Fourth Department Finds Payment Agreement Signed Under Duress After Water Service was Shut Off Does Not Bar Suit to Recover Disputed Charges

On March 26, 2010, the Appellate Division, Fourth Department, upheld a lower court's award of damages to customers of the Erie County Water Authority in an action to recover excess water charges. The water authority argued that the customers could not sue because they agreed to pay the charges in installments under a written payment plan, after the water service was shut off in an effort to collect the disputed charges. The court stated:

Defendant [Erie County Water Authority] appeals from an order that modified a judgment of City Court in this small claims action by awarding plaintiffs additional damages for payments made on excess water bills during the period of February 2005 to May 2006.
* * * *
Finally, contrary to defendant’s contention, the payments made by plaintiffs pursuant to the parties’ delinquent account payment agreement may be recovered inasmuch as plaintiffs executed that agreement when they were under duress based on defendant’s conduct in shutting off the water supply to their home (see generally Adrico Realty Corp. v City of New York, 250 NY 29, 33- 34).

Gruber v. Erie County Water Authority, __ A.D.3d __ (4th Dept. March 26, 2010, slip opinion at 2).

GAO Finds "Energy Star" Ratings Inadequately Audited

According to a GAO Report, the "Energy Star" labels placed on products as a way to signal they are "green" - and use less energy are not adequately audited. See Energy Star Program Audit Finds Fraud Vulnerability: Faked Products were Deemed Energy Savers, Matthew L. Wald, N.Y. Times, March 26, 2010.

The report is only the latest in a series involving the 18-year-old EnergyStar program, which was set up to guide the public on energy-efficient choices that could both save people money and help reduce the nation’s runaway energy consumption.

Watchdogs within the Environment Protection Agency and the Department of Energy have reported in the past that Energy Star has taken some claims of energy efficiency on faith. Yet the new study suggests that it often does so on remote control.

Congressional auditors said they were told by EnergyStar officials that some of the approvals, including the one for the gasoline alarm clock, had been issued by an automated system and that the details had probably never been reviewed by a human being.

The GAO Report indicates that "DOE and EPA officials agreed that the program is currently based on self-certifications by manufacturers." Covert Testing Shows the Energy Star Program Certification Process Is Vulnerable to Fraud and Abuse, GAO, March 2010.

The "Energy Star" program problems are not new.

In 2008, Consumer Reports conducted laboratory tests of "Energy Star" rated major appliances and found manufacturers' estimates of energy consumption and claims of comparative energy savings to be quite unreliable. See Energy Star Has Lost Some Luster: The Program Saves Energy but Hasn't kept Up with the Times, Consumer Reports, October, 2008.

In a September 2008 letter to EPA, Consumers Union, publisher of Consumer Reports, urged EPA to:

1. Update energy-use testing procedures and standards
   
2. Require independent verification of manufacturers' self-reported test results
3. Adopt a graded system to better inform consumers of relative product efficiency
4. Tougher policing of standards by federal officials and enforcement of standards, including increasing spot checks of Energy Star-qualified products.

According to the Consumer Reports Home and Garden blog,

We'd like to see independent, third-party energy-use verification for all appliances, not just Energy Star-qualified models. Another challenge for the Energy Department is to toughen energy-use standards and the test procedures they're based on. "We continue to encourage the Energy Department to update testing procedures and raise standards for inclusion in the Energy Star class of products, so that the Energy Star label will be a reliable indicator of energy savings," says Shannon Baker-Branstetter, policy analyst for Consumers Union, the nonprofit publisher of Consumer Reports and the Home & Garden blog.

Daniel DiClerico, DOE to step up energy-use checks on Energy Star-qualified appliances, Consumer Reports Home and Garden Blog, March 22, 2010.

Now, the GAO report has pointed to additional weakness in the "Energy Star" branding program, undermining the public and consumer confidence that is necessary to justify added expenditures on higher cost "Energy Star" appliances touted by manufacturers as being more energy efficient.

Also, without a scientific basis and without adequate regulatory oversight, manufacturers' claims of energy savings with "Energy Star" branded equipment cannot be relied upon in public and utility funded programs designed to cost effectively reduce the use of energy, such as those funded by the New York PSC through the System Benefits Charge. Otherwise, the ability of those programs to function properly and achieve energy savings goals will be impaired.

Grid/Keyspan Releases Low Income Gas Rate Discount Reports, but Not All News is Good

Earlier this month, National Grid released the first annual report for the low income discount program it created for KeySpan Energy Delivery New York (“KEDNY”) and KeySpan Energy Delivery Long Island (“KEDLI”). Both programs were initiated as part of the revised rates approved for the companies in a New York State Public Service Commission (“PSC”) decision on December 21, 2007. For KEDNY, the order approved a low income discount for eligible residential non-heating customers of $2.50 per month off of the minimum charge, while heating customers receive a $9.50 discount. In addition, a winter (November through April) discount of about 45% applies to the second rate block for KEDNY’s heating customers. KEDLI customers receive similar breaks, but the winter discount is only about a 44% savings. PULP was a party to the Joint Proposal which negotiated these discounts and is pleased with the result.

Where the two programs differ is in the number of customers who are eligible to participate. KEDNY estimated 60,000 households would qualify (including heating and non-heating), based on participation in previous low income programs, while KEDLI, which never had a low income program, estimated only 30,000. According to National Grid, “Funding for the Low Income Discount Program was established based on an anticipated level of enrollment of 30,000 customers. As the Company had no experience offering a low-income program in Long Island, the 30,000 estimate was derived by halving the enrollment figures in The Brooklyn Union Gas Company's (formerly d/b/a KeySpan Energy Delivery New York) Low Income Discount Program, a program that has long been in existence. Considering that statistics, such as Home Energy Assistance Program (“HEAP”) enrollment by county are readily available, it is surprising that National Grid selected such a non-scientific approach to determining the number of households to include in the KEDLI low income program.

While KEDNY’s program was serving 54,669 eligible customers at the end of 2008 and 61,196 at the end of 2009 (over 55% percent are heating customers receiving the highest benefit), KEDLI’s program has not been nearly as successful. In fact, in 2008, 5,531 eligible customers participated and in 2009, 8,008 participated. While over 90% of these figures are heating customers, the participation has been dreadfully low. In fact, the December 2007 order anticipated that there might be an issue in attracting a sufficient number of participants on Long Island and called for a review of the program “if the number of customers benefitting is significantly lower than 30,000 after rate year two (2009),” which is definitely the case.

Long Island may be surviving the recession better than other regions of the state, but it is no stranger to poverty and there are thousands of eligible people being missed by KEDLI. According to the recently released 2010 Poverty Report from the New York State Community Action Association, there are 61,647 people in Nassau County living in poverty and 83,475 in Suffolk County. In addition, the state Office of Temporary and Disability Assistance Caseload Statistics Report for December 2009 (the latest month available) at Table 25 states that 15,169 households in Nassau County received HEAP benefits and 27,374 received HEAP benefits in Suffolk County in the 2010 HEAP Federal Fiscal Year. By having only 8,008 customers participating in the low income program is a clear indication that the time is ripe for a review of KEDLI’s program, as foresaw by the PSC in its December 2007 order.

KEDLI has proposed numerous methods to reverse this trend, including:

* The company is working to ensure all HEAP payments are coded to ensure automatic enrollment in the Low Income Discount Program.

* A Low Income Symposium with Long Island community-based organizations and the company’s Consumer Advocates was held in October 2009, which provided an opportunity for the company to promote the program.

* Outbound and Inbound Contact Center representatives were provided additional training on the program’s design and information on the program was incorporated into Contact Center scripts.

* The company’s Consumer Advocates circulated information on the discount at a program sponsored by Long Island Power Authority in August 2009 to launch their Senior Income Qualified Assistance Program.

* The company sent a bill insert in November to all Long Island gas customers with eligibility and enrollment information for the program.

* The company will expand its Outreach and Education campaign to increase enrollment.

* The company will partner with third party organizations to deliver additional outreach.

* The company will implement a file matching program with Long Island Department of Social Services offices and New York City Human Resources Administration in an effort to identify additional customers who may be eligible for the program.

The KEDLI Low Income Discount Program can not be permitted to languish. Over 42,000 households on Long Island received HEAP benefits last year. While many of these undoubtedly use electric heat, or receive oil delivery, and are not gas heating customers, PULP does not believe that National Grid has come close to providing its low income discount to all eligible customers. The first step is to link the low income program with HEAP participation through OTDA and county Department of Social Services offices. The success of the automatic enrollment process is key to the success of the entire program. National Grid should not wait a year before releasing another set of statistics to measure their ability to enroll eligible customers.

Lou Manuta

Yonkers Riverview II Tenants Seek Rehearing of PSC Order Continuing Submetering of Electric Heat

On March 22, 2010, the Yonkers Riverview II Tenants Association filed a petition with the New York State Public Service Commission (PSC) seeking rehearing of its February 18, 2010 Order on Reconsideration which denied a stay and allowed electric submetering to continue based on promises of the owner to provide thermostats for the electric baseboard heat and energy education, and an expectation that 58% of the tenants would receive HEAP benefits so that half the tenants would not be financially harmed.

The tenants' Petition for Rehearing urges the PSC to stop submetering because tenants continue to suffer financial harm from electric bills from their landlord that are greater than the amount of rent reductions and utility allowances provided when the owner stopped including electric service in the rent, and because:

Notice was Defective and Denied Due Process of Law to Riverview II Tenants;

The “Financial Harm to Tenants” Test Used by the Commission is Arbitrary;

The Owner Failed to Show that the Proposed Utility Allowances Appropriately Offset the Shift of Responsibility for Electric Charges from the Owner to the Tenants;

Yonkers Housing Authority Utility Allowances Do Not Reflect the Owner’s Actual Cost Reductions, Are Not Calculated to Offset the Actual Cost of Electricity Being Shifted to Tenants, and Are Based on the Low Cost of Power Received from the New York Power Authority;

There is No Evidence that HUD Approved Conversion to Submetering at Riverview II or that HUD Approved the Use of MHACY Utility Allowances at Riverview II;

The Order on Reconsideration Used Past Rather than Forecast Costs for Electricity, Contrary to the Standard Adopted in the September 17 Roosevelt Order, and as a Result Ignores Impending Rate Increases and Understates the Harm to Tenants;

The Forecast Assumption that Tenants will Use 10% Less Energy After Submetering is Not Supported in the Record, and is Inconsistent with the Commission’s Failure to Forecast and Consider the Upward Trend in Electricity Prices;

The Premises are Not Energy Efficient Even After Completion of a NYSERDA Weatherization Project;

It was Error to Allow Submetering to Continue in a Building with Electric Baseboard Heat Lacking Thermostats;

The Owner Has Not Complied with HEFPA;

The Commission Erred by Allowing Submetering to Commence Before the Time of Lease Renewal and Without Informed Consent of Tenants to Modified Leases Containing Commission-Approved Rates, Terms and Conditions of Electric Service;

Deeming of Electricity Charges to be Rent is not Essential to Enforcement of a Valid Agreement of a Tenant to Pay Charges for Electric Service; Permitting Charges for Electric Service to be Deemed "Additional Rent" Permits Subtle Displacement of Low-Income Tenants
Without HEFPA Protection.

The Petition asks the Commission to halt submetering, require refunds, consider the matter again from the start due to the due process denial by appointing an Administrative Law Judge to conduct the proceedings, to develop a complete record and to issue a recommended decision after conclusion of hearings (including a public statement hearing at Riverview II attended by at least one Commissioner), with an opportunity for parties to submit briefs on exceptions.

Background
For more information on the Riverview II case, see

• PSC Greenlights Eviction of Tenants for Nonpayment of Electric Bills, PULP Network, March 12, 2010;
  
• Riverview II Tenants Rebut Owner's Opposition to Request to Stay Submetering, PULP Network, November 03, 2009;
  
• Yonkers Riverview II Tenants Again Ask PSC to Halt Submetering, PULP Network, October 14, 2009;
• Submetered Yonkers Tenants Show How PSC Order Allowed Landlord to Shift Electric Bills to Low Income Tenants, PULP Network, May 6, 2009;
• Yonkers Tenants Ask PSC to Halt Submetering at Riverview Towers, PULP Network, April 9, 2009.

See PULP's web page on submetering for additional information.

Consistent and Persistent

In recent weeks, PULP has received telephone calls and e-mails from different utilities asking us to join them in opposing the Governor’s proposed increases to the Gross Receipts Tax (“GRT”) from one percent to three percent. Their reasoning is that PULP represents the interests of utility consumers, especially low income consumers, and any increases in taxes would be detrimental to all New York families struggling to make ends meet in this tough economic climate. While on the surface, their analysis – that PULP would serve as a valuable partner in their quest and would add a strategic consumer advocate to their utility coalition – may have made sense, PULP’s very existence relies on being consistent and persistent.

Let me explain.

The vast majority of PULP’s funding comes from the New York State Budget as part of the allocation of monies for civil legal services. Every year, we remind our friends in the state legislature about the important role PULP plays in assisting families in keeping their lights, heat, and telephone service on. We are involved in NYS Public Service Commission (“PSC”) > proceedings, often taking a position that is not represented by anyone else – that of the state’s residential utility consumers who pay the bills. We represent individual utility customers in PSC complaint hearings and in state and federal courts, without compensation. PULP provides expert advice to lawmakers and members of the press who are looking for independent views and information on utility and energy issues. PULP provides all of this and more on a shoestring budget that has not increased at all in 10 years. We even had to cut funding to our pension plan last year in order to make ends meet and have eliminated all but the most essential travel, such as when we represented a disabled woman in a utility complaint hearing at the PSC’s New York City office.

We do seek grant and other opportunities at every turn, but this has become a tough road, especially during this Great Recession. Simply stated, without state tax revenue and other special revenue items in the state budget, there would be no funding for PULP. All of the vital work we perform would cease.

In our meetings over the past few weeks with state legislators and the Governor’s office about budget and funding matters, we emphasized over and over again the irrationality of the state’s tax regime on utilities. For example:

Why do customers of Energy Service Companies (“ESCOs”) enjoy a sales tax break on their utility delivery service when they buy the electricity or natural gas commodity portion of service from an ESCO? Based on the source (last year’s Division of the Budget's Tax Expenditures Report or this year’s report), this results in a loss to the state of between $50 and $150 million a year, plus millions more to municipalities and school districts across the state.


Why do Voice over Internet Protocol (“VoIP”) and wireless providers not pay regulatory assessments to the PSC when they have taken half of the market in NY and the landline telephone providers are on the hook annually for one-third of one percent of their intrastate revenues? If assessed at the same level, VoIP and wireless providers would bring an additional $15 million to the state every year. If this assessment was increased to the 2% levy placed on electric and natural gas utilities and applied to all voice providers, an additional $182 million a year would be generated .

* Why do VoIP and wireless providers not pay local GRT assessments? This change would generate nearly $114 million a year, based on PULP’s analysis.

Are taxes and assessments on utility consumers are too high? Perhaps some tax rates could be decreased if there were more equal taxation across an entire market of entities providing similar services in a similar manner. In other words, if customers of distribution utilities and ESCOs the same taxes on the same services (both delivery and commodity), the tax rate might be cut significantly and still provide more needed revenues for NY. The same can be said for landline, VoIP, and wireless providers.

In a time when the state is seriously considering shuttering state parks and laying off public school teachers, to allow a tax system to continue which perpetuates the uncompetitive balance of utility markets and permits carriers to “compete” based on tax breaks and not on service quality or product offerings, is both illogical and fundamentally flawed. PULP has consistently and persistently said fix this by leveling the playing field.

While we’re on the topic, the time has come to subject VoIP and wireless providers to the same service quality requirements and consumer protections as the traditional phone companies. With the significant and growing reliance on these services as replacements for plain old telephone service, unless these steps are taken, the PSC will have jurisdiction over less than half the market it supposedly has the power to protect.

As for the GRT, it might appear to be a regressive tax when it is applied to residential customers because it hits rich and poor in equal doses, and takes a larger percentage cut of the income of lower income households. On the other hand, it is also a tax that can not be easily avoided, and which must be paid by businesses.

Interestingly, the same utility and business groups arguing against the GRT by invoking how paying it will harm the poor play another tune when they are selling utility rate increases or business group proposals to shift rate burdens from businesses to residential customers, or reallocate the benefits of low-cost hydro power, as they frequently urge in utility rate cases.

If the GRT tax also applied to all providers of similar services, rates could be reduced while leveling the competitive playing field without causing a chain reaction of damage to those in need.
Equalized tax assessments for all providers of similar services! PULP has been both persistent with this mantra and consistent with whomever asks our opinion. The days of “Don't tax you and don't tax me. Tax that man behind the tree," a phrase attributed to the late Senator Russell Long should be long over.

Lou Manuta

FCC Launches National Broadband Plan; Includes Focus on Affordability

To a mixture of fanfare, relief, and criticism, the FCC delivered to Congress Connecting America: The National Broadband Plan on March 16th. Weighing in at 376 pages, including appendices, it is both the culmination of several years work and the beginning of a lengthy process which, the report states, "[l]ike the Internet itself. . . will always be changing - adjusting to new developments in technologies and markets, reflecting new realities, and evolving to realize the unforeseen opportunities of a particular time." While many may argue that a national plan to promote broadband deployment is years overdue, and others may claim that the sheer size of the endeavor - which includes many steps for Congress to take - will mean that some of it will never be implemented, it is nonetheless a momentous occasion. If fully realized, all Americans, including low income New York families, which be able to afford 100 megabits per second ("mbps") Internet access.

Background
The FCC was directed by Congress in early 2009 through the American Recovery and Reinvestment Act ("ARRA") to develop a National Broadband Plan to ensure every American has access to broadband capability. Congress required that the plan include "a detailed strategy for achieving affordability and maximizing use of broadband to advance `consumer welfare, civic participation, public safety and homeland security, community development, health care delivery, energy independence and efficiency, education, employee training, private sector investment, entrepreneurial activity, job creation and economic growth, and other national purposes.'"

In other words, Congress should not be surprised with the depth and breadth of the Plan.

Plan Goals
In Connecting America, the FCC establishes four broad, short term goals . . . .

1. Design policies to ensure robust competition and, as a result, maximize consumer welfare, innovation, and investment;
2. Ensure efficient allocation and management of assets the government controls or influences, such as spectrum, poles, and rights-of-way, to encourage network upgrades and competitive entry;
3. Reform current universal service mechanisms to support the deployment of broadband and voice in high-cost areas; and ensure that low income Americans can afford broadband; and in addition, support efforts to boost adoption and utilization; and
4. Reform laws, policies, standards, and incentives to maximize the benefits of broadband in sectors the government influences significantly, such as public education, health care, and government operations.

and six long-term goals, to be a guide for the next decade:

1. At least 100 million US homes should have affordable access to actual download speeds of at least 100 mbps and actual upload speeds of at least 50 mbps;
2. The US should lead the world in mobile innovation, with the fastest and most extensive wireless networks of any nation;
3. Every American should have affordable access to robust broadband service, and the means and skills to subscribe if they so choose;
4. Every American community should have affordable access to at least one gigabit per second broadband service to anchor institutions such as schools, hospitals, and government buildings;
5. To ensure the safety of Americans, every first responder should have access to a nationwide, wireless, interoperable broadband public safety network; and
6. To ensure that America leads in the clean energy economy, every American should be able to use broadband to track and manage their real-time energy consumption.

This is certainly an ambitious agenda, but one that is necessary in order for broadband to indeed become universal.

Impact on Low Income Households
For PULP, the most relevant portions of the National Broadband Plan are how it proposes to bridge the digital divide and provide a means for low income households to afford broadband. This is the subject of the grant proposal PULP submitted as part of the ARRA Stimulus Plan. While we were unsuccessful in the first round of consideration, we re-submitted our application on March 15th as part of the larger grant request sought by Cornell Cooperative Extension to promote educational opportunities. PULP is optimistic that the synergies between the two proposals will result in a successful application. We have some FCC-based research to back this up: In a survey recently conducted by the FCC, 36% of non-users cited cost as the determining factor for not subscribing to broadband , adding credence to PULP's affordability proposals.

The FCC's National Broadband Plan's Availability and Adoption and Utilization chapters include three elements to help ensure all Americans have the opportunity to reap the benefits of broadband:

(1) All Americans should have access to broadband service with sufficient capabilities;
(2) All should be able to afford broadband; and
(3) All should have the opportunity to develop digital literacy skills to take advantage of broadband.

PULP wholeheartedly supports all three elements and addressed the second two items in its broadband grant application.

Recommendations
To achieve these elements, several recommendations are offered:
(1) Ensure universal access to broadband network services.

(a) Create the Connect America Fund ("CAF") to support the provision of affordable broadband and voice with at least four mbps download speeds and shift up to $15.5 billion over the next decade from the existing Universal Service Fund ("USF") program to support broadband. The FCC left it to Congress to decide whether to make available public funds of a few billion dollars per year over two to three years as a means to accelerate the deployment of broadband to unserved areas.
(b) Create a Mobility Fund to provide targeted funding to ensure no states are lagging significantly behind the national average for 3G wireless coverage.
(c) Transition the existing High-Cost component of the USF (which provides support in rural areas to ensure comparable customer rates to urban areas) over the next 10 years and shift all resources to the new funds. The $4.6 billion-per-year High Cost component of the USF was designed to support voice services and would be replaced over time by the CAF.
(d) Over the next 10 years, reform intercarrier compensation, which provides implicit subsidies to telephone companies, by eliminating per-minute charges and enabling adequate cost recovery through the CAF.
(e) Design the new CAF and Mobility Fund in a tax-efficient manner to minimize the size of the broadband availability gap and thereby reduce contributions borne by consumers.
(f) Broaden the USF contribution base to ensure USF remains sustainable over time. Currently, only voice providers contribute to the Fund, including landline, wireless, and Voice over Internet Protocol ("VoIP") providers.

(2) Create mechanisms to ensure affordability to low income Americans.

(a) The FCC should consider free or very low-cost wireless broadband as a means to address the affordability barrier to adoption.

(3) Expand the Lifeline and Link-Up programs by allowing subsidies provided to low income Americans to be used for broadband.

(a) The FCC and states should require eligible telecommunications carriers ("ETCs") to permit Lifeline customers to apply Lifeline discounts to any service or package that includes basic voice service.
(b) The FCC should integrate the expanded Lifeline and Link-Up programs with other state and local e-government efforts.
(c) The FCC should facilitate pilot programs that will produce actionable information to implement the most efficient and effective long-term broadband support mechanism, including subsidies for installations (such as Link-Up) and customer premises equipment (including computers and modems).

(4) Ensure every American has the opportunity to become digitally literate.

(a) Launch a National Digital Literacy Corps to organize and train youth and adults to teach digital literacy skills and enable private sector programs addressed at breaking adoption barriers.
(b) Congress, the Institute of Museum and Library Services ("IMLS" ), and the Office of Management and Budget should commit to increase the capacity of institutions that act as partners in building the digital literacy skills of people within local communities.
(c) Congress should consider providing additional public funds to IMLS to improve connectivity, enhance hardware, and train personnel of libraries and other community-based organizations ("CBOs").
(d) OMB, consulting with IMLS, should develop guidelines to ensure that librarians and CBOs have the training they need to help patrons use next-generation e-government applications.
(e) Congress should consider funding an Online Digital Literacy Portal.

It is easy to be overwhelmed with the FCC's recommendations. They discuss revamping intercarrier compensation (such as access charges and reciprocal compensation), creating and reworking universal service programs, expanding Lifeline offerings, and stressing digital literacy. These items, in one form or another, had been languishing for years at the FCC, with past administrations lacking the wherewithal to bring them forward either piecemeal or whole cloth. (Remember back in 2004 when then-President Bush called for broadband in "every corner" of the US by 2007? ) Dare we say that this is an "audacious" agenda? With an emphasis on universal connectivity and job creation, there is hope that most or all of the proposals will become implemented - sometime in the next 10 years.

That said, PULP will cast a wary eye on and fight any efforts to completely eliminate high cost and low income support for voice services. Even by 2020, we do not believe that there will no longer be a need to assist voice customers in rural areas and low income households in all areas. PULP also wants to ensure that the continuing support for voice includes bundled services, such as voice with broadband. Whether combined with the CAF (and used to support broadband access and voice) or retained as stand alone funds for voice customers, PULP will continue to be vigilant when it comes to protecting the rights of residential utility customers should their access to affordable, reliable voice service be put into question. These rights should be explicitly technology neutral and apply to traditional landline, VoIP, and wireless services.

Lou Manuta

Study Finds No Discernible Difference in Tenant Energy Usage When HUD Public Housing is Submetered

A 2007 research report funded by HUD, Benchmarking Utility Usage in Public Housing, concludes

there is no discernible difference in energy use between public housing residents that pay for their own energy and those for whom energy is paid by the [Public Housing Authorities].

The report compared energy usage data from buildings with tenant-paid utilities and with utilities paid by the housing authority:

One of the areas explored during development of the benchmarking model was if residents’ usage was affected when the resident paid directly for their utilities. Many PHAs receive and pay all utility bills with no direct involvement of the residents. Other PHA residences are individually metered and the residents pay their own utilities.

It is difficult to acquire utility data for residences that pay for utilities directly. PHAs usually do not keep these records since the residents are billed directly. However, D&R collected data on 648 buildings with full tenant-paid utility information. This information is sufficient to determine what, if any, statistical difference exists between the energy and water consumption habits of tenants who pay their own utility bills, versus tenants who do not receive utility bills because the PHA pays them.
****
Considering that the energy-paid-by-PHA correlation is very small—R2 = 0.0168 on a scale of 0 to 1—the impact on energy use would likely be very small, although it is within the range of other variables that do have an effect on predicted energy use. In fact, when taken in combination with other significant variables, the effect of energy-paid-by-PHA on energy use was negligible.

It is also noteworthy that the effect of energy-paid-by-PHA on energy use, as represented by its negative sign in Figure 5 and Table 3, suggests that when the PHA pays the bills, the residents use less energy. This is counterintuitive because it suggests that if residents do not see their bills, they are more likely to minimize their energy use. In this case the negative value is probably more a reflection of its statistical insignificance, in that it is very small—in the “noise level” of the data.

Such results call into question the deference of state agencies to the longstanding efforts of big realty groups to shift master-metered electric bills onto their tenants, and their unwarranted assumptions that tenants will use much less electricity after the bills are shifted to them, in order to justify smaller rent reductions and small utility allowances after conversion to submetering.

The HUD-funded study found that factors having far greater correlation to energy usage include the size of apartments and the age of the building "because older buildings tend to use more energy per square foot. This follows logically also because older buildings generally have less insulation, inferior windows, more leaks, etc."

Attention of New York's troika of submetering agencies - the PSC, NYSERDA, and DHCR - needs to be focused less on promoting landlord agendas and more on new, effective measures that will bring thermal efficiency of older buildings up to Energy Star standards.

McKinsey & Company issued a report in 2009 estimating that 92% of the energy efficiency opportunity in low income housing is in building shell upgrades, and 8% in HVAC systems. Typically tenants lack ownership and control of structures and fixture to do such upgrades, even if they could be financed. Burdening submetered tenants with the cost of energy inefficient structures that they lack the power to change, and allowing landlords to decouple from direct responsibility for energy costs, is not the solution.

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

PSC Greenlights Eviction of Tenants for Nonpayment of Electric Bills

We previously discussed the problem that tenants who receive electric service from their landlords can be threatened with eviction, even if they pay the rent, when they protest charges for electricity or if they fall behind in payment of the electric bills due to unemployment or other household financial crises. Typical language in a landlord's boilerplate lease labels charges for submetered electricity as "added rent."

The use of eviction as an alternative to following the utility consumer protections of the Home Energy Fair Practices Act (HEFPA) is a recommended course of action contained in a NYSERDA funded submetering manual for landlords. The NYSERDA manual is co-authored by a frequent petitioner at the PSC on behalf of landlords seeking submetering permission, and an attorney from a law firm specializing in representation of landlords.

In a February 18, 2010 decision, the PSC addressed the use of eviction of tenants for nonpayment of electric charges without first following HEFPA. Tenants had objected to the use of eviction to collect electric bills, as part of their petition raising numerous grounds for halting the submetering of electric heat.

Termination of Service for Non-Payment of Electric Charges
Riverview II’s leases include a provision that purports to allow electric charges to be treated as “rent.” **** Riverview II responds that (1) the leases it uses are “DHCR leases” and “under the regulatory supervision of DHCR;” (2) Riverview II has never “evicted or attempted to evict” tenants for failure to pay electricity charges, and (3) it lacks the physical equipment that would be needed to terminate electric service to individual apartments.

Initially, we must note Riverview II’s claim it has “never” attempted to evict a tenant for non-payment of electricity is belied by the public record. The Department’s Office of Consumer Services, on August 3, 2009, directed Riverview II to stop up to 80 pending civil proceedings, all seeking tenant evictions based upon the tenant’s failure to pay electric charges. Riverview II Tenants Association attached to its Petition one such claim, dated August 11, 2009, in which more than $800 in “Electric Charges” were specifically identified as unpaid, thereby supporting eviction. Riverview II’s claim that the exhibit is merely a routine demand for rent contradicts a fair reading of the document.

Further, Riverview II provided no citation to the regulatory requirement that it use a specific lease or that the lease could not be modified to bring its provisions into alignment with HEFPA. ****
In this case, Riverview II . . . represents . . . that it will fully implement all of the HEFPA protections applicable to a tenant whose service could be terminated for non-payment before commencing any action or seeking relief from a court based on this non-payment. For these reasons, we will not apply in this case an outright prohibition on the treatment of submetered electrical charges as rent. Rather, Riverview II is ordered, in the event of non-payment of electric charges, to afford the tenant all notices and protections available to such tenant pursuant to HEFPA before any judicial action based on such non-payment is commenced. The HEFPA notices and protections that we require Riverview II to provide before any judicial proceeding commences, include, but are not limited to, deferred payment agreements as set forth in Public Service Law §37 and 16 NYCRR Part 11, budget and levelized billing plans as set forth in 38 September 17 Roosevelt Order at 34. Public Service Law §38 and 16 NYCRR Part 11, the complaint handling procedures as set forth in Public Service Law §43 and 16 NYCRR Part 11, and the special protections for medical emergencies, elderly, blind and disabled customers, and for cold weather periods as set forth in Public Service Law §32 and 16 NYCRR Part 11.

Although direct eviction attempts for nonpayment of electric charges, as the landlord had attempted, there is a simple, indirect path, charted by the PSC and its Office of Consumer Services, to accomplish the same result indirectly.

But like so many other aspects of the PSC submetering regime, the recent decision seemingly protecting tenants is likely to be ineffective and easily avoided by landlords. The key is the PSC's actual denial of the tenants' request for an "outright prohibition on the treatment of submetered electrical charges as rent," coupled with its clever language that only bars eviction for "this nonpayment," i.e., charges owed for electricity.

When the tenant pays the rent but holds payment for electricity, due to a dispute or inability to afford the charges, the owner may simply reallocate the intended payment for rent, so that it covers all the unpaid electricity charges. Presto! Nothing is owed for electric service, and "this nonpayment" does not exist. Thus the landlord believes it has no obligation to offer deferred payment arrangements, no need to notify tenants about public assistance and no need to offer the other HEFPA protections triggered when the customer owes money, because due to the reallocation of the rent payment, the customer is not behind in payment.

Then, the owner simply evicts for nonpayment of the balance of unpaid rent. There need be no telltale indications on the housing court eviction petitions of anything but unpaid rent.

This scenario is not hypothetical.

It is plotted in the NYSERDA submetering manual for landlords, and is acted out in practice at the Public Service Commission's Office of Consumer Services. When a tenant protests electric charges but pays the regular rent, and protests when the landlord tries to evict, here is what really happens: the owner applies the tenant's rent payment to electricity making it appear to the housing courts that the rent is unpaid, and the PSC Office of Consumer Services greenlights the practice:

This is in response to your complaint, Case Number ****** conceming Stellar Management Company (Stellar Management), your submetering company.

In your initial contact with the Public Service Commission (PSC) you indicated that you are disputing Stellar Management's assessment that your rent is in arrears. You are contending that the unpaid charges are not for rent, but for electric service.

While the PSC regulates submetering companies in issues related to energy services, it has no authority to mandate how a tenant's payment is dispersed. Stellar Management applied your payments toward your electric service, and not your rent. Therefore, your rent is in arrears.

Thus, in practice, the PSC, through its Office of Consumer Services (OCS), lets landlords allocate tenant payments intended to satisfy disputed or unpaid charges for electric service and evict for unpaid rent, even when the tenant pays the amount of the rent.

In sum, the recent PSC decision still allows deeming of charges for electric service to be rent, and it artfully bars only evictions for "this nonpayment" of charges for electric service. "This nonpayment" simply disappears when the landlord reallocates the tenant's intended rent payment to make the nonpayment for electric service disappear. As a result, the requirements of HEFPA, such as deferred payment plans and protection of customers from enforced payment of disputed charges, can still be circumvented, and the reallocation practice is greenlighted by OCS.

Like so much of the Commission's submetering regime, its orders professing to recognize customer rights and protections are unenforced and hollow in practice.

New York PSC Supports California’s Request for Access to FCC’s Outage Reporting Data

In comments submitted to the FCC March 4th, the New York State Public Service Commission (“PSC”) expressed its support for the California Public Utilities Commission’s (“CPUC”) request for direct, password-protected access to the FCC’s Network Outage Reporting System (“NORS”) database. The PSC joined the CPUC in calling for the launch of a proceeding to implement a method of state access to the NORS database.

The CPUC had issued an order in 2009 concluding that the state’s service outage reporting would be improved if it adopted the FCC’s NORS reporting requirements and substituted those requirements for the state’s independent disruption and outage reporting guidelines. The CPUC directed its staff to seek direct access to the NORS database from the FCC. Unless its staff’s request is granted, California carriers must file the same outage reporting information twice: once with the FCC, and then again with the CPUC. In its Petition to the FCC, California noted that dual reporting is both impractical and burdensome both for the carriers and for state agency staff. It argued that the most efficient way for states to obtain NORS information is through secure access to the NORS database itself.

The PSC explained its support for direct access to the NORS database this way:

Access to the NORS database will assist in meeting our mandate of ensuring safe and reliable telecommunication service in New York. Due to increasing reliance on intermodal forms of communication (e.g., cellular and Internet Protocol (IP)), fulfilling this mandate requires that we have information from many different telecommunication providers, some which we do not currently assert jurisdiction over or may not necessarily fall under our jurisdiction. Because required outage reports, which are recorded in the NORS, are applicable to wireline, wireless and cable outages, we believe password-protected access to the NORS database, limited to New York-specific disruptions, will complement our existing outage reporting procedures; limit the creation of additional regulatory reporting obligations in multiple state jurisdictions; and, enhance the common interests of local, state and federal agencies with regard to network reliability and recovery.”

No confidentiality issues would arise from providing direct access to states, the PSC argued, because other federal databases (including the telephone numbering databases) have been shared with the states for years. “In fact,” the PSC noted, “granting such access could streamline the reporting process for both state commissions and carriers, and possibly reduce the need for states to expand mandatory reporting requirements to all telecommunications operators and service providers.”

PULP supports confidential, direct access by state commissions to the vital information contained in the NORS data as this is the only database which includes landline, wireless, and Voice over Internet Protocol (“VoIP”) outage information. With wireless and VoIP having captured half of the voice market in New York State, it is essential that the PSC have access to this database in order to help it meet its mandate to preserve telephone service. It is a necessary first step in protecting ALL of the state’s voice customers.

Lou Manuta

Coalition Urges FERC to Examine Electricity Sellers' Costs and Revenues in Wholesale Power Markets

On March 5, 2010, a broad coalition of groups, including PULP, filed comments with FERC urging closer assessment of the results of private wholesale markets. The functionally deregulated markets are run by private RTO utilities under FERC jurisdiction, such as the NYISO. FERC allows the RTOs to set prices for electricity using "market-based rates" demanded secretly by sellers in spot market auctions, without advance public filing, without prior review by FERC, and without meaningful possibility of revision or refund of unreasonable rates.

The comments were filed by:

• AARP
  
• American Forest & Paper Association
  
• American Municipal Power, Inc.
  
• American Public Power Association
  
• Blue Ridge Power Agency
  
• Citizen Power
  
• Citizens Utility Board
  
• Coalition of Midwest Transmission Customers
  
• Connecticut Office of Consumer Counsel
  
• Delaware Municipal Electric Corporation, Inc.
  
• Electricity Consumers Resource Council
  
• Illinois Attorney General
  
• Industrial Energy Consumers of America
  
• Kennebunk Light & Power
  
• Maryland Office of People's Counsel
  
• Modesto Irrigation District
  
• Municipal Electric Utilities Association of New York
  
• National Consumer Law Center
  
• NEPOOL Industrial Customer Coalition
  
• New England Public Power Association
  
• New York Association of Public Power
  
• Office of the People’s Counsel for the District of Columbia
  
• Ohio Partners for Affordable Energy
  
• Pennsylvania Office of Consumer Advocate
  
• PJM Industrial Coalition
  
• Public Citizen
  
• Public Power Association of New Jersey
  
• Public Utility Law Project of New York, Inc.
  
• Virginia Citizens Consumer Council

The comments point out that during FERC's 15 years of experimentation with RTO electricity markets, there has been no "accurate determination of whether these changes have in fact produced net benefits to end-use consumers."

The comments call for an examination of all components of power generator costs and revenues to ascertain whether FERC's market-based rate system is really achieving results for consumers superior to those under traditional regulation, where rates are based on reviewed prudent costs and an allowance for a reasonable return to investors.

Maryland Reconsiders Electricity Deregulation

A cornerstone of the Enron-inspired electricity restructuring plans adopted in about 15 states was to require traditional vertically integrated utilities to sell their power plants to "merchant power" utilities who would compete in a wholesale market. The old utilities and new retail "energy services companies" would buy the electricity generation portion of service at wholesale and resell it to retail customers. The incentive for the old utilities was to form holding companies with Enron-like affilates in other lines of business, for example, wholesale power generation in other states and countries, wholesale energy trading, retail middlemen, broadband communications, and acquisition of other utilities through mergers.

Except for New York, legislatures in all the other states that "restructured" passed laws requiring the traditional utilities to sell their power plants and forbidding them from re-entering the power generation business, except through holding company affiliates.

Maryland is now rethinking its path to deregulation and higher prices, and is considering new legislation to allow utilities to build cost effective power plants. According to Electric Power Daily:

A hearing is scheduled today on a bill introduced by Maryland's most vocal opponents of the deregulation of electricity markets, who will release a study that shows ratepayers could save a significant amount if utilities build new natural gas-fired plants. The bill, S.B. 807, directs the Public Service Commission to develop a plan for utilities to build and own new, regulated electric generation. The legislation is meant to reinforce Governor Martin O'Malley's December 2009 letter to the PSC urging the regulators to use their existing authority to direct utilities to build new plants, Senators Jim Rosapepe and E.J. Pipkin, said in a statement.

The study by the Maryland Tax Education Foundation shows that Baltimore Gas and Electric and Pepco . Jeff Hooke, managing director of Hooke Associates, and chairman of the board of the Maryland Tax Education Foundation, said Monday in an interview.

Hooke said BGE and Pepco, both distribution companies, are paying an average of $109/MWh for power. But he found that the utilities could generate the power themselves for about $60/MWh, assuming the price of natural gas is$5.50/Mcf.

Hooke researched the cost of building and operating anew combined cycle gas-fired plant, including the cost of the turbines. Hooke built a 15% return on equity into his evaluation and a 5% interest on debt, he said.

“The profit margins of merchant power producers are quite high,” Hooke said, noting their unleveraged return on assets is more than 20%. Hooke was an investment banker for25 years and now runs a consulting firm and said he is not opposed to companies making a profit. “But the beleaguered customers of the utilities are sending large profits to these merchant companies,” he said.

Mary Powers, Platt's Electric Power Daily, March 9, 2010. A summary of the report of the Maryland Tax Education Foundation is here.

In New York, the PSC worked with the utilities to restructure voluntarily and without legislation, making deals providing for the sale of power plants, giving utilities their wish to establish new holding companies and allowing recovery of "stranded" costs. Although other states are readjusting their paradigms in light of bitter experience with higher prices after restructuring, the New York PSC remains wedded to the Enron-inspired plan and its heavy reliance on NYISO spot market pricing. For example, the PSC insisted, as a condition of the sale of Energy East to Iberdrola, that RG&E sell more of its power plants to merchant power companies. Before restructuring, RG&E prices were on a par with Niagara Mohawk's and were above Central Hudson's. While other utilities followed the PSC prescription, and their prices rose, RG&E became the lowest price investor-owned electric utility in the state, probably because its energy charges were based more on RG&E's cost of production and less upon market-based rates.

The Cure for Verizon’s Service Quality Woes? Change the Way the Standards Are Measured

As PULP reported on February 22, 2010, Verizon has proposed a solution to its continuing trend of poor service quality: change the standards. When Verizon is unable to access necessary facilities in order to complete a repair (due to the customer or the property owner denying access) and when the customer requests Verizon to repair a trouble not the next day, but several days later, these are counted against the company in calculating its out-of-service 24 hours and service affecting over 48 hours repair rates. The company is required to repair out-of-service conditions within 24 hours 80% of the time (“OOS>24”) and service affecting situations within 48 hours 80% of the time (“SA>48”). Verizon wants these situations to be removed from its calculations.

PULP does not believe these changes are necessary, but does support extending the service standards to wireless and the voice services offered by the cable companies.

The New York State Public Service Commission (“PSC”) heeded Verizon’s request and released a notice inviting comments on Verizon’s proposals on February 24th. Specifically, Verizon asked that the following changes be made to the PSC’s Uniform Measurement Guidelines:

No Access: Under the current Guidelines, when Verizon cannot gain access to a customer’s premises to clear an out-of-service or service-affecting condition, the 24 or 48 hour clock runs until the trouble condition is cleared. As a result, “No Access” situations cleared after 24 or 48 hours would count as a trouble not cleared and, therefore, would count against the company in its measurements. Verizon requested that the Guidelines be changed so that if it appears at the customer’s premises within the 24 or 48 hour window and is unable to enter the premises or obtain access, such situations would not be included in the calculations since it would not reflect any failure by Verizon to take timely action. Verizon added that in these situations it calls the customer back to try to schedule a new appointment and this second appointment could be treated as a separate, reportable incident for metrics reporting purposes.

Request or Accept: Verizon argued that it does not make sense to apply a 24 or 48 hour clock to a customer-requested appointment that falls beyond the 24 hour or 48 hour window. Instead, where Verizon offers the customer an appointment that would enable it to make the repair within the 24 or 48 hour window and the customer requests or accepts an alternative appointment outside the 24 or 48 hour window, it should not count against the company. Verizon proposed that one of two alternatives should be adopted: (1) the metric would not apply at all to the appointment; or (2) the 24 or 48 hour “clock” could be deemed to begin running at 8 AM on the day of the scheduled appointment.

PSC Staff tentatively supported Verizon’s request to exclude customer “requests” beyond the 24 hour or 48 hour window from the calculation of both the out-of-service and service affecting metrics, citing to “[t]he increasingly prevalent use of cell phones as an alternative means of communications . . . not contemplated when the Uniform Measurement Guidelines were adopted in 2000 . . . [which] may lessen the need for a repair within the mandated window.” It reasoned that Verizon should not be penalized if it is “merely complying with a customer’s request.” PSC Staff does not support the exclusion of instances when a customer “accepts” a company-offered repair appointment outside the mandated 24 or 48 windows. “In such cases,” Staff reasoned, “it would appear to be difficult to judge whether or not a customer’s ‘acceptance’ is full-hearted or if it is a mere acquiescence due to a perceived lack of alternatives.”

PSC Staff also does not support altering the Guidelines to exclude “no access” situations, stating: “The reason the OOS>24 and SA>48 metric thresholds were originally set at 20%, rather than 0%, is to recognize that there are circumstances such as no-access to customer premises, that will cause not every repair to be cleared within the mandated windows. The company has not offered any to reason treat no-access situations differently than they have always been treated. To the extent that “no-access” has already been factored into the 20% thresholds, excluding them now without adjusting the thresholds would skew the results in a manner that would make it easier for a company to achieve the threshold without any actual improvement to the company’s performance.”

Accordingly, while all of Verizon’s proposals are on the table, Commission Staff is only lending its support to the situation where the customer requests an appointment outside the 24 or 48 hour window, presumably due to the availability of wireless phones. This position ignores the fact that accessing emergency services through 911 does not work the same for wireless phones as it does for Verizon, if it works at all. PULP understands Commission Staff’s concerns with the other points raised by Verizon and is, therefore, not inclined to support altering the Uniform Measurement Guidelines at this time, other than making them applicable to all telephone service providers (including wireless and the voice services offered by the cable companies). The current arrangement unfairly skews the marketplace because these standards only apply to half of the players.

Comments are due by March 23rd.

Lou Manuta

On a PACE to a Greener Future? Are Property Assessed Clean Energy Bonds the Solution to Weatherization and Green Jobs?

In November 2009, the New York State Legislature approved enabling legislation permitting municipalities to create their own programs to finance the installation of renewable energy systems and energy efficiency improvements using Property Assessed Clean Energy (“PACE”) bonds. Through PACE, upfront costs for cost effective energy improvements would no longer be a barrier because property owners can pay for the improvements over 15 or 20 years, at a fixed interest rate, through an assessment on their property tax bill. Over a dozen states have passed enabling legislation similar to New York's.

The New York Law (Chapter 497) refers to “window and door replacement, lighting, caulking, weatherstripping, air sealing, insulation, and heating and cooling system upgrades” as acceptable renovation and retrofitting measures. Proponents claim that PACE bonds will assist municipalities in achieving statewide energy efficiency and renewable energy goals, reduce greenhouse emissions, advance a clean energy economy, save residents money on their energy usage, and create “green” jobs – all without raising state and local taxes .

The money to pay for the energy efficiency measures comes from federal grants or federal credit support. So far, the only amounts set aside for PACE have been through the Energy Efficiency and Conservation Block Grant program, which brought $175 million to NY through the American Recovery and Reinvestment Act (“ARRA”) in April 2009. While this money can be used for a variety of energy programs in addition to PACE, the municipalities which have been granted access to the money include: Albany, Binghamton, Brookhaven, Buffalo, NYC, Niagara Falls, Poughkeepsie, Rochester, Schenectady, Syracuse, Troy, Utica, White Plains, and Yonkers. Additional money will be made available in the climate change bill, currently pending in Congress, as well as an additional $75 million from the not-yet-allocated ARRA “retrofit ramp-up program”. The Town of Babylon, on Long Island, has come up with a creative way to kick off its PACE program – tap into Babylon’s more than $25 million solid-waste reserve fund.

Congressman Steve Israel has introduced a bill, HR 3836, which would require the federal Department of Energy’s indirect loan guarantee program to provide 100% guarantees for PACE bonds. According to Rep. Israel: “PACE bonds are an innovative way to help property owners across America ‘go green.’ With a little help to finance energy efficient retrofits, property owners reap an immediate savings on their monthly energy bills.”

In February 2010, the Albany County Legislature took advantage of the state’s legislation and approved its own PACE grant program. The steps to implement the program will now be designed by the County Executive.

In a short period of time, PACE bonds have become a popular vehicle for achieving energy conservation, weatherization, and green jobs. Former President Clinton has included PACE as part of his Clinton Global Initiative. The biggest challenge to PACE’s success may be sufficient, steady funding to ensure it makes a significant impact.

On the other hand, there could be implementation problems too. According to a just-released report by the Department of Energy's Inspector General, only 280 of the 45,400 housing units scheduled to be weatherized in New York with non-PACE weatherization funding from the ARRA stimulus package were completed as of December, which is a completion ratio of only 0.62%.

On top of this, with better energy efficiency measures being developed all the time, will a prospective home purchaser want to incur the additional property tax assessment for an “improvement” by the current owner which was state-of-the-art 10 years ago, but is considered woefully inadequate today? Also, will homeowners embrace PACE when the PACE assessment creates a lien on the property?

Lou Manuta

PSC and DHCR Stonewalling on FOIL Requests Regarding Conversion of Electrically Heated Oceangate Project to Submetering

Incomplete Information from PSC
The North Bay Tenants Association filed a petition in January 2010 with the New York Public Service Commission seeking to halt the conversion of the premises from master metering of electricity to submetering. The premises, a former Mitchell-Lama project owned by a Starrett company, are electrically heated.

The online PSC file for PSC Case 06-E-0847 contains the March 8, 2007 PSC Order "So Ordering" a PSC Staff Recommendation to approve the application. A FOIL request yielded only the owner's July 12, 2006 letter petition from Herbert E. Hirschfield on behalf of the owner. This was obviously incomplete. The first sentence of the PSC Order approving the petition refers to a second document submitted by Hirschfield dated December 1, 2006.

By letters dated July 12 and December 1, 2006, Herbert E. Hirschfeld, P.E. (Applicant), on behalf of Oceangate Associates, LP (Oceangate Associates), requested permission to submeter electricity to residential tenants at Oceangate....

Hirschfield's petition for permission to submeter clearly indicates that Starrett informed PSC Staff of its plan to submeter electric heat:

Apartment heating is provided by electric baseboards and domestic hot water is provided by burning natural gas in hot water heaters located in each building utility room. Cooking is provided by gas supplied by Keyspan. Apartment cooling is by individual through the wall-mounted air conditioning units.

The PSC Staff Recommendation did not address the impact upon tenants of shifting to them the cost of baseboard electric heat. The only mention of heat in the PSC Staff Recommendation is oblique, contained in a parenthetic description of the Con Edison bulk rate suggesting that submetering would be less expensive than if the building were converted to direct metered service from Con Edison:

According to the Applicant, the buildings will be billed at Con Edison's bulk electric SC-12 (Multiple Dwelling Space Heating) rate which will be less expensive than the SC-7 rate for directly metered service (Residential and Religious – Heating).

In the Roosevelt Island case and the Yonkers Riverview II case the Commission reconsidered its prior orders allowing submetering, in part because the Commission was unaware that the premises proposed to be submetered were electrically heated and was unapprised of the consequences, especially for lower income tenants. In the Oceangate case, the PSC Staff Recommendation that was "so ordered" by the Commission skated around the fact that it has many low-income tenants, even though the owner had mentioned in the application that Oceangate "contains a total of 542 apartments, all occupied by subsidized residents....

No Information from DHCR
In November 2009, Starrett filed a request with DHCR for "confirmation" of submetering, alluding to

• a DHCR "utility allowance schedule submetering electric,"
• a "DHCR utility Allowance for 2010 for the project including a factor for electric heat,"
  
• "DHCR has the information for utility consumption for the entire project submitted as part of its annual audited financial statements provided to DHCR on an annual basis, and submitted as part of its BRD process,"
• "rental adjustments for submetering," and
• other items.
  

As counsel to North Bay Tenants Association, PULP made a FOIL request to DHCR for documents on December 23, 2009, related to these and other items mentioned by Starrett in its letter to DHCR.

DHCR did not respond to the FOIL request.


Update
73 days after the FOIA request was made, and after a reminder, DHCR acknowledged receipt of the FOIA request in in a March 8, 2010 letter (received March 12) saying the agency will respond in 20 days.

NY PSC Allows Owners to Give Defective Notice, Thwarting Tenant Participation in Conversions to Submetering of Electricity

In numerous cases involving submetering, tenants learn far too late that the New York PSC approved a plan for submetering that will increase their economic burdens despite good faith efforts to conserve electricity usage in their apartments. Under the PSC submetering regulations, a landlord seeking to convert from master metered electricity to a submetering system seemingly is required to notify tenants of the opportunity to comment to the PSC on the merits of the application, before the PSC acts on it. The official regulations of the PSC, 16 NYCRR Part 96, provide:

(a) No utility shall provide service to a customer engaged in the submetering, remetering or resale of electric service provided to residential premises, except as provided in subdivisions (b)-(j) of this section.

(b) Master-metered residential rental units owned or operated by private or government entities. Submetering as a substitute for master-metering of private or government entities providing electric service to residential rental units shall be permitted upon application by the prospective submeterer to the commission, which application shall contain the following:

1. a statement substantiating the economic advantages of submetering over direct utility metering;
2. a description of the type of submetering system to be installed and a validation of its reliability and accuracy;
3. the method and basis for calculating rates to tenants, which shall include a maximum rate provision (rate cap) preventing charges to tenants from exceeding the utility's tariffed residential rate for direct metered service to such tenants;
4. complaint procedures and tenant protections consistent with the Home Energy Fair Practices Act (Public Service Law, sections 31-50; 16 NYCRR Parts 11 and 12);
5. a procedure for notifying in writing all tenants of the proposal to submeter. The notification shall include a summary of the information provided to the commission under paragraphs (1) through (4) of this subdivision and an invitation to comment to the commission. The notification shall prominently display the address and telephone number of the nearest commission consumer services division office;
6. a demonstration that an enforcement mechanism is available to the tenants to ensure that their rights are protected under the law (for government entities, the entity or another government agency may enforce the submetering provisions);
7. certification that the method of rate calculation, the rate cap, complaint procedures, tenant protections and the enforcement mechanism shall be incorporated in plain language into all leases governing submetered premises; and
8. a description of an appropriate rent reduction formula that accurately reflects the applicant's overall reduction in his total electric costs resulting from conversion to submetering.

Although it might appear to a reader of the regulation that the PSC submetering regime invites tenant participation and that tenants are heard before action is taken on a submetering proposal that affects their monthly bills, in practice the "invitation to comment" is nothing more than meaningless window dressing to make it seem the PSC's one-sided submetering regime favoring landlords is fair and balanced when it is not.

In none of the numerous cases we have seen has the owner actually provided notice to the tenants containing an "invitation to comment to the commission."

For example, in the Oceangate case, the owner only notified tenants that

If you require any additional information from PSC, you may write to: New York State Public Services Commission, 90 Church Street, New York, NY I 0007-2919, Or you may call: 1-800-342-3377

That is no "invitation to comment." The address for making comments to the Commission is the PSC Secretary's office in Albany, not the New York City branch office; the telephone number given by the Starrett for tenants to call is the consumer complaint line of the PSC's Office of Consumer Services.

In 2003, the Commission issued an order considering a similar failure of a landlord to notify tenants of any "invitation to comment" on the landlord's application for waiver of the prohibition against submetering. The landlord simply gave the contact information for the Commission office under part (5) above, but omitted notice of any "invitation to comment to the commission."

The Commission allowed the landlord to disregard the "invitation to comment" provision, stating:

While the KSLM owners' December 1st notification (with a copy of the May 19, 2003 letter attached) did not specifically state that the tenants should contact us to comment, the notification letter substantially complied with the provisions of 16 NYCRR §96.2(b)(5). The notice contained the address and phone number of our nearest office, which complies with the intent of the regulations. Further information could have been obtained by contacting our office.

Thus, the provision in the PSC regulation for landlords to invite tenant participation and comment to the Commission on a submetering conversion proposal before it is acted upon is hollow. It is unenforced and is disregarded by owners. Noncompliance with the invitation to comment provision is routinely approved by PSC Staff in their review of submetering applications. Significantly, the PSC "sample notice" for owners to give tenants when they propose submetering does not contain any mention of an "invitation to comment" to the Commission on the merits of the application before it is acted upon.

Indeed, in yet another case where tenants did not receive notice of the right to comment to the Commission prior to its action, and they only got the PSC "contact" information a few days before the end of the SAPA notice period, they did contact the PSC for "further information," as the 2003 order suggests is a substitute for an actual invitation to comment. Weeks after their request for a copy of the owner's application , PSC Staff finally mailed the tenants a copy of the owner's application to submeter, the day after it was approved by the Commission.

In some situations where the lack of notice to allow effective participation by tenants before a decision is made has been pointed out, the Commission prescribes a dose of energy education as a palliative ostensibly to relieve the pain.

The so-called "energy education" about submetering provided to tenants by owners and NYSERDA, however, is often highly misleading and actually discourages tenant participation in regulatory proceedings regarding a conversion to submetering. The "energy education" typically lacks any meaningful information regarding the actual or expected financial impact, i.e., what the charges will be and what the rent adjustments will be.

Rather, the NYSERDA funded and owner sponsored "energy education" seems designed to mollify tenant concern and interest by giving the false impression that only a few energy wasters will suffer. For example, at a presentation arranged by the owner for Oceangate tenants, a NYSERDA official blamed high electricity consumption on tenants:

"25% of the people in MM [master Metered] buildings use 50% the electricity. They are electricity hogs****

ln NYS average electricity use is 500 kwhs/month. You used to use 2.5 times the average

After spend¡ng $2.4M for windows, lights, heat controllers, refrigerators you should save 1,483,9L5 kWh, or $276,227 per year, or $509 per year per apartment, or $42 per month. That's an 18% savings using technology. Now you are using 1001 kWh per month. But you can do more. Studies of submetering indicate that you will save an additional 20% with submeters, if you want to.

I use 220 kWhs per month

But the good news is that most of you do use less than the average, so most of you will save money

We seriously doubt that the NYSERDA energy educator, who brags about "30 years of energy and environmental engineering" and personally using only "220 kWhs per month," pays for baseboard electric resistance heat with crude control knobs and no room thermostats. Indeed, there is no mention of heat in his "energy education" presentation notes.

And just who are the "25% of the people" who allegedly are "electricity hogs" using more electricity than average? Are they elderly or disabled persons with circulatory problems who need more heat? Are they those with respiratory diseases who need more air conditioning? Are they homebound most of the day? Are they large households with more rooms to heat? Are they large families that use more electricity for cooking and laundry? The NYSERDA energy expert does not say. Where is the unbiased and peer reviewed energy research?

The NYSERDA funded submetering project at Oceangate was based on an unscientific and unreliable audit estimate of 25% energy usage reductions after submetering. NYSERDA and the PSC now assert submetering savings of only 8%. When submetering is implemented, there is usually a very significant mismatch between small DHCR rent reductions and the high bills tenants receive after submetering begins, even for prudent electricity usage. This has the effect of shifting additional financial burdens to tenant households, causing hardship and possible displacement.

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