb program approved last month for FirstEnergy. Today, I received a letter from Gov. Strickland asking that the PUCO postpone the program until such time as we can address several questions raised by the governor, members of the Ohio General Assembly and FirstEnergy customers related to program details and costs.

As a result, I have asked FirstEnergy to postpone deployment of its compact fluorescent light bulb program until the Commission can thoroughly assess the costs associated with this program. The PUCO approved the program following consensus reached during discussions among the company and other organizations including the Office of the Ohio Consumers’ Counsel and the Natural Resources Defense Council.

Although the PUCO allowed FirstEnergy to implement its program, we did not approve the charge that will appear on monthly bills as a result. Reports in the media place the cost to customers at sixty cents per month for three years, which equates to $21.60 over the life of the program. The PUCO has not approved these additional dollars nor have we received a request by the company to do so.

Statement from PUCO Chairman on FirstEnergy’s compact fluorescent light bulb program, PUCO Press Release, Oct. 7, 2009.

Similar "revenue decoupling" schemes jointly promoted by the Natural Resources Defense Council (NRDC), utilities, and pro-deregulation state utility regulators have drawn considerable skepticism from consumer advocates, who have long been supportive of energy efficiency policies that are more reality based than "revenue decoupling." The payment to utilities for "lost revenue" due to its efficiency program is the essence of "revenue decoupling," which is designed to maintain utility revenues when sales go down due to conservation measures, so as to induce the utility to run programs. When sales go down due to cool weather or a recession (U.S. electricity sales are down 4.1% so far this year), and when it is hard to figure out whether customers actually achieved real usage reductions with the efficiency measures (did the bulb get used at all, or was it put in a rarely used basement closet?), and when the normal business risk to the utility of customer conservation or use of more efficient appliances is being substantially reduced, "revenue decoupling" is fraught with risk to consumers.

Interestingly, NRDC reacted with outrage the other day to an international version of the same revenue decoupling notion it promotes so avidly in concert with U.S. utilities. Saudi Arabia suggested a revenue decoupling program for oil producers to compensate them if consumers use less gasoline due to the advent of more efficient engines or electric cars running on electricity produced from other sources, such as coal or nuclear fission.

Saudi Arabia is trying to enlist other oil-producing countries to support a provocative idea: if wealthy countries reduce their oil consumption to combat global warming, they should pay compensation to oil producers.
****
Environmental advocates denounced the idea, saying the Saudi stance hampered progress to assist poor nations that are already suffering from the effect of climate change, and that genuinely need financial assistance.

“It is like the tobacco industry asking for compensation for lost revenues as a part of a settlement to address the health risks of smoking,” said Jake Schmidt, the international climate policy director at the Natural Resources Defense Council.

Jad Mouawad and Andrew C. Revkin, Saudis Seek Payments for Any Drop in Oil Revenues, New York Times, Oct. 13, 2009. Would that NRDC stood for "progress to assist poor [U.S. electric consumers] that are already suffering from the effect of [utility charges to deal with] climate change, and that genuinely need financial assistance." Perhaps NRDC has yet to reach a joint understanding with the Saudis, as it apparently has with U.S. utilities, to put an environmental gloss on its decoupling proposal. Maybe NRDC would support the Saudis' plea for revenue decoupling if the Saudis would fund an efficiency program to increase gasoline mileage by adding more air to chronically underinflated auto tires.

Last year, service to 330,000 New York utility consumers was shut off because they could not afford their bills, putting about one million people in their households in the dark. They cannot afford expensive utility "give-aways" that would add to their already high utility bills when they shut the lights off. See PSC Reports on Devastating Termination Statistics, PULP Network, April 9, 2009; Candle Fires: A Symptom of "Rolling Blackouts" Affecting Low-Income Households.

Yonkers Riverview II Tenants Again Ask PSC to Halt Submetering

Tenants of Riverview II, a former Mitchell-Lama housing project in Yonkers, are again asking the Public Service Commission to halt submetering. Faced with new bills for electricity not offset by rent reductions or allowances under HUD-regulated subsidy programs for low and moderate income households, the tenants filed a petition in April, 2009, asking the PSC to stay and vacate its prior order that had allowed a waiver of the general prohibition against submetering. The April petition raised a variety of procedural, environmental, and economic issues, as well as non compliance with the PSC Order allowing submetering. See Yonkers Tenants Ask PSC to Halt Submetering at Riverview Towers, PULP Network, April 9, 2009.

As in several other cases where tenants petitioned the PSC for relief from submetering, the Commission Secretary initially referred the Riverview II case to the Office of Consumer Services (OCS) to be handled as an ordinary consumer complaint.

Shunting the petitions into the OCS complaint department avoided -- or at least delayed -- consideration by the PSC Commissioners themselves whether to stop the contested submetering. OCS lacks power to change or vacate a PSC order, and has taken more than a year in other cases just to issue first level determinations (in a three-step review process) that skirt issues raised by tenants. See, e.g., PSC Secretary Finds No Evidence of Delay in Handling Hazel Towers Tenant Complaints Regarding Submetering, Motion to Recuse OCS Hearing Officer for refusing to consider issues raised by Hazel Towers complainants, andResponse of Hazel Towers Tenants Association; Parker Towers Tenants Still Waiting for PSC Action on Petition to Halt Submetering; Town House West Tenants Association Files Supplemental Complaint Against Stellar Management's New, Unfiled Conditions of Submetered Electric Service; Tiffany Mews Tenants Ask PSC to Halt Submetering with No Proper Order and No Filed Tariff or Contracts Approved by the PSC.

Without action by OCS to remedy the major problems, the Riverview II Tenants Association re-petitioned the PSC to vacate or modify the prior order on an emergency basis. See Yonkers Riverview II Tenants' Association Petition filed on October 12, 2009. The renewed petition cites stays of submetering issued in other recent cases. See PSC Stops Submetering at Four Buildings, Sets New Standards to Address Tenant Concerns, PULP Network, September 17, 2009.

For more information, see PULP's web page on submetering.

Electric Car Chargers Present Regulatory and Jurisdictional Issues

The October 12, 2009 New York Times "Green Inc." blog signals a new issue presented by the advent of electric cars and the development of commercial charging stations to boost their range away from a home charging base. Correctly, the California Public Service Commission is working on a regulatory regime that would apply to new third-party retail providers of electricity, over the opposition of new industry entrants. See Discord Over Regulation of Car Charging, Green Inc., N.Y. Times, Oct. 12, 2009; Electric Car-Charging Network Expands, Green Inc., N.Y. Times September 9, 2009.

The new car charging industry seeks a deregulated environment, and there is apparently some controversy over whether the California PSC has jurisdiction to extend regulation to the new providers:

California’s three big investor-owned utilities have split over the issue.

“The commission should establish its authority to regulate third-party providers of electricity for electric vehicles,” Christopher Warner, an attorney for Pacific Gas & Electric, wrote in a filing with the utilities commission. “Managing the increased electricity consumption and load attributable to electric vehicles in order to avoid adverse impacts on the safety and reliability of the electric grid may be one of the most difficult management challenges that electric utilities will face.”

Southern California Edison, meanwhile, urged the commission to move cautiously, calibrating any regulation to the specific business models of the companies.

San Diego Gas & Electric said the commission did not have the right to regulate companies like Better Place.

In New York, Public Service Commission jurisdiction under Section 5 of the Public Service Law sweepingly extends to the "sale or distribution" of electricity and natural gas (except bottle gas). Thus, jurisdiction of the New York commission is not limited to traditional utilities that have distribution systems of wires and pipes; it also applies to Energy Services Companies ("ESCOs"), the alternative retail electric companies selling retail generation service, to submetering landlords, and, we would contend, to any new companies providing metered auto battery charging service to retail consumers.

History and experience with unlicensed ESCOs and submeterers teaches that consumers will need to be protected, for example, with proper certification and oversight of safety, non-utility metering of sales, and other consumer protection issues, such as regulation of rates, terms and conditions, and adequate price disclosure. Also, FERC jurisdictional issues may be presented if the new charging industry buys substantial energy in interstate wholesale electricity markets regulated by FERC for resale to retail customers.

NY PSC Staff Issues Universal Service Fund Reports, Supports Need for Immediate Action

As part of the new universal service proceeding at the New York State Public Service Commission, the agency Staff issued reports on October 2nd on the status of the state’s two universal service funds – the Transition Fund and the Targeted Accessibility Fund (“TAF”). The parties to the proceeding had determined that they could not move forward with “fixing” the Funds unless there was a better understanding of the Funds, including how they are supported, what types of carriers contribute to the Funds, and the long-term viability of the Funds as currently constituted. The reports make clear that the time for action has arrived.

Both the Transition Fund and TAF help to support Universal Service, which is a concept that dates back to the original Communications Act of 1934. It was determined decades ago that the ability to be able to reach all others and to be reached by all others is a national goal that promotes public safety and community. In order to achieve this goal, two actions must occur – people residing in rural, high cost areas must be able to have local telephone rates comparable to urban rates and everyone must be able to afford the service. Today, support for both goals resides on both the federal level (through the Universal Service Fund, or USF, which provides support for low income and high cost customers, as well as to schools and libraries and rural health care centers) and the state (via TAF and the Transition Fund).

Transition Fund

For large Bell Operating Companies, charging residential customers reasonable rates in high cost areas is possible due to balancing costs with customers in lower cost urban and suburban areas. For small, Independent providers across New York State which do not have the ability to balance their local rates that way, they were able to benefit from higher access charges paid by the long distance companies in order to access their local networks as a way to keep their local rates low. The Independents’ access charges were pooled together in the Intrastate Access Settlement Pool and payments were made to carriers in need.

When access revenues began to drop (for several reasons, including the transition to cellular phone usage for long distance calls), this system became unworkable. While the federal USF assists high cost area providers, without a complementary state program, the future of affordable service in high cost areas would be seriously in doubt. So, the Transition Fund was created in 2003 to replace the to-be-phased-out Settlement Pool as the means to provide support to enable incumbent providers in rural, high cost areas of the state to keep prices down. There was a finite amount of money placed in the Fund and additional deposits were eliminated. In addition, there was an understanding in the PSC Order creating the Transition Fund that the question of what (if anything) would replace it would not be addressed until only 18 months of monies remained in the account. Now that four carriers have begun to draw from the Transition Fund in order to keep their local rates at or below the statewide $23 cap, and additional companies have put in requests to draw from the Fund, it is estimated that the Fund will run dry in the first quarter of 2011.

The imperative of addressing this issue finally brought the new universal service proceeding to the forefront.

TAF

For customers located in large and small markets, the low income programs, such as Lifeline, reduce the prices paid by eligible customers for local service. On the state level, telephone corporations have contributed a percentage of their intrastate revenues to support TAF since its inception in 1998 (which, in turn, supports Lifeline, the relay service for the deaf, and access to E-911). With the growing loss of access lines to Voice over Internet Protocol (“VoIP”) providers, such as the voice services offered by the cable companies, and wireless companies – Verizon claims to have lost over 50% of its access lines in the past decade and continues to lose upwards of 60,000 access lines a month in New York State alone – these “assessable revenues” are seeing a steep decline. Moreover, with rate increases approved for Verizon over the past couple of years, the difference between its tariffed rate for local service and the Lifeline rate charged customers is growing, placing additional strains on TAF. Under its current constitution, the long term survivability of the TAF is seriously in doubt.

This result is illustrated in the PSC Staff report, which shows in the past 10 years, the assessable revenues on a monthly basis have dropped from over $600,000 a month to under $400,000 a month and the assessment ratio is more than double it was in 2001. In fact, as recently as 2006, the assessment ratio was about 0.004% and is now over 0.01%. That means that one percent of the intrastate revenues of the regulated telephone companies (Verizon, Frontier, etc.) goes to TAF, while the cable and wireless providers are exempt from this requirement.

While the TAF report does not include company specific data, it does include a chart illustrating the steep decline in Lifeline subscribership in New York State. According to the report, the number of Lifeline customers in 1996 was 768,720 and in 2008 it was 298,790. Meanwhile, the number of households receiving Home Energy Assistance, one of the eligibility criteria for Lifeline, now tops 800,000. Of course, the number of Food Stamps households in the state (another criteria for Lifeline eligibility) now tops 1.2 million. In other words, as poor a picture as the report illustrates for Lifeline, it is actually about 400,000 households worse. The cure? Require all providers – VoIP and wireless – to contribute to TAF, as they are required on the federal level, and permit them to offer Lifeline themselves. See: Lifeline Awareness Week Begins Monday – Is There Anything for New York to Celebrate? ; All NY Phone Customers Lose Big $$ Due to PSC Lifeline Policies.

Next Steps

While the PSC Order dissolving the Settlement Pool set parameters as to when the issue needs to be examined (18 months prior to planned exhaustion), no such specificity exists with regards to TAF. However, a thorough examination of universal service requires a look at both high cost and low income support. The two reports lay out in clear language the collision course both Funds have with oblivion. Having these reports provides needed insight for all interested parties. Now, all can see the inevitable direction the Transition Fund and TAF, as currently composed, are heading. No one should question that continued universal service requires action on both counts and the discussions that will follow should focus on how to fix TAF and with what should the Transition Fund be replaced, not whether the changes are necessary. Obstructionists should be ignored.

The time to fix and maintain universal service in the state is now and no self-serving entity should stand in the way of this imperative.

Lou Manuta