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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