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.