Happy New Year for Con Edison: News Year's Eve Proposal Would Continue High Rates if Approved by PSC

Con Edison filed new rates last year with data regarding a one year case, and the PSC suspended implementation of new rates until they could be reviewed.  Department of Public Service (DPS) Staff and other parties filed testimony regarding the filed one-year rate proposal, cross examination of witnesses was conducted over several weeks, and parties submitted post-hearing briefs to the presiding expert Administrative Law Judges.  A public Recommended Decision of the Judges was not issued, and instead the case went into extended secret multiparty negotiations.

The outcome of those negotiations was revealed in a non unanimous "Joint Proposal" for resolution of the Con Edison gas and electric cases filed this afternoon, New Year's Eve.  See CON EDISON RATE PACT TO BE UNVEILED ON LAST DAY OF BLOOMBERG ADMINISTRATION.

The proposed deal would continue Con Edison's high rates. It is not supported by any independent advocate for residential customers.

The Project opposes the settlement and will urge the PSC to reject it.  The PSC Secretary today scheduled an evidentiary hearing to review the proposal for January 14, 2013.

The Joint Proposal of Con Edison and  parties who joined in it recommend approval by the PSC of  a 2 year electric rate deal with a $76 million reduction in Year 1.  Though on the face of the proposal bills could be reduced, the $76 million "reduction" for Year 1 is phantom, and would be held by Con Ed to defray a putative increase in Year 2.

The gas case would be settled in a 3 year deal, with a $54 million decrease in Year 1 again not used to reduce rates, but would be held by Con Edison for use to defray putative future increases in Years 2 and 3.

Rates are basically set to allow an investor-owned utility to recover its reasonable costs of operation, based on a forward looking budget of income and expenses, and a fair return on its investors' capital, i.e., the "Return on Equity."

DPS Staff testified at hearings held before negotiations began that using established PSC approved methodology, the Return on Equity (ROE) for Con Edison should be 8.7%.

The settlement allows a 9.2% ROE for electric and 9.3% for gas.

These upward ROE adjustments in the allowed profit on investment come at a very high cost to consumers.  In addition, the deal would allow  Con Edison to keep all excess earnings above the ROE up to 9.8% before even beginning to "share" any excess profits with customers.  Also, some revenue is not counted when calculating the amount to be "shared."

 It appears this will allow Con Edison to continue to earn more than a reasonable return on shareholder investments while perpetuating the nation's highest rates. There is no adequate explanation in the Joint Proposal for the capitulation by DPS Staff in allowing the higher ROE and the "dead band" above it.

Customers are hundreds of millions of dollars behind in paying Con Edison's high bills. Hundreds of thousands of Con Edison customers are threatened with shutoff every month.  Approximately 80,000  customers are shut off each year for bill collection purposes, sometimes with disastrous consequences when households resort to less safe energy sources.

Large numbers of Con Edison customers are facing hardship from its high rates, and will continue to face hardship if rates remain "frozen" at their current high level.  Modest improvements in low income programs contained in the Joint Proposal do not come close to meeting the need for more robust customer assistance programs, measures to make bills more affordable for the poor, and measures to reduce reliance on bill termination for bill collection purposes.  The continuation of existing customer service performance standards and incentives, agreed to by the utility in the Joint Proposal, do not measure and incent performance related to keeping service on for the poor.

The Joint Proposal would give Con Edison more money than necessary, because it would end Con Edison's "austerity" program and would have customers pay for additional management bonuses.

The Joint Proposal is being styled as a rate "freeze" but in fact bills can go up a lot.  The Joint Proposal will allow rate changes without notice for dozens of adjustments which could significantly increase customer bills.  These automatic adjustments allow Con Edison to shift its major business risks to customers. The deal would allow Con Edison to have the same revenue whether or not there are major outages, and will guarantee that customers will pay all expenses for major storm outage costs.  which is another reason why the settlement ROE is too high and should be lowered.

New York consumers are suffering and deserve relief from Con Edison rates.The Governor has asked the PSC to lower Con Edison rates  if feasible. It is feasible to lower rates and to begin a reversal of the record-setting trend of high Con Edison bills.  The PSC should reduce the ROE, continue austerity measures, disallow expenses for management bonues, and adopt a one year plan with lower rates.  The year should be used by the PSC to prepare for fdeeper scrutiny of any future request for increases.

The Joint Proposal filed today again illustrates why the Governor should implement the Moreland Commission recommendation for a well funded independent residential utility consumer advocate office.

Gerald A. Norlander


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Con Edison: PSC Will Back Our Illegal Practice of Shutoffs for Bills of Deceased Customers Instead of Opening Accounts for Household Members

One of the basic precepts of the Home Energy Fair Practices Act, enacted in 1981, was to end the practice of denying service to applicants to collect the debts of former customers.  The law clearly requires the prompt provision of service to applicants who owe no arrears for service provided to a prior account in his or her name.   The right to service upon request is a personal right that cannot be affected by the debts of others to the utility.   The bill of a deceased customer is collectible from that customer's estate, because the contract for service ends with death, through conventional measures available to creditors.  Service denial or shutoff to household members to collect the decedent's debt is not an option.  This is because the legislature declared in Public Service Law Section 30 that the continued provision of service is in the public interest and necessary for health and welfare.

Contrary to these principles, Con Edison threatens shutoff of service to surviving household members when a customer dies, instead of closing the account and opening a new one for another household member. 

Con Edison sends more than 200,000 termination notices each month, and interrupts service to more than 6,000 customer a month as a bill collection measure.  This increases the risk to life and property when people without utility service resort to less safe energy sources. See    Candle Fires: A Symptom of "Rolling Blackouts" Affecting Low Income Households.  In a recent instance, service apparently was shut off to a low-income household eligible for public assistance, the mother obtained the assistance, but the fire from candles used for light occurred before service was reconnected. See Fire Kills 3 Boys After Con Ed Shut Power Off to Collect Unpaid Bill and Mom Used Candles, October 26, 2013. While it is only conjecture, the practice of shutting service off to collect debts to a deceased customer might have been involved in the October situation where three children died due to a candle fire.  A news report said the bills had been in their grandmother's name. There could be other scenarios, but it may be that the grandmother had died, and they shut off the mother for not paying the grandmother's bills instead of opening a new account.  It is rumored that investigation of that situation is being conducted by the PSC's Office of Consumer Services -- the same office that has winked for years at the practice of shutting service off to collect arrears of deceased customers rather than opening new accounts for other household members.   In the past, the PSC's Office of Consumer Services Staff received its training from a utility on an incorrect interpretation of what HEFPA requires.


In the pending Con Edison rate case, the Utility Project is urging more scrutiny of termination practices, reduced reliance on termination as a bill collection measure, and improved assistance to low income customers. PULP Files Testimony in Con Edison Rate Case, Seeking Improved Low Income Rates, Reduced Service Interruption to Collect Bills, Improved Storm Cost Recovery Measures.

In response, Con Edison witnesses contend it shuts service off only as a "last resort."  Hearings will be held in the case on January 13, 2014.

PULP is requesting admissions that Con Edison has a practice of threatening shutoff of service to households where the customer has died to collect debts of the customer instead of opening a new account for a new customer in the household.  In a recent instance, where shutoff was threatened after a customer died, the applicant for service was told it would be a waste of time to complain  to the PSC -- which has the duty to adjudicate customer complaints under Public Service Law 43.2 -- because the PSC inevitably will back the utility:

Pursuant to New York Public Service Commission ("Commission") regulation 16 N.Y.C.R.R. §5.5, the Public Utility Law Project of New York, Inc. requests Con Edison within 10 days to respond to these requests for admission, for purposes of this proceeding only, of the genuineness of the attached documents and the truth of the following statements:

3. A genuine copy of section 31 of the public service law regarding the obligation to provide service to applicants and notice of denial is attached as attachment A. 

4. A genuine copy of section 11.3 of the public service commission regulations regarding the obligation to provide service to applicants and notice of denial is attached as attachment B.

5. A genuine copy of Con Edison’s response to PULP Interrogatory Number 83 in this proceeding, regarding provision of service to applicants where a deceased relative has outstanding unpaid charges, dated May 4, 2013, is attached as Attachment C.

6. In PULP Interrogatory 83, Con Edison was asked:
When a customer dies owing money to Con Edison and a relative provides proof of the customer's death and requests service in his or her name, and the relative seeking service does not owe Con Edison for service to a prior account in his or her name, is it a practice or policy of Con Edison to deny service to the applicant unless the applicant pays or makes arrangements to pay the debt owed by the deceased customer?  (Emphasis added) 

7. In its answer to PULP Interrogatory Number 83, Con Edison stated:
No.  Con Edison does not deny service to an applicant under such circumstances.  In such cases, the account is closed as of the date on the Death certificate and the representative asks for the address that the final bill should be sent to. 

7.1  A genuine copy of Con Edison’s Response to PULP Interrogatory #83 is attached as Attachment C. 

8. Con Edison witnesses on its Customer Operations Panel testified at page 59 of its prefiled rebuttal testimony, at line 7-8, in opposition to  Utility Project’s proposals for reducing reliance on service termination as a bill collection measure, that “Discontinuing service remains a last resort for the Company.”  

9. In ************, 2013 the residential customer with Con Edison account number **************  died with arrears on his account, some of which had been disputed. 

10. Con Edison representatives attempted to collect the arrears owed by the deceased customer with account number **************** from the customer’s spouse, threatening termination of service if $200 is not paid on an installment plan by December 20, 2013. The surviving spouse’ request for a copy of any written deferred payment agreement was refused. 

11. The surviving spouse of the deceased customer with account number ************ does not owe Con Edison any money from any prior account in her name. She and two children are facing very difficult financial circumstances with the reduction of household income due to her husband’s death. 

12. After receiving the shutoff threats, the spouse of the deceased customer with account number ************* went to Con Edison walk-in office at 1 Metrotech Center, Brooklyn with her spouse’s death certificate and papers to discuss the situation and establish service in her name.   

13. Con Edison was required by Commission Order to maintain customer service walk-in centers where customers and applicants of service could do business with the utility in person- Joint Petition of the Public Utility Law Project of New York, Inc., Local 1-2 of the Utility Workers of America, A.F.L.-C.I.O., and Save Our Services for a Commission Order that Consolidated Edison Company of New York, Inc. Cease Closing Customer Service Offices and Re-Open Customer Service Offices Already Closed. ORDER APPROVING JOINT PROPOSAL (Issued and Effective March 27, 2001).

13.1 The Order states:
Each Walk-in Center will have sufficient staffing and resources to allow customers to transact any and all normal business with the company promptly and efficiently.  Customers will be able to speak with the Con Edison representative in person.  The centers will have bilingual representative as required by the community served....
The same level of service formerly provided by the Customer Service Centers will continue to be provided at the Walk-in Centers, and customers will be able to place service orders, discuss billing disputes, negotiate payment arrangements, make bill payments, and transact other business in the same manner as they always have.

14. Con Edison in its last compliance progress report filed November 17, 2003 in Case 99-M-0851 stated that “four customer service professionals” would staff its 1 Metrotech Center location. 

15. Con Edison has not petitioned the Commission for relief or to modify the Order in Case 99-M-0851 requiring on-site customer assistance staff at its walk-in service centers.

16. The customer service center at 1 Metrotech Center, Brooklyn had no worker there to assist the applicant for service who is the spouse of the deceased customer with account number ************, and she was referred to a house telephone in the lobby. 

16.1 When she used the phone she spoke to an representative who threatened her with service termination if she did not pay the bills of her deceased spouse.

16.2   The Con Edison representative did not close the account of the deceased customer and open a new account as indicated in Con Edison’s answer to PULP IR 83.

16.3   The representative’s last name was ***************** (sp).

17. The spouse of the deceased customer with account number *-************* called Con Edison again to request service to an account in her name.  

17.1  She did not receive assistance from Con Edison in establishing an account for service in her name. 

17.2  She was told, in substance, that she could not apply for service until she had paid the arrears on her deceased spouse’s account.  

17.3 Her request for any payment plan that her deceased spouse had signed was denied.

17.4 She said she was going to contact the Department of Public Service, and was told by the Con Edison representative, in substance, not to bother, that it would be a waste of her time to call  the PSC’s Office of Consumer Services, because they would do nothing and would support the position of Con Edison and that if she did not pay the amount demanded, her service will be terminated.

17.5 The customer was not provided notice of the factual and legal basis for the denial of service. 

18.   Con Edison routinely records and transcribes conversations between its customer service representatives and applicants for service. 

18.1 The conversations summarized above were recorded and can be transcribed. 

19. The spouse of the deceased customer with account number ************ called the Department of Public Service Office of Consumer Services on December 16, 2013 and spoke to someone named ********** (sp) who would not give his last name and  did not take a complaint or take steps to address the continued provision of service, but suggested she might send an online complaint to the PSC. 

20. The Public Service Commission has never commenced a penalty proceeding against Con Edison for failing to comply with the Home Energy Fair Practices Act (HEFPA).

21. None of the customer service performance metrics in the current rate plan measure compliance with HEFPA, including

.1 meeting time limits for provision of service,
.2  timely provision of denial notices,
.3 payment to customers of amounts due them for untimely provision or reconnection of service
.4 timely reconnections after payments sufficient to restore service are made,
.5 accepting proof of identity through means other than Social Security numbers,
.6 forbearing from termination of customers with serious medical conditions that would be worsened by termination,
.7 termination of service for breach of “oral” deferred payment agreements, or
.8 the duty to proffer written deferred payment agreements prior to termination.

22. Con Edison’s answer to PULP’s Interrogatory No. 83 is false.  

22.1 Con Edison does have a practice or policy to deny service to an applicant unless the applicant pays or makes arrangements to pay the debt owed by a deceased customer.

The PSCs "performance regulation" style gives strong incentives to utilities to cut costs, so it may be economic for utilities to breach the customer protection rules when it is profitable to do so.The customer service performance standards used by the PSC (which are voluntarily agreed upon by utilities) do not measure compliance with HEFPA's consumer protection requirements, and enforcement occurs only rarely, with no financial sanction.  

Gerald A. Norlander
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Union and Utility Project Oppose KeySpan Proposal to Reduce Walk-in Gas Customer Service at Eight Long Island Offices and to Relocate Call Center to Brooklyn

KeysPan East Gas Corporation has filed a proposal with the PSC seeking to eliminate all customer service assistance (except for taking payments) at eight of its eleven long island customer assistance offices. In an update, the utility says it will put a courtesy phone in  8 centers linked to their call center, which they also propose to relocate, from Melville to Brooklyn.  The remaining 3 offices would have full service for 2 years, after that, no commitment is made. The 8 centers have provided about 43% of the walk-in services.

In addition to making payments at the utility offices, customers make written applications in situations for service where that can be required, negotiate repayment agreements to avoid imminent termination, and lodge customer service inquiries and complaints.

The utility union, the International Brotherhood of Electrical Workers, Local Union 1049, and New York's Utility Project have intervened in the case at the PSC to oppose the proposals. 

The PSC case is Case No. 13-G-0371, KeySpan Gas East Corporation d/b/a National Grid Customer Service Transition Update and Notice of Intent to Relocate Call Center                                                         

Section 65(13) of the Public Service Law requires the PSC to provide notice and a hearing on any relocation of customer assistance services or any relocation of a customer service call center prior to acting on a request:

 13.  (a)  Every  gas  corporation  or  electric corporation furnishing  utility services  shall  provide  the  following  call  center  customer  assistance  receiving  inquiries  on: customer financial responsibility;  receiving requests to initiate or terminate service; receiving  requests for  emergency  services;  determining deposit required or billing rate; receiving meter  and  service  orders  and  access  to  meter  requests; explaining  company rates, regulations, policies, procedures, and common practices; initiating trouble order forms and high bill  investigations; handling  payment  and  other  credit  arrangements  such  as  obtaining deposits,  financial  statements  and  payment  plans;   and   referring customers to social service agencies and other assistance programs.

(b)  No gas or electric corporation shall close a call center or other  facility providing the customer assistance set forth in paragraph (a) of this subdivision or relocate such customer assistance to another area of New York state or outside of New York state without notice  and  hearing   before the commission.  (c)  This  subdivision shall not apply to the collection of debt where by utility company policy such debt is directed to a  collection  agency or similar service companies.

The SAPA Notice issued by the PSC and published in the September 11, 2013 State Register covers only the proposed call center relocation and does not mention the proposed relocation of customer assistance services from the eight offices to the call center.

The Public Service Commission previously issued orders requiring walk-in customer service offices to be maintained by Con Edison, Rochester Gas & Electric (RG&E), and New York State Electric & Gas (NYSEG).

Comments can be filed online with the PSC at 

http://documents.dps.ny.gov/public/MatterManagement/CaseMaster.aspx?MatterCaseNo=13-G-0371&submit=Search+by+Case+Number

Update

On December 11, 2013, International Brotherhood of Electrical Workers, Local Union 1049 filed with the Public Service Commission a Motion for Hearings and Interim Relief .

On December 12, 2013, The PSC put the case on its "consent agenda" for its December 19, 2013 meeting.

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California ALJs Reject Utility Proposal for Pre-Pay Electric Meters with Remote Shutoff, Illustrating Important Role of Utility Consumer Advocates

On November 22, 2013, Administrative Law Judges (ALJs) for the California Public Utilities Commission (CAPUC) issued a Proposed Decision in a San Diego Gas & Electric (SDG&E) case rejecting the utility's proposal to install pre-pay meters as a "pilot" project.

Utility service is typically provided as a credit transaction, in that customer pays after the service is provided.  From time to time proposals are made to reverse that and make poorer customers pay in advance, and pay more.  See Rethinking Pre Paid Utility Service: Customers at Risk.  SDG&E's proposal, couched in benign terms that made it sound like a benefit to customers, would have allowed customers to "choose" to have a pre-pay meter after a shutoff or under threat of denial of essential service for nonpayment of old bills.   Once in the program, a customer's electric service would simply be remotely shut off if the pre-paid money balance ran out.  The utility claimed this was good for consumers because by pre-paying, they: (1) could avoid paying a security deposit; (2) did not have to pay off debt owed for prior service to obtain service or reconnect after a shutoff; and (3) hypothetical energy savings due to assumed closer monitoring of usage as the prepaid amount is used up.  The ALJs in their Proposed Decision at page 51 described how customers would lose service under the utility proposal:

Operationally, as proposed by SDG&E, a participating customer would be disconnected if his or her Prepay account balance drops below zero, and if at least one of the following conditions is met: 1) the customer’s balance has been below zero for four consecutive days; or 2) the customer’s balance is at or below -$20.00. If at least one of the above conditions is met, a remote disconnection would be scheduled for the next business day during normal business hours.

The National Consumer Law Center (NCLC), The Utility Reform Network (TURN), the Center for Accessible Technology and the Greenlining Institute intervened in the case and jointly opposed the "pilot" project.   They argued the "pilot" would be illegal under California law because pre-pay customers would not receive the 15-day advance notice of a termination required by California statute; that service could be shut off during an investigation of a complaint disputing the amount of charges for the pre-paid service; that customers may not receive proper notice of available low-income discount rate programs prior to termination; and that customers might not knowingly waive these rights.

On that last point, we note that under New York law some "voluntary agreements" utility customers are required to make a condition of avoiding shutoff or obtaining utility service may be voidable even if they are "knowingly" made because they are not truly voluntary due to economic duress.  See Fourth Department Finds Payment Agreement Signed Under Duress After Water Service was Shut Off.

Customers with money to obtain regular service would be quite unlikely to sign up for the prepaid service. The ALJs noted an intervenor comment that the SDG&E's proposed "‘prepay program’ is not designed for any customer who is not poor or cash-strapped.”

The California ALJs' Proposed Decision noted that the proposed remote termination process, involving short internet and phone notice to the customer rather than mailed notice, was not tailored to provide adequate notice prior to shutoff:

We also take note of Consumer Groups’ logical inference that, depending on the communications means chosen (e.g., text message, automated phone message, or e-mail), customers on the proposed Prepay Program might receive no advance notice of termination at all since customers who are behind on their electric bills may also behind on their internet or phone bills. We find that such an outcome is unacceptable.

The ALJs also faulted SDG&E because it had "not consulted with likely affected customers as it developed its proposal." In conclusion they flatly rejected the company's proposal for prepaid service with remote shutoffs: "We do not find SDG&E's proposed Prepay Program . . . in the public interest."

The ALJs' Proposed Decision in CPUC docket 11-10-002 is scheduled to be voted on by the full California Public Utilities Commission on December 19, 2013.

Consumer groups who intervened in the California proceeding and submitted testimony and written arguments against the utility's proposal deserve accolades for bringing to bear the facts and arguments that nipped the program in the bud.  It is a reality, however, that full participation in regulatory proceedings takes money, and that without vigorous consumer input, the decisonal process and resolution of issues in "stakeholder" negotiations becomes skewed toward the utilities and business groups who can afford to participate.

To address the need for diverse public participation, California has an Intervenor Compensation program which provides funding to enable non profit groups to intervene in Public Utilities Commission proceedings.  This enables them to hire experts to testify and develop more fully the record upon which regulatory decisions are made.  Current California PUC intervenor compensation rates for attorneys are based in part on what utilities pay their counsel, and range, depending on experience, from $160 per hour to $555 per hour, and for experts, from $135 per hour to $410 per hour.

In contrast, New York, with some of the highest utility rates in the country, which has inadequate low income rate structures, and whose utilities shut service off to approximately 300,000 customers a year who cannot afford it, does not have a functioning system to support sustained independent utility consumer advocacy.

• Though independent, the Utility Project lacks sustained, sufficient funding.  Unless extended, the Project's funding expires March 31, 2014.  
• The legacy NY CPB utility intervention unit now lodged at the Department of State lacks the requisite jurisdiction, independence and budget. 
• A bill to make the UIU more independent passed the Assembly in 2013 but was not passed by the Senate. See Assembly Passes Bill to Protect Overburdened Residential Utility Consumers
• UIU is not utilizing a million dollar a year appropriation of federal disgorgement funds, approved in October 2012, to advocate for consumers in matters affecting wholesale electric rates. 
• A bill to create a New York utility intervenor funding program passed the state Senate in 2010 but was not acted on by the Assembly prior to adjournment.

A 2013 Siena College poll conducted for AARP found strong support for strengthening utility consumer advocacy in New York.  See also, AARP Press Release, Consumer Groups ask NY Leaders for Better Utility Oversight, Stronger Consumer Protections, and More Resources for Independent Utility Consumer Advocacy.    

The June 2013 Final Report of the Governor's Moreland Commission on utilities recommends shoring up the system for ensuring utility consumer advocacy by independent groups at the Publid Service Commission.  See Moreland Commission Recommends Stronger Utility Consumer Advocacy.

Gerald A. Norlander


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Verizon Misses Service Quality Standards, Again

Today the New York Public Service Commission issued a report, received at its November 14 session, indicating that Verizon again missed major service quality targets.  Here is the conclusion of the Third Quarter 2013 Service Quality Report:

The Commission’s approval of Verizon’s revised SQIP in December 2010 established a new reporting paradigm for the company. The revised SQIP was intended to provide focus on repairs for Lifeline customers, special needs customers, or customers who do not have competitive wireline options. It eliminated reporting on certain service quality performance to more closely reflect the realities of competition by moving closer to comparable treatment for competing providers, thereby allowing the market to dictate service quality.
The company’s performance for network reliability, as measured by the companywide CTRR metric, missed the threshold for this metric every month in the third quarter of 2013 and the two-year trend continues to decline. . The company met the Commission’s two timeliness of repair metrics for core customers in each of five geographic areas during each month in the third quarter of this year, with the exception of the OOS>24 threshold being missed in the New York City area in July. The company’s repair service answer bureau missed the threshold for the call center answer time metric every month in the third quarter of 2013, however, the two-year trend is improving. Consumer complaints to the Department were slightly worse during the third quarter of 2013 as compared to one year earlier, despite having lost over 500,000 lines, over that same period. However, the two-year trend shows slight improvement. Staff meets monthly with the company concerning service quality and consumer complaints and will continue to monitor the company’s performance in these regards and report back to the Commission.

In the "Performance Regulation" style for oversight of utilities now in vogue at the Public Service Commission, regulators set a price or revenue limit and purport to measure results, not inputs.  This is thought to encourage the utilities to reduce expenses and keep the added profit from that without reducing their revenues, so long as they provide adequate service.  A failure to meet the criteria can result in financial sanctions.  Critical to this style is that enough of the right things are measured, and that it is not efficient for the utility to breach the standards.  It is becoming obvious that the potential adverse consequences to Verizon for missing the Commission's performance regulation targets are less than the cost of expending the funds and effort to satisfy the standards.

PSC Holds Off on Requiring New Code in the 315 Area Code Region

The New York State Public Service Commission today announced today it is putting on hold plans to create a new area code within the existing 315 area, which serves Syracuse, Utica, and large areas of the north central part of New York State.  The Commission Press Release indicates that a revised number exhaust date allows postponement of the change.  COMMISSION PUTS 315 AREA CODE CHANGES ON HOLD, — Revised Forecast Results in New Area Code Exhaust Date, November 14, 2013.  An order is expected to be issued later with a fuller explanation of the decision.

The revised number exhaust date was issued by Neustar, the North American Numbering Plan Administrator, (NANPA).  A spinoff of Lockheed Martin,

Neustar administrates the North American Numbering Plan, the authoritative directories that manage virtually all telephone area codes and numbers, and enables the routing of calls among thousands of competing Communications Service Providers (CSPs). All telecommunications service providers (TSPs) that offer telecommunications services to the public at large must access the Neustar clearinghouse to properly route virtually all of their customers’ calls. Also, Neustar provides clearinghouse services to emerging CSPs, including Internet service providers (ISPs), mobile network operators, cable television operators, and voice over Internet protocol (VoIP) service providers.

The company created and operates the Number Portability Administration Center (NPAC), which enables US and Canadian consumers to keep their phone number when they switch carriers. Each time a consumer attempts to transfer their number from one phone company to another, Neustar is involved.  In this role, "Neustar manages changes to telephone number routing information when subscribers change service from one local telephone service provider to another and keep their existing telephone number — whether the service is wireline, wireless, voice over IP (VoIP) or cable."

The Utility Project urged the PSC to adopt more aggressive number conservation measures to recover excess numbers stranded in rural areas to obviate the need for a new area code in the 315 region.  With Millions of Phone Numbers Still Unused in 315 Area Code Region, Utility Project Urges PSC Not to Add New Area Code Now, August 8, 2013.

Recent technological advances might make it possible to free up many numbers that are now seemingly tied up in rural areas of the 315 region within only lightly used NXX blocks of 10,000 numbers. For example, someday it may be possible to move a nearly empty and largely redundant NXX exchange from a rural area to an area where it is needed, and then forward or port the few numbers now used back to the rural area without requiring even those few customers to change their numbers.

The Commission previously decided to use a new three-digit overlay code for adding new phone numbers, and would require 10-digit dialing with either the existing 315 prefix or the new one. Today's decision will at least delay the cost and inconvenience of adding a new overlay code, and should give more time to explore more aggressive number conservation and potential reclamation measures.

Gerald A. Norlander


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Fire Kills 3 Boys After Con Ed Shut Power Off to Collect Unpaid Bill and Mom Used Candles

The importance of continued, safe electric service was tragically underscored again last night, when three young Bronx boys, ages 4 months, 2 years, and 5 years died in a fire apparently caused by a candle used for light.  According to a CBS news report,  "Con Edison confirmed that it had shut off power to the apartment due to non-payment. Neighbors said the mother of five who lived in the unit had been using the candles as an alternative to light the apartment. The power had only been off for a few days, Con Ed told CBS 2.

According to ABC News, "The mother had been approved for public assistance, and the lights were due to come back on Saturday."

According to a DNAinfo.com story, "A Con Edison spokesman said the apartment's electric meter had been removed and power shut off on Thursday. The electric bills had totaled $8,700 and had about $500 of late fees tacked on, a landlord told DNAinfo.com. He said the one-bedroom unit was still in Turner's grandmother's name..."

The Utility Project has repeatedly warned that utilities are being allowed by their regulator, the Public Service Commission, to have rates unaffordable to the poor, to reduce customer service to those in need, and to unduly rely on service interruption, as a bill collection tactic, instead of negotiation or assistance in obtaining public aid as a last resort.  See, e.g.,

• As Poverty Continues its Tight Grip on New York State, Utilities Increase Interruptions of Electric and Natural Gas Service to Collect Bills, April 2010,
•  No Electricity: Middletown Residents in Critical Condition from Lantern Fire,  October 19, 2008,
•    Candle Fires: A Symptom of "Rolling Blackouts" Affecting Low Income Households,  September 5, 2006.  
•  The Gas Company as Social Worker; Brooklyn Utility Tries Softer Approach to Pursue Unpaid Bills.

After Tropical Storm Irene raised awareness of the cost and danger of electric service interruptions due to storm blackouts, AARP issued a White Paper on the less noticed but no less dangerous and harmful deliberate service interruptions for collection purposes.  See The Quiet Blackout, New York’s Utility Termination Storm (2011).

After Hurricane Sandy resulted in electric service interruption to many thousands of customers, poor and nonpoor alike, a Moreland Commission was convened.  The Utility Project and AARP submitted a report questioning the deregulatory style of Public Service Commission, which relies on "performance regulation" to reward cost cutting, which has no performance standards for major storms, which maintains revenues at the same level even when service is off, and which defers for later recovery from customers all costs of major storms. As with major storms, utility revenues are unaffected by the 80,000 or so annual service terminations for collection purposes, due to the "revenue decoupling" mechanism promoted by environmentalists to guarantee the same utility revenues regardless of the amount actually used, and there is no performance "metric" to measure and discourage the interruption of service as a bill collection tactic.

In the recent Central Hudson/Fortis merger case, the Utility Project objected to approval of the merger and a rate plan extension without improvement of low-income rates and investigation of Central Hudson's practices regarding the interruption of service for bill collection purposes, submitting data showing that shutoffs have risen from 4,688 in 2005 to 13,687 in 2012, and that the percentage of customers shut off rose from 1.89% in 2005 to 5.99% in 2012.

In the Con Edison rate case now underway, the Utility Project is raising the issue of undue reliance on service interruption as a bill collection measure. See Utility Project Files Testimony in Con Edison Rate Case, Seeking Improved Low Income Rates, Reduced Service Interruption to Collect Bills, Improved Storm Cost Recovery Measures, June 2013.  See also, Testimony of Nancy Brockway, a former Commissioner of the New Hampshire Public Service Commission, who stated in her rate case testimony:

[R]ates charged by a Con Edison electric and gas are too high and too volatile for many low-income families. Second, with regard to the use of service interruption as a collection tool, the Company relies too much on this practice and not enough on better practices for engaging with payment-troubled customers who lack the resources to pay in full and on time. Third, steps should be taken to expand the reach and effectiveness of the low-income affordability program.

Usually quick to invoke confidentiality of customer information, in this situation Con Edison appears to be taking inoculatory PR measures to justify the interruption of service that preceded the fire and deaths:  According to a CNN report,

"The account had a significant amount of arrears -- well into the thousands of dollars," Consolidated Edison spokesman Allan Drury told CNN.   "We try to avoid turning service off to customers. We'll put them on payment plans to work with them to avoid turnoff, but this account had substantial arrears."  

The situation, where service was off while the customer sought public assistance, is similar to a 2005 incident  involving the death of a New York City child in a fire started by a candle while power was shut off. It was reported that the customer had made payment arrangements sufficient to be reconnected, the reconnection was scheduled for the next day, but the 2005 fire occurred during the intervening night:

• "[A] Con Ed spokesman ... confirmed electricity to the apartment had been cut off at 1:45 p.m. Monday. Two hours later, [the customer] appeared at a local Con Ed branch to pay $700 - almost half the outstanding bill. [A]n order to restore electricity within 24 hours was issued two hours later. Tragically, it was not in time - firefighters responded to the scene of the fatal fire at 10:45 p.m."

Questions that should be answered in any investigation include:

• Did Con Edison comply in all respect with the Home Energy Fair Practices Act when it terminated electric service to the customer?  See Lawsuit Involving Death of Velma Fordham Settled by National Fuel
• Did Con Edison have a written deferred payment agreement (DPA) with the customer that was broken by the customer, or was it unwritten?  The HEFPA statute requires DPAs to be signed by both the company and the customer.  Utilities frequently enter into oral, unwritten agreements with customers.  As noted by the PSC, "However, 16 NYCRR § 11.10(a)(1) requires the utility to offer a written deferred payment agreement, signed "by both the utility and the customer," prior to terminating service for nonpayment. Therefore, a customer who defaults on a verbal deferred payment agreement remains eligible for deferred payment terms, as per 16 NYCRR § 11.10(b)(1)." 
• If there was a written DPA that was broken, was it negotiated based on the customer's individual financial circumstances, as contemplated by Section 37 of the Public Service Law?
• Did Con Edison shut the customer off for breach of an "oral" DPA?  The deregulation minded Public Service Commission gave its OK to unwritten oral DPAs and countered objections with the promise that if a customer broke an oral DPA they would still have the chance to keep service with a new written DPA.  See Utilities Must Offer Written, Negotiable Payment Agreements Before Terminating Electric or Natural Gas Service, August 2008. But Con Edison is known to threaten shutoffs for breach of an oral DPA.  
• Did the utility provide aid to the customer in accessing public assistance for utility arrears? 
• Did the bills include excessive charges for ESCO service, purchased from the ESCO by Con Edison and demanded from the customer under threat of shutoff?  
• Did the customer have phone service to communicate and negotiate with Con Edison, which has been allowed by the PSC to close most of its walk-in service centers?  
• Does Con Edison have effective liaison with public assistance agencies, and why does it leave power off after public assistance is assured?
• Should Con Edison be required to make same-day reconnections when payment is guaranteed by HRA?
• Were some of the arrears for which the customer was terminated stale, transferred from other persons, backbilled, reversal of shared meter charges, or incurred prior to other public assistance payments under Social Services Law 131-s that should have precluded repeat terminations to collect old arrears?
• Could another adult person in the household have opened a new account in their name?
• Did the customer have access to legal assistance to forestall the shutoff or pursue bankruptcy remedies?

Gerald A. Norlander

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PSC Extends Time for Public Comment on Central Hudson Nominee for "Golden Shareholder"

The New York State Public Service Commission, for procedural reasons, has issued a Notice Extending The Period For Commission Consideration Of The Proposed Holder Of A “Golden Share”
 in the Central Hudson/Fortis merger case.  The Commission previously issued an order approving the merger, which has been consummated.  The Commission has not ruled on pending petitions for rehearing and investigation whether the utility has earned in excess of the intended return and there should be rate reductions.  Comments on the "Golden Share" issue will continue to be accepted until Nov. 15.  

The history of holding company ownership of regulated utilities is replete with instances in which utility affiliates, and their customers, suffered from negative financial events affecting other holding company affiliates or the holding company parent. The most famous of these was the collapse of the utility holding company empire of Samual Insull in the 1930's, which may have prompted Congress to enact the Public Utility Holding Company Act of 1935 (PUHCA).  PUHCA regulated and effectively discouraged interstate and international utility holding companies, and promoted local utilities more responsive to local communities under full state regulation, as Central Hudson was.  Indeed, Central Hudson was once owned by the Niagara Hudson holding company and was required to be divested in the 1940's by the SEC, which administered PUHCA. PUHCA was repealed in 2005, over the objection of consumer, environmental, union and credit rating groups, and replaced with a far weaker law.  Subsequently, the pace of mergers and acquisitions of local utilities by interstate or international holding companies has increased.

The "Golden Share" is a corporate structure tool intended to help "ring fence" a regulated utility by preventing a holding company parent from taking its regulated utility subsidiary into voluntary bankruptcy or reorganization, where its assets could be liquidated, contracts could be abridged, and rates could be raised to generate more cash to cover liabilities. Where the holding company parent controls selection of the utility subsidiary's directors, the directors could vote to file for bankruptcy, but for the creation of a special "Golden Share" of preferred stock which has voting power to block a voluntary bankruptcy decision by the board.

At issue is who should hold the "Golden Share"?

In explanations of the Central Hudson/Fortis merger plan, the "Golden Share" mechanism was touted as the antidote to possible voluntary bankruptcy of the local utility which would protect customers and New York State even though control of the local utility is transferred out of the state and country.  Central Hudson's nominee for holding the "Golden Share" to protect consumers and the State is not a public official, such as the State Controller or Secretary of State, but rather is a corporate services company based in New Jersey.  Their proposed contract is with Central Hudson, and it contains no direct instruction for the Golden Shareholder to act in any particular way in voting on a corporate resolution to go bankrupt.  Nor is there any fiduciary accountability created by law or contract. Instead there is a vague statement that the "Golden Share" holder will protect interests under the public service law.  As the Utility Project pointed out in its Opposition to Central Hudson's Nomination of the "Golden Shareholder," and in its pending Petition for Rehearing, Rate Investigation and Temporary Rates, interests under the public service law include those of the utility.  In actuality, the nominee proposed for "Golden Shareholder" has no public service duty a New York State public officer would have.  Also, there is no ascertainable fiduciary duty placed on the private "Golden Share" holder to vote in any particular way, and thus there can be no real assurance that the shareholder nominee will actually protect the state of New York or customers of Central Hudson.

Public comments can be electronically filed at the Public Comment tab at the PSC website page for the Central Hudson/Fortis merger.

Gerald A. Norlander


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ALJs Rule that Refund Statute May Apply in National Fuel Gas Rates Proceeding

Background
 In the pending proceeding to review natural gas rates of National Fuel Gas Distribution Company, the New York Public Service Commission set temporary rates subject to refund prospectively from the date of its order. In addition, in light of apparent over earnings in the past, the PSC asked the Administrative Law Judges to examine whether a rarely used statute authorizing refunds of past utility earnings in excess of the intended return applies to the case.  See PSC Power to Order Refund of Earnings Above Authorized Return at Issue in National Fuel Case, October 7, 2013.

The Utility Project and Department of Public Service Staff filed briefs supporting application of the refund statute in this case.  The Utility Project brief provides a detailed analysis of how deferred costs for pension and retirement costs, which ultimately are paid by customers, built up over the same period when National Fuel was overearning.  National Fuel filed a statement opposing application of the law and alternatively limiting it, and a reply brief in response to Staff and the Utility Project on October 16, 2013.

In a short Ruling Concerning the Applicability of PSL 66(20) on October 18, 2013, the Judges ruled that the refund statute may be applied, and said a fuller opinion will be issued. The judges sought input by October 29 from the parties regarding whether to adopt a  litigation schedule for the refund of past earnings issue that would be different from the current litigation timetable for the rate case.  That schedule calls for National Fuel to file testimony and exhibits regarding rates on November 1, 2013.  A decision would be reached by the Commission, at the earliest, in August 2014.

Gerald A. Norlander


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PSC Denies Time Warner Petition to Expand Times when Phone Service May be Interrupted for Bill Collection Purposes

At its October 17, 2013 session, the New York State Public Service Commission denied the Petition of Time Warner Cable Information Services, LLC, to enlarge the times when phone service can be interrupted for bill collection purposes.  The Public Utility Law Project of New York, Inc. filed initial comments in the case generally opposing most of the relief sought by Time Warner in its petition, and supplemental comments.

Time Warner asked the Commission in Case 13-C- 0193 to expand shutoff times to include Saturdays and evenings until 9 PM.  This required waiver of the Commission's Telephone Fair Practices Act Regulations, which limit the days and times when phone service can be shut off.  According to the Commission Press Release,

“We are saying ‘no’ to Time Warner’s request to waive our rules regarding when it would be authorized for suspensions and terminations of its telephone customers,” said Commission Chair Audrey Zibelman. “The Commission’s rules applicable to Time Warner are consistent with the hours of operation of the Commission’s consumer call center which receives consumer complaints’ and requests for assistance. To ensure telephone consumers’ rights are protected, especially core customers such as the elderly and disabled, it is essential customers are afforded the opportunity to contact our call center if their telephone service is threatened with a potential suspension or termination.” 

Time Warner also sought a waiver of Commission regulations requiring service repair quality reports, arguing that competition and the ability of customers to switch telephone service providers now makes reporting of service repair time and other data unnecessary.  The Utility Law Project pointed out in its comments that the ability to switch providers is not an adequate substitute for enforcement of minimum service quality standards, and that even if one believes real competition makes service quality regulation unnecessary, phone service is oligopolistic and not truly competitive.

The Commission Press Release indicates PSC acceptance of Time Warner's argument:

Finally, the Commission conditionally granted Time Warner’s request for a waiver of its monthly service quality reporting requirements because, in Time Warner’s case, the need for regulatory action to ensure timely repairs for voice service has diminished due to the prevalence of competitive alternatives and the ability of residential and business customers to move to a different service provider. 

The Commission did require six months of reporting to establish a baseline of service quality data for future reference and comparison, and the Press Release indicates that "[i]f the data meets Commission staff approval, the company’s request for a waiver of certain service quality 

reporting requirements may take effect."  Thus, the Commission appears to have delegated to its staff, which has generally favored deregulation, the final say whether there will be meaningful enforcement of minimum service quality standards for Time Warner's home phone customers.

The Commission also granted Time Warner's request to limit distribution of residential white page directories to those customers who request them, and to waive Commission rules regarding allocation of undesignated partial payments from customers facing disconnection among various services, such as phone, broadband, and cable TV. Time Warner was allowed to have a "two bucket" system in which undesignated payments are allocated first to preserve phone service, and then to a second bucket of charges for all other services.  As a consequence Time Warner may be able to block customers from receiving phone plus cable tv or phone plus broadband services unless outstanding charges for both cable tv and broadband are paid.  The Commission rules that were waived generally allowed customers to choose which service they wish to preserve with partial payments and allow blocking of only unpaid services.

An order will be issued later explaining the Commission's reasoning.

Prior posts:

New York PSC to Consider Impact of Changing Technology on Phone Consumer Protection, 10/15/2013

Utility Law Project Opposes Time Warner Petitions for Waiver of Consumer Protection Rules on Telephone Shutoffs, Billing Practices, Customer Service Standards, 8/6/2013


Gerald A. Norlander

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New York PSC to Consider Impact of Changing Technology on Phone Consumer Protection

The advent of alternative technological platforms for the provision of phone and other telecom services has generated consumer protection issues now on the agenda at the New York Public Service Commission for its October 17, 2013 meeting.

The Time Warner Petition to Relax Customer Protection Rules for VoIP Cable Phone Service
For years, cable TV providers have provided home phone service, typically over the same coaxial cable used for television and broadband.   With some exception, notably the need for external electric supply, cable phone service (Voice over Internet Protocol, or VoIP) is  relied upon by consumers as the functional equivalent of landline service. Until very recently it has not been regulated.

Indeed, as more conventional phone service migrates to internet technology, there is increased effort to escape all state regulation under the questionable notion that use of alternative technology can take service out of reach of regulation, or that the transition from monopoly to multiple providers made state regulation unnecessary.  As stated by the Colorado Governor several years ago when vetoing a VoIP deregulation bill:

As this progression from landlines to VoIP occurs, Colorado cannot be left without the power to regulate such an important technology. Should the need arise, regardless of movement at the federal level, the PUC must have the latitude and authority to regulate the price, quality of service, and availability of VoIP in order to prevent significant harm to the consumers of this State.

Colorado Governor Vetoes VoIP Deregulation Bill, June 11, 2010.

Earlier this year, Time Warner conceded its VoIP home phone service is fully subject to state utility regulation. Time Warner swiftly petitioned the PSC for waiver of certain consumer protection rules, in PSC Case 13-C-0193.  See Hello? Hello? Hello? Hel...  Time Warner looks to make it easier to shut non-payers' phones off,  By Larry Rulison, Albany Times Union Aug. 27, 2013.

The Public Utility Law Project of New York filed comments in opposition to the waiver petition, opposing the relaxation of customer protections and customer service standards, and supplying information obtained in discovery regarding service terminations.  The Project also filed supplemental comments.

Case 13-C-0193 is on the October 17 PSC Consent Agenda and so the action being taken in the case will not be discussed at the meeting.

See Albany Times Union Editorial: Protect phone customers, October 10, 2013.

The Verizon VoiceLink Case - Substituting Wireless "VoiceLink" for Copper Landline Service
 In Case 13-C-0197 Verizon filed a new tariff with the PSC that would have allowed it permanently  to replace traditional twisted pair copper landline phone service with its VoiceLink wireless service on the western part of Fire Island rather than repair the landlines damaged during Hurricane Sandy related storms.



 In addition, Verizon's tariff as filed would have allowed deployment of wireless phone service in other areas where the utility found it to be a cost effective alternative to repairing landlines.  Similar action was taken by Verizon in New Jersey.

Hurricane Sandy devastated this barrier island community of multimillion-dollar homes, but in Peter Flihan’s view, Verizon Communications has delivered a second blow: the telecommunications giant did not rebuild the landlines destroyed in the storm, and traditional telephone service here has now gone the way of the telegraph.  **** The changing landscape has Verizon, AT&T and other phone companies itching to rid themselves of the cost of maintaining their vast copper-wire networks and instead offer wireless and fiber-optic lines like FiOS and U-verse, even though the new services often fail during a blackout.The vision I have is we are going into the copper plant areas and every place we have FiOS, we are going to kill the copper,” Lowell C. McAdam, Verizon’s chairman and chief executive, said last year.

 On a New Jersey Islet, Twilight of the Landline, NY Times Oct. 14, 2013
 The New York PSC opened an investigation and trimmed back the tariff to limit it to temporary VoiceLink service on Fire Island while the broader issues of eliminating traditional copper landline service are examined.

Responding to the protest against substitution of the less robust VoiceLink service, Verizon announced that it would install a new wireline fiber optic system, withdrew the portion of the tariff that would have allowed permanent substitution of its wireless VoiceLink for wireline service, and argues the matter is moot. Many comments were received, before and after Verizon's change of position, including those of the Attorney General,  Common Cause/New York, Communications Workers of America, Consumers Union of U.S. Inc., Fire Island Association and AARP, represented by Richard Brodsky, former New York State Assembly Corporations Committee Chairman.

The Utility Law Project filed comments seeking clarification of the regulatory regime for the new wireline fiber system regarding universal service, consumer protection, affordability, and service reliability standards.  PULP also recommended that the Commission review how its relaxed service repair standards are working.  Under those standards the Commission-imposed  financial consequences for poor repair service are only imposed when service metrics are failed with respect to "core" customers who predominantly are those who receive low-income Lifeline  assistance.

The case is on the PSC Agenda for October 17, 2013, for discussion and possible action


Gerald A. Norlander

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PSC Power to Order Refund of Earnings Above Authorized Return at Issue in National Fuel Case

In the pending National Fuel Gas Distribution Company case the New York Public Service Commission  set temporary rates when it found that NFG may be earning more than anticipated when rates were last set in 2007. A proceeding at the PSC is now underway to fix permanent rates, which will be effective as of the date the temporary rates were set.

The Commission observed that in recent years, while National Fuel earned higher returns than the Commission anticipated, at the same time significant costs were deferred, in the expectation that they could be collected from customers in the future, when new rates are set.The Commission stated:

National Fuel’s earnings level indicates that its gas rates may be higher than needed to provide safe and adequate service, particularly in light of the recently allowed ROE and earnings sharing provisions established for other utilities. Further, absent action, National Fuel’s deferral balances may continue to escalate during a period of time that the Company is earning a return in excess of its cost of equity. These circumstances may result in National Fuel customers paying higher rates than are just and reasonable.

The PSC also asked the Department of Public Service administrative law judges to examine whether refunds could be made to customers under a little used provision of the Public Service Law, Section 66(20).  That law gives the PSC power to order refunds when a utility earns more than the profit anticipated when rates were last set.

The statute provides:

Notwithstanding any general or special law, rule or regulation, the commission shall have the power to provide for the refund of any revenues received by any gas or electric corporation which cause the corporation to have revenues in the aggregate in excess of its authorized rate of return for a period of twelve months. The commission may initiate a proceeding with respect to such a refund after the conclusion of any such twelve month period.

The ALJs asked parties to brief the applicability of Section 66(20) to the case.  On September 13, 2013 National Fuel argued in its brief to the ALJs the rarely invoked law should not apply and, alternatively, there should only be a one year look-back period for potential refunds.

Department of Public Service trial Staff argues in its brief that the law does apply, and says "It is up to the Commission to determine where the relevant facts, in combination, compel a finding of past unjust and unreasonable rates such that a refund to customers of excess revenues is necessary as provided for by Article 4 of the Public Service Law."

The Public Utility Law Project of New York, Inc. argues in its brief the statute applies.  The Project also discusses in detail the unusual situation in which deferred pension and OPEB costs, which may be collected from customers in the future, grew rapidly while earnings received by National Fuel were above the anticipated 9.1% return.  The Project argues that rates can be reduced if some of the deferrals are reduced, and for refunding earnings above the authorized return, which are estimated to be approximately $24 million since 2010.

NFG earnings since the last rate case are discussed in the Commission's Order to Show Cause initiating the case:

and in the Commission Order SettingTemporary Rates.  The PSC case file with all the filed papers is here:  13-G-0136  

National Fuel is expected to file a reply to the Staff and Utility Law Project briefs, and the ALJs will then decide whether the refund statute applies.  The exact amount of any refunds would be decided in further litigation.

There is also a court case pending in Erie Co. where NFG is challenging constitutionality of Section 66(20).  PULP is not a party there.  NFGDC v. Public Service Commission, (Erie Co. Sup. Ct. Index No. 20130015148).  

Gerald A. Norlander

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