Thursday, October 18, 2012

PSC Urged to Further Revise Proposed Submetering Regulations

The Public Service Commission is considering revisions to its regulations regarding residential submetering.  Generally prohibited since 1950, the PSC through a series of orders beginning in 1976 revived the practice in the name of encouraging efficient use of energy by tenants in older master metered buildings.  The latest version of proposed submetering regulations is here.

The current draft of regulations has been circulated for public comments.  Numerous commenters, including PULP, are urging the Commission to further revise the draft rules.

Submetering, long fraught with landlord/tenant tensions, emerged as a hot issue in recent years, when former Mitchell Lama buildings, some of them electrically heated, were submetered.   During the 1990's, the Division of Homes and Community Renewal adopted rent reduction guidelines based on the assumptions that the cost of submetered electricity would be 20% less than the cost of individual direct service and  that the usage would drop 20% when tenants became directly responsible for usage in their apartments.  Neither assumption is correct, and so a serious mismatch exists between small rent reductions and the new electric bills faced by tenants.  For tenants living on fixed incomes, the difference can be enough to cause hardship or even eventual displacement, when landlords attempt to evict them for nonpayment of utility charges.  The former Mitchell-Lama buildings typically still have commitments, sometimes under HUD rules, to continue Section 8 participation for current tenants, with these obligations dropping off when tenants vacate.  If tenants are displaced through submetering, owners may be able to re-rent their apartments at prevailing market rents.

Many of the buildings being submetered have poor insulation and old appliances provided by landlords which are not energy efficient.  Submetering shifts these costs to tenants who often have little power to address the inefficiencies of poorly insulated and weatherized structures and inefficient older major appliances.

Under the proposed PSC regulations, landlords would be allowed to mark up their bulk rate cost of electricity to the cost of individual direct residential service.  It is unclear how the new regulation would affect old orders which reflect an owner's promise not to mark up the charges for electric service.

The new regulations still do not require landlords to provide timely and adequate prior notice to tenants of the  actual commencement of a proceeding at the PSC considering a shift of a building and its tenants to submetering, which affects the tenants' leases and property interests.  Instead, the PSC draft regulations still allow owners to provide a vague notice of intent to submeter, and a 2 month notice before submetering is actually implemented, with a 5 year gap allowed between the date of an order allowing submetering and  actual implementation.  In prior cases, the PSC has allowed landlords to provide late notice of the intent to submeter, and has not required prior notice to tenants of the actual commencement of the proceeding.

For many years, newer buildings have been required to be equipped for direct utility metering of individual tenant dwellings.  If adopted, the latest revision of the proposed regulations would allow submetering in new buildings.

The comments on the regulations are here.


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