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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