Thursday, April 01, 2010

As Poverty Continues its Tight Grip on New York State, Utilities Increase Interruptions of Electric and Natural Gas Service to Collect Bills

Poverty in New York State
The 2010 New York State Poverty Report issued March 17th by the New York State Community Action Association shows that the level of poverty is virtually unchanged from last year. Because poverty is defined at the family level and not the household level, the poverty status of a household is determined by the poverty status of the householder. Households are classified as poor when the total income of the householder's family in the last 12 months is below the appropriate poverty threshold. The poverty thresholds vary depending upon three criteria: size of the family, number of children, and, for one- and two- person families, age of the householder.

With a statewide population of 19,428,881, 2,603,930 New Yorkers lived in poverty during 2009, representing 13.8% of the population. On a county-wide basis, the percent of the population in poverty ranges widely, from 4.6% in Nassau County to 27.8% in the Bronx, with 6.4% of children in Saratoga Springs living in poverty and 47.7% of children in Utica living in poverty. These statistics are virtually unchanged from last year.

These poverty statistics do not track the state’s unemployment numbers, which tend to follow economic conditions and trends. For example, the NYS Department of Labor reported an employment rate in 2006 and 2007 in the mid-four percent range. This increased to 5.3% in 2008 and jumped to 8.4% in 2009. So far for 2010, unemployment is holding steady at just over 9% . While the poverty statistics were virtually unchanged in 2008 and 2009, the state did experience a surge in unemployment, as did the rest of the nation. What this means is that poverty statistics for 2010 may trend worse than 2009.

Utility Service Interruptions Increasing
With a significant percentage of the state’s population not being able to make ends meet, we checked to see whether the number of utility service interruptions performed as a bill collection measure increased in 2009. To get the data, PULP made a Freedom of Information Law (“FOIL”) request to the New York State Public Service Commission (“PSC”) in order to receive 2009 termination data from the state's nine major investor-owned electric and natural gas utilities (Central Hudson, Con Edison , KeySpan Energy Delivery Long Island, KeySpan Energy Delivery New York, National Fuel Gas, National Grid, New York State Electric & Gas, Orange & Rockland, and Rochester Gas & Electric). It is unclear why the service interruption data is not made publicly available by the PSC on a regular basis. The termination statistics should be posted on the PSC’s webpage, along with the complaint statistics, which are made available.

The termination statistics are devastating.

According to the materials received by PULP from its FOIL request, in 2006, utility service to 237,401 customer households was interrupted for bill collection purposes by the nine utilities. This number grew to 249,401 in 2007, 310,369 in 2008, and 329,650 in 2009. In total, service was interrupted deliberately for over 1.1 million customer households across the state since 2006. While this figure would include some households terminated on more than one occasion, it can not be denied that this is a significant figure. According to the US Census Bureau, there were just under eight million households in New York State on July 1, 2008. Accordingly, a fair estimate is that utility service was interrupted to about 12.5% of the state's households in the past four years for non-payment, slightly less than the state’s poverty rate.

With an average household size of 2.65 persons, deliberate utility service interruptions for bill collection purposes affected nearly three million New Yorkers in the past four years.
Service interruption creates severe hardship and disruption of ordinary family life. These service interruptions create havoc in the lives of the poor and increase the risk of tragic events when people resort to less safe solutions to meet their energy needs. See Candle Fires: A Symptom of "Rolling Blackouts" Affecting Low Income Households, PULP Network, September 5, 2006; No Electricity: Middletown Residents in Critical Condition from Lantern Fire, PULP Network, October 19, 2008.

Notwithstanding the New York PSC's PR efforts, the service interruption statistics indicate how poorly the utilities and their regulator, the PSC, are doing to fulfill the policy declared in state law (HEFPA) that continuous residential electric service is in the public health, welfare and public interest of all the people of the state. It appears from the statistics that while utilities are easing up on service interruptions to collect bills in cold weather, they are adopting much harsher measures to make massive use of service termination in Springtime. In the coming months we may again see huge wave of service interruptions, greenlighted by the PSC.
  • What is the PSC doing to reduce the number of service interruptions?
  • Has the PSC Hotline, which can head off terminations by directing utilities to continue service in appropriate cases, been adequately publicized to customers?
  • Has the Hotline staff and function been eroded to the point that it acquiesces too often to the rigid demands of utilities for payment amounts far beyond the reach of customers trying to maintain service?
  • How many terminations were greenlighted by the PSC Hotline?
  • How many of the New York households affected by service interruption were qualified to receive continued service under various HEFPA protections?
  • Could service have been continued with a Home Energy Assistance Program grant or a grant or loan under Section 131-s of the Social Services Law, to assist in the payment of their utility bills?
  • How well did the utility perform in referring needy customers to assistance programs?
  • How many of the terminated households qualified for low income gas or electric rates, or Lifeline discount telephone service, but do not participate?
  • Would improvement of typically inadequate utility low income rates alleviate the termination epidemic?
Interestingly, while the New York PSC keeps its embarrassing service interruption data out of sight and its press release issued today touts its consumer protection activities, the California PUC recently commenced a public proceeding to inquire into the rising use of service termination as a utility bill collection mechanism:
The economic crisis currently existing in California and a recent increase in utility service disconnections has led us to reexamine utility disconnection rules and practices. We want to identify more effective ways for the utilities to work with their customers and develop solutions that avoid unnecessary disconnections without placing an undue cost burden on other customers.
See California PUC webpage on Residential Customer Disconnections.

The rising use of service interruption as a bill collection tactic could be addressed by the PSC in setting service standards for utilities under its "performance regulation" regime. Under this trendy label, the PSC basically follows a laissez faire approach to utility regulation, allowing utilities mainly to do whatever they want, coupled with a few service quality measurements and standards, violation of which may result in trivial financial consequences to the utilities. The PSC has no benchmark or rule to deter increasingly rigid call center collection scripts coupled with utility service interruption as cheaper tactics to collect overdue bills.

The values of continuous service, rates affordable to the poor, enforcement of HEFPA, sound customer assistance programs, and effective regulatory policies to discourage unnecessary service interruption are being sacrificed at the New York PSC for short term utility cost-cutting, without sufficient attention to the social cost of massive customer service interruptions and the importance to society of continuous, universal utility service.

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