The Topsy Turvy World of Lifeline Enrollment in New York

As PULP has reported on numerous times in recent years, telephone Lifeline enrollment for reduced price telephone Lifeline service in New York State with the landline providers has dropped by more than 50% since its peak in 1996 . However, according to the latest postings from the Universal Service Administrative Company ("USAC"), the FCC's designated administrator of the federal Universal Service Funds, while Verizon's Lifeline enrollment totals have been on a roller coaster for the past year, TracFone's numbers are reaching ever higher.

Among its many quarterly reports to the FCC, USAC includes a table (Table LI01) showing the amount of money paid to Lifeline providers in a given quarter. These figures can be divided by three to calculate the monthly amount and then divided by 10 to determine the number of customers served (the federal reimbursement rate for New York State is $10 a month per Lifeline customer). Thus, a seven million dollar figure for a particular quarter would translate to approximately 233,333 Lifeline customers.

For the first two quarters of 2009, USAC reported that Verizon's Lifeline enrollment grew from nearly 235,000 to about 239,000, while TracFone did not have any Lifeline customers to report. Then, in the third quarter of 2009, Verizon counted about 246,000 Lifeline customers and TracFone began with 21,414. Through the current quarter (second quarter of 2010), Verizon has gone from 255,000 to 269,000 and back to 240,500. Meanwhile, TracFone's subscribership exploded: 181,000 to 329,000 to 403,000 during the same time period. According to USAC's projections, the third quarter of this year will yield nearly 236,000 Verizon Lifeline customers and over 399,000 TracFone Lifeline customers. That's right: since the beginning of the year, TracFone has been the largest Lifeline provider in New York and has gone from 21,414 Lifeline customers to 399,000, which translates to nearly $4 million a month in revenue just from New York. They are followed by Verizon, and then much further back, Virgin Mobile (operating as Assurance Wireless), Frontier Telephone of Rochester, Citizens Telecommunications, XChange Telecom, and AT&T.

While TracFone's success is unprecedented, it comes at a steep price to its customers. The company does offer a free handset and free minutes, but only 68 minutes a month for both incoming and outgoing calls. Once a customer exceeds that amount, they will need to purchase additional minutes at a premium. Meanwhile, Virgin Mobile offers a free handset and 200 minutes a month - all with the same $10 monthly reimbursement from USAC that TracFone receives.

These results reveal incredible growth in wireless Lifeline service and some variability in Verizon's Lifeline customer count. The state's Office of Temporary and Disability Assistance reported in March (at Table 16) that there are over 1.4 million Food Stamps households in New York (one of the primary eligibility criteria for Lifeline) and we now have a little over 700,000 Lifeline subscribers across the state, including all landline and wireless Lifeline providers. While this is certainly a great improvement, it is a mixed blessing. Virtually all of the subscribership growth is in an area outside the state Public Service Commission's ("PSC") current regulation of terms and conditions, meaning that no enforceable service quality or consumer protections apply to protect either TracFone or Virgin Mobile's customers. This giant step forward may end up leaving thousands of our most at-risk people behind. When will the PSC act to boost Lifeline enrollment to include more persons living in poverty or take the step to exert jurisdiction over terms and conditions of wireless service, which can be accomplished under state law by conducting a hearing and deciding that doing so is in the public interest? When more Lifeline customers are wireless customers than landline customers, the time for this hearing may have finally arrived.

Raiding Niagara

The New York Public Authorities Law Section 1005 generally requires, with some exceptions, that hydro power be used for the benefit of the state's "rural and domestic customers." This makes the power from the Niagara and St. Lawrence hydro plants available at the very low cost of production without any markup. Over the years, large business groups have sought to increase the portion of hydro benefits they receive by raiding the longstanding residential allocation, in the name of job creation. They are now asking for changes in the law to take all the residential allocation. This would allow the Power Authority (and the Governor, who must approve all hydro contracts) to "pick winners" in the competitive business world by giving selected companies very low cost public power. See, e.g., Higher electric bills for homes suggested as way to grow jobs, Journal News - 03-10-2007.

The drumbeat for taking power from residential customers increased at the legislature in recent years when businesses faced the economic downturn coupled with the cost of high and spiking electric prices. Since 1999, those prices have been increasingly influenced by deregulated and flawed wholesale electricity spot markets run by the NYISO. The latest hydropower raid seeks to go beyond other existing economic development programs for businesses. These include secret discount "negotiated" utility rates, which can be obtained through the PSC, even if the utility does not agree in "negotiations", as has occurred with large industrial customers like Nucor and Corning.

Ironically, New York big business groups once clamored for deregulation of wholesale electric prices to avoid retail prices set by state regulation. The power generation function of the investor owned utilities was transferred to merchant power companies who are under federal rate jurisdiction, and they are now de facto deregulated by FERC. Instead of fighting harder for reform of the wholesale electricity markets run by the NYISO, New York's large business users of electricity now seek to take cheap hydropower away from residential customers, thus diluting the high cost of electricity driven by the flawed NYISO markets.

According to the New York State Power Authority:

Power for Jobs has helped hundreds of companies make the transition to the newly deregulated electricity marketplace in New York State.

The "transition to the newly deregulated marketplace" mentioned above tacitly acknowledges that it is not working. (If the "transition" to deregulation had lowered electric rates, big business would not need state relief from the marketplace). Cheap hydropower is seen as a palliative for New York businesses who face some of the highest electricity costs in the nation, despite the relative abundance in New York State of low cost hydro and nuclear power. (New York state has the nation's third largest output of hydropower, and several large nuclear plants). Since the advent of wholesale electricity deregulation in 1999, programs for allocation of NYPA power to businesses have grown. See New York Power Authority Report to the Governor and Legislative Leaders on NYPA Power Programs for Economic Development, (prepared pursuant to Section 9 of Chapter 217 of the Laws of 2009), December, 2009.

The increased clamor to take cheap hydropower from residential customers appears to be in response to the deregulation experiment begun by the Pataki administration. New York's largest industrial and large business customers, already benefiting from Power Authority programs which offset and dilute some of the high and spiking deregulated market prices, are much quieter about the failure of New York's deregulation than their counterparts in the New England ISO and the PJM RTO regions. In contrast, business groups in those areas are more vigorous than New York's in urging FERC to reform deregulated wholesale electricity markets.

Brushed aside in the "Power for Jobs" sloganeering s a sure consequence of reallocating the residential hydro power: it will raise electric bills substantially for large numbers of residential consumers, making matters worse for them. As stated by a representative of NYSEG/RG&E to a legislative commission on hydropower appointed by Governor Pataki:

In addition, and just as important, a loss of this power to residential customers in the NYSEG and RG&E service areas would significantly increase rates, severely impacting customers at a time when the upstate economy continues to struggle. Absent the Niagara Project allocation, residential electricity rates would increase 7.2% to 8.7% for NYSEG customers and 10.8% to 14.2% for RG&E, depending on the type of service a customer has chosen. If St. Lawrence allocations, which are covered by the same contracts that cover the allocation of Niagara Project power, were also lost, the rate increase climbs to between 12% and 14.5% for NYSEG customers and 19.6% to 25.7% for RG&E customers. These dramatic increases at a time when the upstate economy continues to struggle would cause a true hardship for our customers.

****

Suggesting that these savings are meaningless to a residential customer and that the residential customer allocation would be better spent on economic development programs is irresponsible. The commission should resist an arbitrary shifting of this allocation to programs that may not add significantly to the regional economy. It cannot be assumed that the transfer of low-cost power from residential customers to a business creates an automatic, substantial win for the economy.

Consumer spending may be the engine for renewed economic growth after a recession. Raising consumer utility bills, however, deflates the consumer economy. With high unemployment and even less money in consumers' pockets to spend in the regional economy, economic recovery may be slowed if hydro benefits are diverted away from residential customers.

NYSEG filed a report several years ago with the state hydro commission appointed by then-Governor Pataki indicating that the putative benefit to the economy from using residential hydro for businesses in the name of creating jobs would be far outweighed by the damage to the region's economy by raising prices for massive numbers of residential customers and reducing their collective purchasing power. This report found that shifting $51.7 million of hydro benefits away from residential customers would actually have a serious and much greater negative economic impact that outweighs the putative benefits of shifting the cheap power to business customers. Because the money saved would not be spent -and respent- by residential customers in the local economy, there would be

• a net reduction in Gross Regional Product of $97 million,
  
• a wage loss of $40 million,
  
• a loss of 1,186 jobs, and
  
• a population loss of 2,326.

See EMCG Report on Selected Socioeconomic Impacts that Eliminating Power from the Niagara Power Project Would have on the Service Territories of New York State Electric and Gas Corp and Rochester Gas and Electric - 12-1-2005 - 5-18-2010.

Now, proponents of hydro power reallocation to business propose taking nearly all of the residential allocation, currently valued at $100 million or more. They dismiss the cost of the shift of this very broad based benefit to a select few businesses, and the dampening effect that adding a billion dollars to residential electric bills over a decade would likely have on consumer spending and the local economy.

Business proponents of the shift scoff at the relatively small monthly amounts their proposal would add to residential electric bills, (and they may be underestimating the bill impacts, contrary to NYSEG and RG&E's estimations). But whatever the amount, every dollar added to consumers' bills by diversion of hydro benefits to business customers cuts the amount of income households can spend in the local economy. Dollars saved by low cost residential hydro power help meet household needs. Many residential customers lack significant savings and are living today from check to check, often running out of money for food and other essentials in the days preceding their next paycheck, social security, or pension check, and living in hardship. Indeed, in 2009, the investor owned utilities interrupted service as a collection measure to more than 330,000 New York utility customers who could not afford to pay their bills. Adding to the energy burdens of residential customers would only make matters worse.

Justifications for changing the longstanding law mandating residential benefits are based on very speculative job creation claims. This, of course, requires government to pick the winners of low cost hydro subsidies - normally anathema to the ideas of "free market" business competition and "level playing fields" usually touted by the same business groups now clamoring for more low cost public hydro power. The business groups support new legislation to gradually convert the residential hydro benefit for upstate customers into a cash credit on the utility bill that would diminish over five years from $100 million to just $30 million.

The actual value of the cheap Niagara residential hydro power varies in relation to the cost of other power obtained in the marketplace from private suppliers. Governor Paterson estimated that it was worth $82 million in 2009. The utilities who receive the cheap power under contracts with the Power Authority and pass the benefit on to residential customers have said it is worth much more over time. The value is the difference between the cost of the hydro power - which is less than one cent per kilowatt hour - and what the utilities would have to pay to replace it with power bought in the wholesale electric market at market-based rates set at the NYISO by the most expensive producer whose bid is accepted. Over the past year, due to the recession and the drop in the price of natural gas, and mild weather, electricity market prices have come down somewhat, narrowing the spread between the cheap hydro and the market price of other power. Estimates based on this recent narrower spread may significantly understate the real long term wealth shift from residential to business customers that would be accomplished over time if the legislative proposals are approved.

Proponents of giving residential hydropower to selected companies argue that it will create new jobs. Such claims should be taken with a grain of salt, as the record of many publicly subsidized economic development programs is at best spotty. Even if some jobs are created with more power subsidies to certain businesses, the the total resource cost of creating those jobs must include the offsetting damage to the regional economy from raising monthly bills for large numbers of residential customers and decreasing their discretionary incomes. Rather than make the hard case to justify investment of general tax dollars to subsidize businesses to grow jobs and build the economy, New York's large businesses appear to be aiming at a "softer" target: reallocation of residential hydropower benefits.

There is a long history involving private acquisition and domination of the public water power assets in New York. In 1907 New York Governor Charles Evans Hughes (later Chief Justice of the United States) declared that water power in New York state "should be preserved and held for the benefit of the people and should not be surrendered to private interests."

In 1914, Theodore Roosevelt warned in his autobiography against water power barons seeking a monopoly on natural resources:

the work of the [Corporations] Bureau showed that ten great interests and their allies held nearly sixty per cent of the developed water power of the United States. Says [Corporations Bureau] Commissioner Smith: "Perhaps the most important thing in the whole work was its clear demonstration of the fact that the only effective place to control water power in the public interest is at the power sites; that as to powers now owned by the public it is absolutely essential that the public shall retain title....

In the 1920's Governor Alfred E. Smith called for hydropower development by a state authority. Smith expressed concern over privatization of hydropower:

During the presidential campaign of 1928, Al Smith insisted that private control of hydropower sites reduced public control of power rates, weakened regulatory authority over electric utilities, and exposed the public to unnamed future hazards. Given these dangers, he argued, there was "nothing socialistic or revolutionary" about regulating utilities or developing public power.

Canada took steps to undo privatization of its Niagara hydro power early in the last century. Karl Froschauer, Ontario's Niagara Falls, 1887-1929: Reversing the Privatization of Hydro, (2005).

In 1931, when Franklin D. Roosevelt was Governor, the state Legislature created the Power Authority of the State of New York (PASNY). A driving purpose of its creation was to develop the International Rapids section of the St. Lawrence near Massena, NY, in cooperation with Canada. The St. Lawrence FDR Project began in 1954, when PASNY was headed by Robert Moses, after a 1950 treaty with Canada and 1953 federal legislation authorized the project.

The 1950 treaty also cleared the way for redevelopment of the Niagara Falls hydro project. At that time, Niagara Mohawk Power Corporation owned the "Schoellkopf" station at Niagara, built in three segments between 1903 and 1924, which by 1950 was capable of producing only 360 MW of power. "The original redevelopment plans called for construction of a new power plant with more than 1300 MW of installed capacity." Alex Radin, Public Power, Private Life, p. 159 (APPA 2003). A struggle ensued over whether the new facility would be publicly or privately owned.

On June 7, 1956, in "the most spectacular accident in the history of electric service. . .[a] series of giant rockfalls sent two-thirds of Niagara Mohawk Power Corporation's large Schoellkopf hydroelectric plant crashing into the Niagara River Gorge a half mile below Niagara Falls."Radin, supra. At that point, it was determined that PASNY would redevelop the site at Lewiston, downstream from the ruined Schoellkopf site, and Niagara Mohawk would receive the "replacement power" output from the amount of water it had been using at the ruined plant, equal to 445 MW because the higher head of the new plant could make better use of the water than the Schoellkopf units had. Half of the output was reserved, by federal statute, as "preference" power for municipally owned utilities and rural electric cooperatives.

Even if New York state law were amended to shift residential hydro benefits to businesses, the federal Niagara Redevelopment Act seemingly requires at least half the output of the Niagara Redevelopment Project to be allocated to residential customers. FERC mentioned this requirement in its 2007 Order granting NYPA's application for relicensing of the Niagara Project:

Niagara Redevelopment Act section 836... authorizes and directs the Commission to issue a license to the Power Authority for the construction and operation of a project with the electric generation capacity to use all of the United States’ share of the Niagara River water available for power generation. It requires the Commission to include among the license conditions, in addition to those deemed necessary and required under the terms of the FPA, provisions to:

• Assure that at least 50 percent of the project power is available primarily for the benefit of consumers, particularly domestic and rural consumers, and to make such power available at the lowest rates reasonably possible to encourage the widest possible use, and to give preference to public bodies and nonprofit cooperatives within economic transmission distance.

In a 1985 court decision, however, the mid-level Court of Appeals for the Second Circuit decided that the above language indicating that the majority of power should go to residential customers does not really mean what it appears to say. It relied on legislative history to conclude that the words of the statute that seemingly guarantee benefits to residential customers are empty: "The term "domestic and rural consumers" expresses a Congressional expectation, not a mandate, and the word "primarily" does not mean "exclusively". Residential customers were not represented in that litigation, and the case did not culminate in any definitive decision of the Supreme Court on the meaning of the statute.

In allowing flexible allocation of hydro benefits seemingly at odds with the plain language of the statue, the court decision at page 107 backstopped its decision by pointing out that in any event, as a "practical matter", very substantial hydro power benefits were then being received by residential customers:

Finally, we note that FERC's rejection of PASNY's "end-use" contention has not as a practical matter injured domestic and rural consumers. Although MEUA's members presently sell only 42% of their preference power allocation to such consumers, the 58% remaining being supplied to commercial and industrial users, the private utilities are bound by contract to resell 600 MW of their non-withdrawable power at retail at a fixed percentage above cost to domestic consumers.

Now, it is proposed to drastically reduce or nearly eliminate the residential benefit, by removing the residential ("domestic") allocation requirement from New York state law. This might not resolve the federal issue, i.e., the requirements of the Niagara Redevelopment Act.

New York's share of the water power of Niagara and the St. Lawrence is purposed under existing laws to provide direct benefits to residential consumers. It still belongs to the people of the state and could be viewed as part of the "commons" which should not be appropriated for the benefit of a few businesses:

They hang the man and flog the woman
That steals the goose from off the Common
But let the greater villain loose
That steals the Common from the goose

The law demands that we atone
When we take things we do not own
But leaves the lords and ladies fine
Who take things that are yours and mine

English Nursery Rhyme c. 1760.

Updates
"The New York Power Authority will conduct a public hearing this week in Syracuse to solicit opinions on continuing the sale of cheap state-owned hydropower for use by Upstate residential customers....Some economic development advocates say the electricity — valued at about $82 million below market in 2009 — could be better used to subsidize business growth. Paterson and Senate leaders this year backed a plan to use some of the power for economic development, but the plan was blocked in the Assembly. NYPA is proposing to extend its current contracts with the utilities through 2011, subject to revocation with 30 days notice." New York Power Authority holds hearing in Syracuse on sale of hydropower to utilities, Post Standard, Nov. 3, 2010.

NYPA Holding Hearings on Reduced Hydropower Allocation for Residential Customers, PULP Network, Sept 1, 2009.

David Robinson, Recharge New York is new take on power share, Buffalo News, Feb. 3, 2011. "

Brian Amaral, Cuomo pushes low-cost power bill, Watertown Daily Times, Feb. 3, 2011.

Brian Amaral, Low-cost power bill OK'd by Senate, Cuomo optimistic: Assembly less certain; farmers get boost, Watertown Daily Times, March 9, 2011. "The new program would be twice the size of its predecessor, at 910 megawatts. It does so by taking 455 megawatts that are used to reduce electricity bills for residential energy bills upstate.... The legislation would cushion the residential blow by providing a $100 million annual discount — the same figure as in 2010 — for residential patrons until 2014, when it would be cut to $70 million. In 2015, it would be cut to $50 million. By 2016, the figure would be cut to $30 million, where it would remain."

Jimmy Vielkind, Power Plan Revived in Budget, Times Union, March 30, 2011.

"Now called Recharge New York, the program will be administered by the New York Power Authority and will automatically renew benefits for more than 500 businesses and nonprofits -- including SCA Tissue, Finch Paper, Albany Molecular Research and the Albany Institute of History and Art -- that participated in the old Power for Jobs program.

That program expired in 2010. Then-Gov. David Paterson and members of the state Senate favored an expanded program, which would have made 910 megawatts of subsidized power available, up from 577 megawatts. (A megawatt is enough power to supply up to 1,000 homes.)

That larger amount would be directed entirely to businesses. Previously, residential customers of three upstate utilities -- NYSEG, National Grid and RG&E -- also benefited from an allotment of subsidized power.

Cuomo submitted a bill similar to Paterson's, which eliminated the residential benefit.

Cuomo's measure passed the Senate and will be included in budget legislation expected to pass this week.

The new program will continue the monthly rebate for these residential customers -- an average of $3.30 per month -- for three years, and then offer a $30 million subsidy.

FCC Finds Wireless Customers Suffer from Bill Shock; Early Termination Fees Are Still an Issue

On May 26, 2010, the FCC released the findings of a survey which indicates that 30 million Americans - or one in six mobile users - have experienced "bill shock," its term for a sudden increase in their monthly bill that is not caused by a change in service plan. The survey also showed that nearly half of cell phone users who have plans with early termination fees ("ETFs") - and almost two-thirds of residential broadband users with ETFs - don't know the amount of the fees they're accountable for if they switch providers or terminate service before the end of the contract. To conduct this survey, the FCC interviewed over 3000 adults between April 19th and May 2nd.

Of the 30 million "bill shocked" wireless customers, 84% said their mobile carrier did not contact them when they were about to exceed their allowed minutes, text messages, or data downloads and 88% said their carrier did not contact them after their bill suddenly increased. Also, more than a third of the people who experienced bill shock said their bills jumped by at least $50, and 23% said the increase was $100 or more.

The survey also asked consumers about ETFs for wireless phone and broadband service. Of the respondents with personal cell phones (those not paid for by an employer), 54% reported that they would have to pay an ETF should they terminate their contracts before the expiration date, and 18% didn't know whether they would have to pay or not. Of those who are subject to an ETF, 43% said it was $150 or more, but 47% did not know how much it was. One reason the FCC found for the confusion is the billing practices of the service providers: Only 36% of cell phone customers who are familiar with their bills said that they include "very clear" information on ETFs. For residential broadband ETFs, only 21% of home broadband users stated that their contracts include an ETF. Of those, fully 64% were unaware what the fee is.

Finally, according to the survey, 43% of customers indicated that ETFs are one factor that keep them from switching carriers even when their service is not ideal, almost exactly the same number who said they would be deterred from switching by the cost of setting up a new service or by paying a deposit on a new service.

To combat the consumer abuse found in the survey, the FCC unveiled a "Tip Sheet" which offers sage advice, such as "Ask how much the early termination fee will be and how it is prorated" and "If you use your phone sparingly, consider avoiding the whole ETF issue by buying a pre-paid phone."

It does not surprise PULP that the FCC had placed the burden of consumer protections on the consumer. While awareness is essential, basic protections such as the notice of fees, should clearly reside with the provider. Remember that in December there was a scathing report out of the Government Accountability Office, and while the FCC processes tens of thousands of wireless customer complaints every year, it does not actually decide them when the wireless company does not agree with the consumer.

On top of this, the wireless industry has developed its own voluntary (and thus unenforceable) Consumer Code, which apparently hasn't worked well to protect about 63% of consumers who told the FCC that their bills were not "very clear." Believe it or not, Code Number One is actually "Disclose Rates and Terms of Service to Consumers:"

For each rate plan offered to new consumers, wireless carriers will make available to consumers in collateral or other disclosures at point of sale and on their web sites, at least the following information, as applicable: (a) the calling area for the plan; (b) the monthly access fee or base charge; (c) the number of airtime minutes included in the plan; (d) any nights and weekend minutes included in the plan or other differing charges for different time periods and the time periods when nights and weekend minutes or other charges apply; (e) the charges for excess or additional minutes; (f) per-minute long distance charges or whether long distance is included in other rates; (g) per-minute roaming or off-network charges; (h) whether any additional taxes, fees or surcharges apply; (i) the amount or range of any such fees or surcharges that are collected and retained by the carrier; (j) whether a fixed-term contract is required and its duration; (k) any activation or initiation fee; and (l) any early termination fee that applies and the trial period during which no early termination fee will apply.

Further, while the New York State Public Service Commission ("PSC") regulate terms and conditions of wireless services in the state upon completing a hearing determining that such a move is in the public interest - which would include establishing consumer protections for wireless users - it has not taken leadership on wireless consumer protection. This, despite the fact that the United States Centers for Disease Control and Prevention released a report earlier this month on the number of Americans who have "cut the cord" and are using wireless telephone service only. According to the report, 24.5% had only wireless telephones during the last half of 2009, a 1.8% increase since the first half of 2009.

More and more Americans are relying on their wireless phones as their primary means of communication. Should they suffer billing, notification, or termination issues, there is nowhere to turn. The FCC will not decide a complaint. The PSC claims it can not take a complaint (because it has not exercised its discretionary power to regulate terms and conditions of wireless service). And the industry's own weak Consumer Code is not even followed by the industry which wrote it.

The PSC seems to be waiting for the federal government to act and preempt the states. That may not happen or it may mean a very weak set of protections. New York should take leadership now to establish reasonable and enforceable universal service, affordability, consumer protection, and service quality requirements for all telecommunications providers operating in the state, including traditional landline telephone service, cable telephony, and wireless.

Lou Manuta

HUD Directs Roll-Back of Submetering at Yonkers Riverview II

Background
Over the past year we have occasionally discussed some of the efforts of the Related Company, manager of the Yonkers Riverview II apartment complex, to convert to landlord submetering of electricity with the support of New York state agencies, the PSC, DHCR and NYSERDA, and the adverse impact upon tenants. See
April 9, 2009:
Yonkers Tenants Ask PSC to Halt Submetering at Riverview Towers,
May 6, 2009:
Submetered Yonkers Tenants Show How PSC Order Allowed Landlord to Shift Electric Bills to Low Income Tenants,
August 14, 2009:
Yonkers Tenants Win Reprieve from Eviction While Fighting Landlord's Electric Bills,
October 14, 2009:
Yonkers Riverview II Tenants Again Ask PSC to Halt Submetering,
November 03, 2009:
Riverview II Tenants Rebut Owner's Opposition to Request to Stay Submetering,
March 12, 2010:
PSC Greenlights Eviction of Tenants for Nonpayment of Electric Bills,
March 22, 2010:
Yonkers Riverview II Tenants Seek Rehearing of PSC Order Continuing Submetering of Electric Heat
May 11, 2010:
Yonkers Riverview II Files Revised Procedures to Evict Tenants for Alleged Nonpayment of Bills for Submetered Electric Service

Noncompliance with HUD Submetering Conversion Regulations
The owner of the premises and the tenants receive federal subsidies from HUD intended to support decent housing that is affordable to low income households. Consequently, the premises are subject to HUD regulations.

The HUD regulations that apply to submetering require notice and tenant participation in the conversion process, and the development of equitable utility allowances or rent reductions that will not disadvantage an energy conservative household. Owners are required to disclose to tenants their applications to HUD for submetering and to include an estimate of future electricity costs in relation to proposed utility allowances.

In contrast, the PSC allowed submetering without notice to the tenants of the proceeding prior to issuance of the order, without assessment of the impact on tenants, including the cost of electric heat in a poorly insulated building, and without disclosing the magnitude of the cost shift to ytenants. Refusing the tenants' request for a stay, the PSC first shunted their petition to its Office of Consumer Services to be handled as an ordinary complaint, and later, after a second petition was filed, still allowed submetering to go forward if a bare majority of tenants could cover the electric costs with utility allowances and public aid through HEAP grants.

In a recent filing, Related claimed that in the past year 54 percent of the tenants could have covered the new electric charges. Even if that were the case, it occurred during a year of milder than normal weather and lower electricity costs, and left 46% facing additional burdens. The PSC greenlighted the owner's use of eviction to enforce claims for unpaid electric bills.

In a February 16, 2010 letter, HUD confirmed its determination that the owner had not complied with the applicable federal regulations relating to submetering. HUD said that

Riverview II must cease charging for electricity and comply anew with all the tenant notification and submetering conversion regulations.

Riverview must comply anew with all of the tenant notice and comments [procedure] described herein prior to charging for submetered utilities.

On March 17, 2010, Riverview II protested the HUD decision disapproving the implementation of submetering without compliance with the agency rules, and asked HUD to waive its regulatory requirements.

On April 7, 2010, the tenants submitted to HUD their papers in opposition to the owner's request for a waiver.

On May 7, 2010, Riverview II filed materials with the PSC indicating its plan to evict tenants who do not pay electric bills. The filing includes a sample notice regarding non payment of electric service charges which states:

Please remit $XX.XX by MM!DD/YY [15 days later] or we will commence summary proceedings in accordance with New York law to enforce our rights and seek a warrant of eviction.

See Yonkers Riverview II Files Revised Procedures to Evict Tenants for Alleged Nonpayment of Bills for Submetered Electric Service.

On May 13, 2010 the New York PSC denied the petition of the Riverview II Tenants' Association for rehearing. That petition had pointed out, in detail, the denial of due process and lack of HUD approval of submetering in accordance with federal regulations. For example, the petition identified a pattern and practice of allowing submetering which affects tenant property interests without providing timely and adequate notice to tenants of the pendency of the proceedings and an opportunity to participate in the proceeding prior to issuance of submetering orders.

In response the owner argued it did not have to notify tenants when it filed the application to submeter that a case was pending to allow the owner to submeter their apartments.

The Commission denied the tenants request for rehearing along with many other items on its consent agenda on May 13 with a voice vote and no discussion. The written order has not been released.

In a May 21, 2010 letter, HUD confirmed that the submetering was illegally implemented and denied the owner's request for waiver of HUD requirements.

HUD directed a roll-back of submetering at the Yonkers Riverview II project due to the failure of the owner to comply with federal regulations which govern a conversion from owner-paid to tenant-paid utility service. HUD stated:

Based on HUD's review, it has been determined that the Department will not approve the waiver [requested by Riverview II] . Please be advised that the owner has been directed to comply with the tenant [participation] and notice requirements prior to charging for sub-metered utilities.

HUD also stated that the approval by the PSC was not sufficient to satisfy the federal requirements:

While HUD recognizes that the owner must obtain any necessary Public Service Commission approvals, HUD would not consider those approvals as meeting the required notice and other requirements set out in HUD's regulations.

To remedy the illegal submetering, at a minimum it will be necessary for all charges for electric service to be reversed and refunded, and for the PSC to vacate its orders allowing submetering at Riverview II.

If the PSC submetering orders for Riverview II are not vacated, or if full refunds to tenants of all charges made under color of the PSC orders are not made forthwith, tenants may seek damages and injunctive relief in federal court due to the violation of the tenants' clearly established constitutional rights to due process of law and the violation of HUD regulations regarding conversion to submetering.

Anne Mead, First PSC Chairwoman and Former PULP Board Member, Dies at 86

Anne Mead died last week. She was "a trailblazing Democratic lawyer who served as Suffolk's first deputy county executive, the county's first woman judge and later the first woman to chair the Public Service Commission." She was highly respected, a champion of consumer rights, and served as a member of the Board of Directors of PULP following her service on the Commission.

Maine PUC Staff Calls for Regulation of VoIP

In an Examiners’ Report released on May 18th, the Maine Public Utilities Commission (“MPUC”) Staff found that the Voice over Internet Protocol (“VoIP”) services provided by Time Warner Cable and Comcast constitute “telephone services” under Maine law and are subject to the MPUC’s regulations. The Staff also found that its conclusion is not preempted by federal law. While the issue is now set for final decision by the full Commission in Maine, the positions taken in the Examiners’ Report and the analysis provided are very illuminating for the marketplace changes taking place in New York State.

As we’ve reported here and here, the regulated local exchange carriers across our state have lost about half of their access lines in the past 10 years, with most of them migrating from Verizon to the unregulated VoIP services offered by the cable companies. As in Maine, these providers are not subject to the New York State Public Service Commission (“PSC”) protection or service quality requirements and do not pay regulatory assessments to the PSC, creating a disjointed and, yes, broken regulatory environment in our state.

As in New York, the cable companies offering VoIP services in Maine obtain wholesale services from certificated (that is, regulated) providers. These companies execute interconnection agreements with other providers, receive telephone numbering resources for the VoIP operations, and permit telephone number porting but, because they do not provide service to the end user customers and the VoIP provider does, the state’s regulatory requirements are currently inapplicable. The Maine Office of the Public Advocate argued that since the VoIP providers “transmit communications by telephone” they are offering a “telephone service” under the Maine Statutes and because they offer this service within the state for compensation, they are a “telephone utility.” As such, they must receive a certificate of public convenience and necessity from the MPUC. The Maine Statutes also provide that a cable television company that offers services like those of the telephone utilities is subject to the MPUC’s jurisdiction. In addition, it was argued that neither Congress or the FCC have explicitly preempted state regulation of voice services offered by cable companies.

The Examiners’ Report agreed with the Public Advocate and found that VoIP is a telephone service under the Maine Statute:

Indeed, VoIP service is offered to consumers as a substitute for traditional, circuit-switched telephone service, and the experience of placing or receiving a VoIP call is indistinguishable from that of placing or receiving a circuit-switched call: a consumer picks up a telephone handset, dials a telephone number, and waits until the called party joins the call by picking up the ringing telephone handset. Likewise, the experience of conversing with another person on a call placed or received by a party subscribing to VoIP service is indistinguishable from the experience of conversing on a purely circuit-switched call.

The Report also found that Maine is not preempted in regulating these services. While states were specifically preempted by the FCC from regulating so-called “nomadic” VoIP providers such as Vonage, that was because the mobility aspect of the service made it impossible to determine the terminating points of the call, rendering the service to be “interstate only.” With “fixed” VoIP services, like those offered by Time Warner Cable and Comcast, the FCC has not preempted enforcement.

PULP believes every Commissioner at the New York PSC should read this important decision from Maine and begin the process to exercise proper authority over the VoIP service offered by the cable companies. Otherwise, our present course will result in the PSC having necessary regulatory oversight over a significant minority of the state’s telephone providers and customers, leaving the customers whose telephone service is via VoIP without the necessary protections to ensure reliable, affordable,universal service at reasonable rates, terms and conditions.

Lou Manuta

AARP Objects to Proposed Settlement by U.S. of Antitrust Case Against KeySpan for Inflating NYISO Charges

AARP has submitted comments and objections to the proposed settlement of a U.S. Justice Department (DOJ) antitrust lawsuit against KeySpan filed in February 2010. The Complaint alleges KeySpan violated the Sherman Act when it inflated NYISO electricity capacity auction prices from 2006 to 2008. The amount by which prices were inflated was estimated by Con Edison at $159 million in 2006 alone.

A Proposed Final Judgment, filed the same day as the Complaint, would settle the case. See KeySpan Agrees to $12 Million Settlement of DOJ Antitrust Claims it Manipulated NYISO Electric Capacity Market Prices, PULP Network, February 23, 2010.

Under federal law, there must be an opportunity for public review and comment before a court approves settlement of a civil antitrust case brought by DOJ. Under the terms of the proposed settlement:

• KeySpan would admit no wrongdoing,
• Keyspan would pay $12 million to the U.S. Treasury.
• There would be no remedy for customers who were overcharged,
  
• there is no statement of the harm to markets and consumers caused by KeySpan or disclosure of the portion of inflated charges received,
• no explanation for requiring disgorgement of only part of KeySpan's share of the inflated prices paid to all sellers in the NYISO capacity market, and
  
• inadequate factual justification in the record for a settlement.

AARP's comments ask the Justice Department to supply more information and to renegotiate the proposed settlement, and for the Court to disapprove it if it is not modified.

Update:
Matthew L. Wald, Critics Assail U.S. Plan to Settle With KeySpan, N.Y. Times, July 21, 2010.

Memorandum and Order, Feb. 2, 2011. U.S. District Court Judge William H. Pauley III, approved the settlement on the terms agreed to by the Government, accepting the US DOJ recommendation to reject arguments of objectors including AARP, the state utility regulator, and Con Edison.

Matthew L. Wald, KeySpan Price-Fixing Penalty Approved - Some Call It Low, N.Y. Times Feb. 2, 2011. "Although price-fixing by an electricity company may have cost New York customers nearly $300 million, the federal government can close the books on the case by collecting a penalty of just $12 million, a judge ruled on Wednesday."

Michael Giberson, United States v. KeySpan Corporation antitrust Case Settles for Paltry $12 Million, Knowledge Problem, Feb. 2, 2011. "$12 million seems like a too-modest remedy."

GIPA Files for Rehearing of FERC Decision on Cohoes Falls Hydro Project

The Court of Appeals for the Second Circuit held the Federal Energy Regulatory Commission (FERC) failed to consider best use of the federally regulated Cohoes, N.Y. dam and hydropower plant when it granted a new license to the current owner, and so the case was remanded to FERC to review an alternative proposal of the Green Island Power Authority (GIPA). See Second Circuit Requires Consideration of GIPA Plan for Cohoes Falls Hydro Power Station, PULP Network, August 10, 2009. PULP joined with many other organizations in filing an amicus brief with the Circuit Court supporting GIPA's proposals.

The power plant known as the School Street Project in Cohoes was sold by Niagara Mohawk Power Corporation as part of the New York PSC's effort to deregulate power generation, and the power plant has since changed hands several times. GIPA proposed to replace the School Street Project with a Cohoes Falls Project. The Cohoes Falls Project would increase renewable power production, restore public appreciation of the resource, and its Native American heritage, rewater the historic Cohoes Falls to run year round, save fish, and increase community economic development of the area by securing more low cost renewable power and enhancing recreational uses. The plan would improve public access and restore Cohoes Falls to the year-round beauty preserved by James J. Audubon when he painted the Cohoes Ducks:

On April 15, 2010, FERC issued an Order on Remand and Reinstating New License for the School Street Project No. 2539, Erie Boulevard Hydropower, L.P., 131 FERC ¶ 61,036 (2010). In that order, FERC rejected GIPA's Cohoes Falls Project proposal and denied standing to GIPA. In doing so, FERC also rejected GIPA's cost estimates for building a new, relocated dam and an improved power generating plant as being too low.

GIPA has now filed a Request for Rehearing with FERC specifying seventeen errors it believes require reversal. See Larry Rulison, GIPA Appeals Ruling on Cohoes Falls, Albany Times Union, May 18, 2010.

If FERC does not grant rehearing, the Request for Rehearing is a prerequisite for further court review under the Federal Power Act.

OTDA Announces Second Regular HEAP Payments: $100 to Utilities, $200 to Vendors of Delivered Fuel

On May 11, 2010, the New York State Office of Temporary and Disability Assistance (OTDA) announced it will issue additional HEAP benefits to households who previously qualified for Regular HEAP during the 2009-2010 HEAP season. The supplemental payment is being made with federal LIHEAP contingency funds released by President Obama in January.

According to the OTDA press release,

eligible households will be able to receive an additional $200 if they heat their home with a deliverable fuel such as oil, kerosene or propane, or $100 if they heat with natural gas or electricity provided by their utility company.

Most households that have already received a HEAP benefit this winter will not need to apply for the second regular benefit, and will receive a notice later this month informing them that their additional benefit has been sent to their fuel vendor to be credited to their account. Those households to whom OTDA is unable to authorize a payment will receive a notice at that time with instructions on how to apply.

The additional benefits will help many New York households who have been unable to afford their energy costs this year without hardship. According to the OTDA press release, "[t]hrough the end of April, over 1.4 million HEAP benefits have been issued, a 13 percent increase over the same time last year. Last winter, New York issued more than 1.5 million HEAP benefits to low-income households, a record high."

The OTDA Press Release says

The additional assistance is being provided with $45 million in federal Low-Income Home Energy Assistance Program (LIHEAP) contingency funds released to New York earlier this year by President Obama.

The $45 million of federal contingency funds were released on January 20, 2010. OTDA announced the release of additional funds nearly four months later, and only three days before the HEAP program closed to new applications on May 14, 2010. It appears that OTDA did not adopt a new regulation, HEAP Plan amendment, or sub-regulatory policy guidance through its ADM, INF, or GIS systems regarding the use of the additional funds.

There was no opportunity for public participation prior to the May 11 OTDA announcement of the belated allocation of the $45 million in additional federal funds released in January. The HEAP Block Grant Advisory Council (BGAC) has not been convened by OTDA to meet in the past two years. Appointments to the BGAC have not been made to replace former members who retired or who no longer work for HEAP program stakeholders. In his proposed 2010-11 budget, Governor Paterson proposes to eliminate the BGAC, which serves without compensation, and to eliminate HEAP funding for low-income weatherization, which by statute is allocated 15% of the federal HEAP funds for New York State. The legislature has not acted on the proposals.

It is not clear whether the additional payments to utilities and fuel vendors will provide tenants with any extra protection against shutoffs, beyond the direct payment to the vendors. Duties of utilities and other energy vendors upon their receipt of second Regular HEAP payments are not all contained in the State HEAP Plan. In privately negotiated vendor agreements with OTDA, energy services providers make arrangements with OTDA on matters such as continued provision of service in exchange for direct payment of regular or emergency HEAP benefits. A common provision is the assurance of 30 days continued service without shutoff after a HEAP payment is made.

In comments regarding the preparation of next year's HEAP Plan, PULP has pointed out the absence of adequate public participation in how the money is used, and the omission from the State HEAP Plan the duties of the utilities and other vendors which can significantly affect household eligibility and their protection. See PULP Expresses Concerns with State HEAP Program, Proposes Improvements,Transparency and Public Scrutiny of Utility Vendor Agreements, PULP Network, February 19, 2010.

OTDA Proposes Rule Extending Utility Assistance Repayment Agreements from One to Two Years

The New York State Office of Temporary and Disability Assistance (OTDA) is proposing to amend its regulations to implement last year's statutory amendment to the emergency utility assistance program under social services law 131-s. Persons with incomes over the threshold for ongoing public assistance are required to sign a repayment agreement as a condition of assistance. The proposed regulation will extend the repayment period from one to two years. Although the regulatory change is being made now, OTDA previously announced the change in the repayment period in a directive to local social services districts, 09-ADM-17. See

• OTDA Implements Amendment Easing Repayment Terms for Emergency Utility Assistance, PULP Network, October 22, 2009;
• OTDA Must Relax Its Administrative Restriction on Utility Assistance Loans for Persons with Incomes Above the Public Assistance Level, PULP Network, July 29, 2008;
• OTDA Eases, but Continues, its Administrative Restriction on Assistance to Utility Customers with Incomes Above the Public Assistance Level, PULP Network, October 5, 2008.
  

In its justification for the new regulation, apart from taking action to comply with the statute, OTDA acknowledges the hardships when 131-s assistance is denied:

By extending the time period for low-income households to repay their utility arrears assistance from one year to two years, these amendments would reduce the households' monthly repayment amounts, making the payments more affordable. Lower monthly payments would help low-income families remain current on their utility repayment agreements during these difficult economic times and better enable them to meet their other monthly financial obligations. By improving the ability of low-income households to comply with the terms of the repayment agreements, these amendments also would lessen the need for the local districts to utilize costly temporary housing options.

Temporary housing options are utilized when applicants for SSL § 131-s have been noncompliant with past repayment agreements. If there is noncompliance with prior repayment agreements, local districts are prohibited from making additional payments under SSL § 131-s and 18 NYCRR 352.5(e). Thus these amendments would help local districts reduce the need for temporary housing assistance and would enable more persons to remain in their homes with the utility services they need.

Actually, one could look all day in the statute, Section 131-2 of the Social Services Law, but one will not find any statutory language which actually mandates that "[i]f there is noncompliance with prior repayment agreements, local districts are prohibited from making additional payments under SSL § 131-s."

This harsh requirement is the invention of OTDA, which added the prohibition of aid to those indebted for prior assistance in its regulation, going beyond the language of the statute. Section 131-s has always limited assistance to those unable to pay to avert a shutoff. The fact that a person has income above the meager public assistance level does not mean the person can afford to pay prior utility assistance or that the person has funds now to meet the current need.

While a stretchout of the payments from one year to two years under the recent amendment will undoubtedly help some households, the above discussion of homelessness caused by a lack of utility service highlights the hardship and problems caused when aid to avert a current utility emergency is refused under OTDA's harsh rule due to the applicant's failure to repay assistance received in the past, without regard to the current availability of income and resources needed to continue service. Courts have recognized that the lack of utility service contributes to "a threat of imminent danger" to children In re Lillian H., 254 AD2d 237, 679 NYS2d 142 [1st Dept., 1998]). No utilities, heat or running water resulted in a finding of "imminent danger"Matter of Tad M., 123 Misc 2d 1071, 475 NYS2d 996 (Fam. Ct., Richmond Co., 1984. See Candle Fires: A Symptom of "Rolling Blackouts" Affecting Low Income Households, PULP Network, September 5, 2006; No Electricity: Middletown Residents in Critical Condition from Lantern Fire, PULP Network, October 19, 2008.

The 131-s program has a heightened importance now that the 2009-10 HEAP season has ended. The affordability problem is particularly acute during the summer and fall, when assistance under the federally funded seasonal HEAP program is unavailable, and utilities ramp up their terminations of service for collection purposes. See Powerless: Low-Income Households Facing Termination of Service with No Remedies, PULP Network, PULP Network, July 17, 2009; As Poverty Continues its Tight Grip on New York State, Utilities Increase Interruptions of Electric and Natural Gas Service to Collect Bills, PULP Network, April 01, 2010.

FCC: Low Income New Yorkers Still Struggling to Afford Phone Service

This week, the FCC released its latest "Telephone Penetration By Income By State" report . The report is based on March 2009 Census Bureau survey data from its Current Population Survey which asks the question:

"Does this house, apartment, or mobile home have telephone service from which you can both make and receive calls? Please include cell phones, regular phones, and any other type of telephone."

The FCC Report found:

• In March 2009, penetration among low income households (under $10,000 annual income in 1984 dollars) nationwide was 90.4%. This contrasts with an overall nationwide penetration rate of 95.6% in March 2009.
• Since 1985, when the FCC first established Lifeline to help low income households afford the monthly cost of telephone service, penetration rates among low income households have grown from 80.0% to 90.4%.
• States that have provided a high level of Lifeline support for telephone service for low income consumers experienced an average growth in penetration of 4.6% for low income households from March 1997 to March 2009. In contrast, states that provided a low level of Lifeline support experienced an average growth of 2.9% in telephone penetration rates for low income households between March 1997 and March 2009.
• Among all states, penetration rates among low income households ranged from a high of 97.0% to a low of 81.1% in March 2009.
  

The Report shows that the percentage of low income households with telephone service in New York State rose from 84.6% in March 1984 to 90.1% in March 2009. In March 2000, the penetration rate for low income New Yorkers was 92.0%. In contrast, the penetration rate for higher income New York households (earning more than $40,000/year in 1984 dollars) was much higher: 98.4% in March 1984 and 97.3% in March 2009.

The FCC's survey takes into consideration the presence of wireless Lifeline providers, including TracFone's SafeLink service and Virgin Mobile's Assurance Wireless. Even when these are included, the percentage of low income New Yorkers with phone service actually went down in the past decade by nearly two percentage points. Keep in mind that TracFone is now the largest Lifeline provider in New York State, with about 365,986 customers , and the percentage of low income households with a phone has still declined. The 2% shrinkage in New York's telephone penetration means that approximately 160,000 more households lack any phone service.

A Universal Service proceeding has been launched by the New York State Public Service Commission ("PSC"), but it is examining high cost support in rural areas first and may not get to low income issues for a year or more. What more can be done in the meantime to ensure all eligible New Yorkers can benefit from this worthwhile program and increase the state's telephone penetration rate?

Lou Manuta

Nearly One-Quarter of All Americans Have Cut the Cord; PSC Losing Clout

The United States Centers for Disease Control and Prevention released on May 12, 2010 its twice a year report on the number of Americans who "cut the cord" and are using wireless telephone service only. According to the report, 24.5% had only wireless telephones during the last half of 2009, a 1.8% increase since the first half of 2009. A state-by-state breakdown was not provided.

The New York State Public Service Commission (“PSC”) www.dps.state.ny.us currently only exercises jurisdiction over traditional, wired telephone service and can only regulate wireless service after it conducts a hearing to determine that such a step is necessary. As a result, the PSC’s consumer protections and service quality requirements do not apply to one-quarter of the state’s telephone users using wireless phones only (these protections do not apply to Voice over Internet Protocol or cable telephony customers either, who make up about 30% of the state’s telecommunications market).

How can the PSC meet its proclaimed mission to “ensure safe, secure, and reliable access to . . . telecommunications . . . services for New York State’s residential and business consumers, at just and reasonable rates” when it no longer provides oversight of the terms and conditions of phone service to half of the marketplace?

Lou Manuta

New York's HEAP Household Energy Assistance Programs Closing May 14

New York OTDA has announced that the Home Energy Assistance Program (HEAP) will close for both Regular and Emergency HEAP assistance benefits on Friday, May 14, 2010. No new applications will be accepted after that date.

When the HEAP program is open, OTDA instructs local departments of social services to explore HEAP eligibility first, before considering applicants' eligibility for state/local funded programs, such as New York's emergency utility payment program under Section 131-s of the Social Services Law. This state-and-local program will become very important for growing numbers of low-income households facing service termination. See As Poverty Continues its Tight Grip on New York State, Utilities Increase Interruptions of Electric and Natural Gas Service to Collect Bills, PULP Network, April 1, 2010.

OTDA will issue a draft HEAP plan for 2010 - 2011 at some point outlining its intentions for the program in the next HEAP season beginning November 1, 2010. The state plan for using federal HEAP funds in 2010-2011 will eventually be submitted by the Governor to HHS for approval, after public involvement. A summary of public comments in the HEAP needs assessment phase of plan development are posted at the OTDA website. PULP filed comments and recommendations for improvement of the HEAP program in February, 2010. See PULP Expresses Concerns with State HEAP Program, Proposes Improvements, Transparency and Public Scrutiny of Utility Vendor Agreements, PULP Network, February 19, 2010.

The HEAP emergency heating equipment repair and replacement program not affected by the May 14 cessation of the Regular and Emergency grants and will continue through Thursday, September 30, 2010.

Yonkers Riverview II Files Revised Procedures to Evict Tenants for Alleged Nonpayment of Bills for Submetered Electric Service

The Related Companies, owner of Yonkers Riverview II, filed revised procedures and model notices for eviction of tenants who have not paid charges for electric service. The May 7, 2010 filing by the landlord includes a sample notice regarding non payment of electric service charges which states:

Please remit $XX.XX by MM!DD/YY [15 days later] or we will commence summary proceedings in accordance with New York law to enforce our rights and seek a warrant of eviction.

A February 18, 2010 PSC Order indicated that the owner attempted to evict 80 tenants alleging nonpayment of charges for electric service, yet the PSC allowed submetering to continue, denying a petition of the tenants. Some lower court decisions indicate that landlords cannot evict tenants for non payment of bills for submetered electric service.

The tenants' petition for rehearing is pending. It points out that the PSC order, which allows owners to evict for non payment of electric service if they first give HEFPA notices, owners may circumvent the HEFPA procedures and simply allocate partial tenant payments to cover the electric service first, and then seek to evict for nonpayment of the balance of rent due.

The owner's response to the tenants' petition indicates that the utility allowances established after submetering began do not cover the costs of electric service for 46% of the tenants. When electric charges for electric heat are not offset by utility allowances, additional economic pressure is placed on tenants, particularly those with low incomes. As a result, submetering may contribute to hardship faced by low income households and to their displacement from previously affordable housing.

Oceangate Tenants File Comments on Submetering

The North Bay Tenants Association at the Oceangate apartment complex in Brooklyn filed a petition on January 28, 2010 asking the PSC to revoke its prior approval of landlord submetering of electrically heated apartments. As a result, implementation of submetering has been put on hold. The PSC issued a notice inviting public comment under the State Administrative Procedure Act. Last week, the North Bay Tenants Association filed a summary of comments of 212 tenants pointing out flaws in the submetering regime that was about to be implemented.

The tenants stated:

• The apartments are heated by baseboard electric heat. Almost 60% of the commenting households reported that their baseboard electric heaters lacked programmable thermostats.
  

• Eleven percent (11%) reported that their windows do not open and close properly and almost

• 17% reported that their apartment doors do not open and close properly. Forty-eight percent

• 48% said their windows were drafty; 43% reported drafts around their apartment doors, and

• 73% said there is no weather stripping on their apartment doors, leading to hallways that 50% said were unheated.
  
• About 53% of the 212 commenting households wrote in additional comments and of these, 19% reported malfunctioning heaters and thermostats and inadequate heat in winter.
  

Comments regarding the baseboard electric heaters included the following:

• "The new heaters are not child proof and they need to fix that."

• "The biggest problem is there is no manual option to adjust heat. It was very cold all the time."
• "The thermostate [sic] doesn't work."

• "'We don't have no control of the thermostat."

• "Heater does not work in winter time."

• My apartment is always cold the heat never comes up. The meter [sic] by the kitchen stays showing that there is heat because it is near the kitchen when I cook -once again I don't think its fair to pay for something (heat) that I do not receive.
  
• In the winter we have to sleep with hats and sweaters or hoodies because its constantly cold. I don't think it is fair to have to pay for something I don't receive regularly."
• "I don't have control over my thermostat and my heat."
• "I feel electricity should be included in the rent because we have no control of thermostat."
• "There is a problem with the heaters, before they never worked after the landlord changed new heaters I cannot regulate my own temperature since its also not working when it comes to regulating temperatures."
• "I have a 1 year old son, it is cold in my whole house. We have to walk around and sleep in our regular clothing instead of night clothing. I do not feel that it is fair to me or my son I said something to landlord and they said there is nothing they can do the heat is controlled by the thermostat."
• "In order to heat my apartment I have to put ice pack on the heater to make heat go on and use electric heaters."
• "Apartment very cold we have to put ice pack or ice on the meters for the apartment to be warm."
• "In Dec., Jan., Feb. 2010 my baseboard heaters in LR and BR didn't work. It was very cold in the apartment."
• "I haven't been getting heat since the conversion to meters. Using ice does not activate system. Neither does turning thermostat."
• "Through the earlier part of Fall and into Winter my apt. was extremely cold resulting in me cutting on oven and boiling water. Eventually I ended up putting frozen water bottles on the thermostat to generate heat this was called into the management . . . ."
• "Did not work properly during the winter too cold."
• "I don't know what switch they clicked but my heat comes on even when it's not cold outside or in my house. Even though 50% of the winter we had no heat."
• There is not enough heat to warm up the living room - draft comes in from my front door and AC.

The owner of Oceangate has been granted extensions of time by the PSC to answer the tenants' emergency petition. New York State DHCR and the PSC have not yet responded to FOIL requests relating to their prior actions approving submetering. The tenants believe there was a lack of timely and adequate notice of the agency actions and that the submetering was approved without full compliance with HUD regulations applicable to submetering conversions, which require tenant participation and establishment of utility allowances commensurate with the usage of energy conservative tenants.

State Budget Not in Sight

Agreement on a state budget for April 1, 2010 - March 31, 2011 has not been reached. See David King, A Month After the Deadline, State Budget Nowhere in Sight, Gotham Gazette May 6, 2010.

As a result, many not for profit organizations are rapidly exhausting their resources as they struggle to provide services in anticipation of renewed appropriations and new contracts. See
State Budget Impasse Threatens PULP's Future, PULP Network, April 09, 2010.

The FCC Stops TracFone from Backing Away from State 911 Requirements

Although TracFone willingly claims and accepts millions every month in universal service support, it has attempted to back away from state requirements to provide emergency 911 service. Back in 2008, the FCC granted TracFone’s petition to be designated as a Lifeline-only Eligible Telecommunications Carrier (“ETC”) in 12 states, including New York. One of the requirements placed on TracFone so that it could receive federal Universal Service Fund (“USF”) low income support was the company’s commitment to be in full compliance with state 911 and E-911 requirements. Not satisfied with this “onerous” mandate, the company petitioned the FCC last summer to relieve it of this obligation. In a May 3rd Order, the FCC denied TracFone’s request.

The FCC held that the 911/E911 requirement “was relevant to the issue of whether designation of TracFone as an ETC was in the public interest” and “[g]iven the circumstances presented by TracFone’s petitions for limited ETC designation for Lifeline support, the Commission imposed the 911/E911 certification condition as being necessary to counterbalance the potential disadvantages of designating TracFone a limited ETC.” It also found that “access to 911 and E911 was especially critical for TracFone’s Lifeline customers because that service may be the customer’s only means of accessing emergency services.”

The Commission went on to note that “the certification condition enforces the principle that Lifeline funds should not be disbursed to any carrier that is not providing access to emergency services nor complying with state-level obligations regarding 911 funding; that principle should be especially potent here, where extending emergency services to the most needy was a motivating factor in the Commission’s initial grant of forbearance to TracFone.” Should TracFone not comply with state 911 and E-911 requirements, the FCC stated that it will consider whether TracFone’s certification should continue to be effective.

At the same time that TracFone was attempting to abdicate one of its primary responsibilities as a Lifeline ETC, it had no qualms in accepting millions of dollars every month in USF low income support. According to the Universal Service Administrative (USAC), for the last quarter of 2009, TracFone received over $10.6 million in support for New York alone. The company is projected to receive over $12 million in the second quarter of 2010. In fact, for all of its states, TracFone received over $156 million of USF support in the fourth quarter of 2009. These figures equate to more than 26 million Lifeline customers nationwide. While it is commendable that they have been able to provide Lifeline service to so many low income users, the least they should do is permit these customers to access emergency services. They are certainly reaping sufficient financial rewards to do so.

Lou Manuta

FCC Orders Review of Lifeline Programs; NY May Need to Improve

In an Order released on May 4th, 2010 the FCC directed the Federal-State Joint Board on Universal Service to review the federal eligibility, verification, and outreach rules for the Lifeline and Link-Up phone service affordability programs. Specifically, the Joint Board was asked to recommend any changes to the Lifeline and Link-Up programs that may be necessary, “given significant technological and marketplace changes since the current rules were adopted.” They were asked to consider:

(1) The combination of federal and state rules that govern which customers are eligible to receive discounts through the Lifeline and Link-Up programs. Currently there are different criteria in each state, depending on whether the state has implemented its own Lifeline program. The FCC questioned whether there should be automatic enrollment in each state and whether the existing income eligibility criteria (135% of the federal poverty guidelines) continues to make sense. Additionally, the Joint Board was asked to examine the verification process currently employed by the providers to discern whether improvements are needed or whether there should be uniformity among the states.

(2) Best practices among states for effective and efficient verification of customer eligibility, both at initial customer sign-up and periodically thereafter. The FCC is seeking information on best practices at the state level, specifically related to consumer eligibility. The Joint Board was asked whether any of these best practices should be applicable at the federal level. In addition, the Joint Board was asked to report on whether any states support broadband services through their low income programs. Further, the Joint Board was asked to investigate whether there have been issues with applicants making duplicate claims for Lifeline support (that is, receiving Lifeline simultaneously from a landline provider and a wireless provider).

(3) The appropriateness of various outreach and enrollment programs. Currently, there are no specific national guidelines for the types of outreach required by the Lifeline providers to promote customer awareness of the service. The Joint Board was directed to examine whether there should be specific, enforceable outreach requirements for all Lifeline providers.

(4) The potential expansion of the low income program to include broadband, as recommended in the National Broadband Plan. Finally, the Joint Board was requested to examine how its responses would be impacted by the expansion of the Lifeline program to broadband.

The Joint Board’s Recommended Decision on these issues is due within six months.

PULP welcomes this examination by the FCC. As we have reported on numerous occasions, the number of Lifeline customers in New York State served by local exchange carriers is less than half its peak in 1996 and too many eligible New Yorkers are not even familiar with Lifeline’s existence.

See Lifeline Awareness Week Begins Monday – Is There Anything for New York to Celebrate?, and Low-Income Telephone Lifeline Assistance Reaches Fewer than 300,000 New Yorkers, Lowest in 20 Years.

Meanwhile, TracFone wireless has single-handedly matched the Lifeline customer total in New York served by the regulated carriers -- all in about a year of offering the service -- but has fought to be removed from some of the Eligible Telecommunications Carrier obligations it agreed to back in 2008.

However, the state Office of Temporary and Disability Assistance reports that there are over 1.3 million households in New York receiving Food Stamps , meaning that merely half of the Lifeline eligible households are enrolled in the service. Will the Joint Board’s recommendations spur the state to do more than maintain the status quo? PULP remains cautiously optimistic.

In addition, PULP has advocated for the expansion of the Lifeline program to include broadband access. This is one of the key elements of our pending application for a broadband stimulus grant, arguing that unless accessing the service is affordable for all, the millions spent on deployment may go to waste. Expanding Lifeline without eliminating the current support for voice service while not overburdening the fund will be a difficult balance to strike, but one essential to achieve.

Lou Manuta