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.