PULP Replies to Con Edison Defense of Reducing its Walk-in Customer Services During Lockout of Unionized Employees

For background, see the prior posts regarding the July 1, 2012 Con Edison lockout of unionized employees, the union’s petition to the NY PSC for investigation of service reductions, and PULP’s motion to intervene urging the PSC to Order reopening and resumption of full service at its walk-in customer service centers, as has been ordered by the Commission on three prior occasions involving Con Edison, NYSEG, and RG&E. 

Con Edison filed a Response to the investigation petition, and PULP has filed a Reply on the issue of diminution of services to customers at the utility’s walk-in offices.

Con Edison’s response argues that despite closing two Walk-in Centers and reducing in-person services at three others to acceptance of payments , “its customers and applicants for service have substantially the same services as they had prior to the work stoppage [i.e., its lockout of union employees].”  Con Edison's Response at page 55, footnote 39, however, basically concedes that services to customers seeking them at walk-in centers are diminished:

[Con Edison] Customer Operations has suspended the following activities:
• Walk-in Centers in the Bronx and Manhattan are closed. The Walk-in Center in Staten Island is open. Walk-in Centers are open in Queens, Brooklyn and Westchester (Mount Vernon) but representatives are not available to handle customer inquiries except via courtesy phones available at Queens, Brooklyn and Mount Vernon centers. Signage in closed Walk-in Centers alerts customers to nearby authorized facilities for bill payment.
• Reading of residential and small commercial customer non-AMR meters is suspended, except in Staten Island.
• Customer-requested physical service turn-offs and meter reading appointments are suspended. 

Thus, Con Edison customers in Staten Island still have full walk-in service and meter reading. On the other hand, customers in Manhattan and the Bronx have no Con Edison office to visit regarding problems, payment plan negotiations to restore previously shut off service, new applications for service which may be required to be in writing whenever there are prior unpaid bills at the premises, presentation of the “positive ID” Con Ed requires for new service, etc.  Customers in Brooklyn, Queens and Mount Vernon face offices that are open only to receive payments, with house telephones for the Call Center.   

Con Edison maintains that

withdrawal of its personnel from the Walk-in Center sites [Mount Vernon, Queens and Brooklyn] was done out of concern for the security of the on-site personnel and the potential that the presence of Company personnel at National Grid and Food Bazaar premises might have resulted in National Grid's and Food Bazaar's personnel and customers having to cross a Union picket line to enter for work or to transact business.

Regarding security fears, PULP responded that the company can employ security guards, as do many other businesses, and seek police assistance in the event of trouble.  PULP pointed out that the company apparently overcame its security concerns when the Staten Island office was fully staffed and remains open to provide full customer services to Con Edison’s Staten Island customers. The discretionary nature of Con Edison's deviation from the Order is illustrated by its decision to provide full services at the Staten Island Walk-in Center but not elsewhere.  

Regarding Con Edison's concern that a hypothetical union picket line protesting its lockout might inconvenience corporate neighbors and burden its neighbors' customers, PULP responded that such “hypothetical concerns should not be an excuse to abandon services required by Commission Order to be provided by Con Edison to Con Edison customers and the public.”   PULP pointed out that if the shoe were on the other foot, and if National Grid or Food Bazaar locked out their employees and they set up a picket line that was honored by Con Edison union employees, Con Edison could continue services to its customers with its management employees, just as it is proving it can do in Staten Island.

PULP noted that Con Edison in its Response touted the fact that  “approximately one year before the expiration of the 2008 Collective Bargaining Agreement, the Company commenced its preparations for the possibility of a work stoppage on July 1, 2012.”  In that entire year of strategic planning for the lockout, these vaunted, detailed preparations did not include continuation of full in-person services to customers at the Walk-in offices (except Staten Island).  Con Edison did not petition for modification of the Commission’s longstanding Order requiring walk-in services to be available every business day, or for permission temporarily to cease walk-in services in Manhattan and the Bronx, or reduce in-person services to the receipt of payments in Mount Vernon, Brooklyn, Queens, or to continue full services to customers in Staten Island that are not available to customers in other boroughs or Mount Vernon.  PULP suggested a disrespect for the often very vulnerable customers who use the walk-in offices and for the Commission and its prior Order which stopped Con Edison from closing its offices and which required reopening of offices that had been closed.  The Order mandates that

Consolidated Edison Company of New York, Inc. shall establish and maintain at least one facility in each of the five boroughs of New York City and in the County of Westchester, whether at an existing Customer Service Center, or at a Walk-in Center to be established in the nearby vicinity of a Customer Service Center to be closed. All Walk-in Centers must be accessible by public transportation and must be open to customers from no less time than 8:30 am to 5:00 pm, Monday through Friday each week, holidays excluded. Each Walk-in Center must provide, at a minimum, all of the services formerly available to customers at the company's Customer Service Centers. All such services shall be provided by Customer Care Professionals employed by Consolidated Edison Company of New York, Inc., except that the function of accepting payments may be provided by tellers or cashiers employed by Primary Agents.

Order Approving Joint Proposal, Case 99-M-0851, (Emphasis added).

Con Edison claims its telephone Call Center is a substitute for the attenuated Walk-in Center services.  Some customers or applicants with hearing, speaking, breathing or other physical or mental limitations that make telephones difficult or impossible for them to use, however, cannot be served satisfactorily by a remote call center, and they may prefer in-person dealings with the utility.  Some customers cannot afford or do not have any telephone service.  Some who need a relative, friend or neighbor to accompany them in sorting out a dispute, applying for service, negotiating a payment plan, lodging a complaint, or simply understanding a problem are not served by an office that is open only to take payments, or by a payment kiosk, or by a house phone to the Con Ed Call Center.  As PULP pointed out in its initial motion for intervention, the denial or delay of utility service can lead to tragic and costly consequences for customers and for the public.

Con Edison argues that the office closings and service reduction are only temporary.  For those seeking service, however, the fact remains that the offices are not open for the full service from Con Edison customer care professionals that is required every day from 8:30 AM to 5:00 PM by the Commission Order.

Con Edison also argued that Department of Public Service Staff is working so closely with the utility that no formal Commission investigation proceeding regarding services being provided during the lockout is needed:

The Company has communicated with the Department of Public Service (“DPS”) the development and implementation of the contingency plan both before and during the work stoppage. DPS Staff has been actively monitoring the Company’s performance during the work stoppage. In light of this diligent and comprehensive effort undertaken by the Company both in advance of and during the work stoppage, and DPS Staff’s ongoing monitoring, a special investigation by the Commission into the quality, reliability or safety of service currently being provided by the Company to its customers is unnecessary. * * * *
There are no circumstances here that would warrant a change in approach, even if the law were to allow it. [footnote omitted]  Moreover, the Motion incorrectly presumes that the Commission is not already exercising oversight of the Company’s operations, both before and during the work stoppage. In fact, the Department of Public Service (the “Department”) is actively monitoring the Company’s operations on a daily basis, having established a Strike Contingency Coordinator and team of Staff technical experts who communicate daily with the Company regarding current operations, actively visit various Company work locations, and reach out to Company personnel for additional information in order to gain a better understanding of various elements of the Corporate Contingency Plan. Moreover, communications between Staff and the Company began well in advance of the work stoppage, in the planning stage. The Company is also proactively communicating with members of the Department at various levels on a daily basis in order to keep Department of Public Service Staff informed as to all material events and circumstances associated with Company operations. 

Con Edison Response, pages. 2, 36.  


PULP replied that even if DPS Staff was somehow persuaded by Con Edison that during the lockout it should be allowed to truncate and terminate walk-in center services to some of the utility's most vulnerable customers, PSC Commissioners cannot be bound when their staff greenlights a utility's course of conduct that violates the Public Service Law or a Commission order, or is contrary to Commission policy.      

Inspector General Report Faults Utility Gifts to Department of Public Service Staff Investigating Safety Issues; Utility to Pay Fine of $1.667 Million

The Syracuse Post Standard reports that:

National Grid is expected to pay a $1.667 million penalty next month to settle charges that for years it plied workers at the state agency that regulates the utility with gifts including meals and rounds of golf.The gifts were uncovered during an investigation of Public Service Commission employees by state Inspector General Catherine Leahy Scott, who released her report today.

Tim Knauss, National Grid fined $1.6 million for improper gifts to state workers regulating the utility, Post Standard, July 18, 2012.  The New York State Inspector General's Report on the Investigation of Employee Misconduct at the Department of Public Service mentions the fine, contained in a proposed settlement scheduled for review by the PSC on August 16, but does not name the utility.  The IG Report states:

The Inspector General determined that from 2002 to 2010 several employees in the New York State Department of Public Service, Office of Electric, Gas, and Water, Safety – Electric, Gas, and Steam Section improperly received gifts totaling more than $7,000 in the form of meals and games of golf from regulated entities.  The Inspector General’s investigation further determined that two Department of Public Service (DPS) employees violated DPS policy by sharing confidential information, which included drafts of documents to be submitted to the New York State Public Service Commission. ****  The Inspector General’s investigation found that for more than eight years, several DPS employees assigned to the Safety Section engaged in misconduct by accepting gifts from public utility companies that were regulated by the Commission.  

 The Inspector General’s investigation further revealed that [an employee working on an explosion investigation] released several draft versions of an accident investigation report in violation of DPS’s confidential information policy.... 

(Emphasis added).  The IG's use of the plural  "regulated entities" and "utility companies" involved in making gifts to DPS staff suggests there may be more than one utility involved.  A response of the Public Service Commission, included in the Inspector General's Report, indicates that:

The utility company which provided gifts to [two DPS employees] as well as other Safety Section employees, has reached a settlement regarding the improper gifting in violation of the New York State Public Service Law.  The utility company has agreed to pay $1.667 million at shareholder expense in lieu of PSC’s commencement of an enforcement proceeding in New York State Supreme Court.  The agreement is subject to PSC approval at its August 2012 meeting.  

Neither the IG Report nor the PSC response contained in it mention National Grid or any of the other gift-giving utilities by name.  It is not clear from the report whether the same utility whose consultant obtained draft investigation reports being prepared by recipients of gifts was also a gift-giver.  The Report does not indicate whether any separate action has been taken by the PSC against the utility whose consultant - a former Department of Public Service staff member - obtained drafts of a DPS explosion investigation report being prepared by employees who had received gifts. 

The report mentions that the leaked draft of the investigation report was being prepared in connection with a major explosion in Queens on July 25, 2008. Contemporary news reports of a major Queens explosion on that date indicate that the utility serving the premises where the explosion occurred is Con Edison.  Sewell Chan, Queens Building Is Evacuated After Explosion, N.Y. Times July 25, 2012; Heads, it's Con Ed; tails, it's the landlord, N.Y. Daily News, July 26, 2008.  Thus, it would appear that the utility whose consultant received drafts of confidential explosion investigation reports is Con Edison.  Parsing the IG report, it appears that at least one employee involved in the leak of the draft DPS explosion investigation report also received gifts, from an unnamed utility.

Update
In a footnote, the Inspector General's report indicates that despite a Safety Staff Report which exonerated Con Edison in the July 25, 2008 gas explosion in Queens, and which was not initially presented to the Commission, the PSC eventually went on to bring a penalty proceeding under PSL § 25 alleging that the utility had violated legal obligations that contributed to the death of a customer, and injury to others:

In March 2011, the Queens incident investigation report was brought before the Commission.  Thereafter, following the filing of an order to show cause in anticipation of proceeding with a penalty action against the utility, the Commission entered into a settlement agreement [with Con Edison] in which the utility agreed to pay $1.5 million.  Following an additional DPS investigative effort, the Commission proceeded against the utility on the grounds that the non-compliance was based on the utility’s failure to follow its written gas turn-on and restoration procedures, which constituted a violation of Public Service Law (PSL) §§ 5 and 65 mandating safe and adequate service and Commission regulation 16 NYCRR 255.603(d), and Commission precedent.

The PSC Case 11-G-0077 includes the Report of the Safety Staff, (drafts of which had been vetted with Con Edison's consultant), which basically would have exonerated Con Edison for not following its established procedures for restoring gas service, stating:

refusing to restore service on that day might only have postponed but not prevented the incident. The same event could have happened even if the Con Edison personnel had fully followed procedure G-11836.

In its Order to Show Cause launching a penalty proceeding against Con Edison regarding the explosion, the Commission indicated it was not bound by the Staff Report:

The Report observed (at 20) that a refusal to restore gas service might have avoided the incident, but concluded that such refusal might not have prevented, but only postponed, the incident because “[t]he same event could have happened even if the Con Edison personnel had fully followed procedure G-11836.” Nothing in PSL 25(3) requires, however, that we determine that full utility compliance would have prevented the death or injury; rather the statute requires a Commission determination that the noncompliance “caused or constituted a contributing factor.” The Report’s speculation as to what might have happened on some subsequent day had the restoration of service been postponed does not necessarily defeat Con Edison’s contribution to what actually happened on July 25, 2008.

The PSC action did not allege any violation arising from the utility's consultant who vetted the Staff drafts of the Safety Report.  Subsequently, Liberty, a plumbing company who along with Con Edison was sued after the explosion, opposed the PSC settlement with Con Edison because it resulted in no finding of wrongdoing by Con Edison.  Liberty apparently raised the issue of the Con Edison  consultant's influence on the DPS Safety Staff Report:

Finally, Liberty claims Con Edison manipulated the Staff investigation. It asserts Con Edison attempted to focus Staff on the condition of gas valves and hoses irrelevant to the open valve in Apartment 2P. 35 Liberty also claims Con Edison diverted Staff’s attention from the actions of Con Edison employees.36 It further asserts Con Edison’s consultant persuaded Staff to remove a conclusion in a draft of the Staff Report, relating to whether Con Edison’s violations caused or contributed to the Gas Incident.37

The footnotes refer to Liberty's objections submitted in opposition to the settlement that are not contained in the PSC public electronic case file for Case 11-G-0077.  As discussed below, the Liberty objections may have contained allegations of improper gift-giving by Con Edison to DPS Staff.


The PSC Order approving the settlement mentions the issue of the leaked report in discussion of Con Edison's response:

Finally, Con Edison rebuts Liberty’s claim that Staff of the Gas Safety Section of the Office of Electric, Gas and Water improperly removed a conclusion from the initial draft of the Report to the effect that Con Edison’s actions caused the explosion.43 Con Edison asserts this is incorrect because the initial report never found Con Edison’s actions caused the explosion, but only suggested that Con Edison’s actions may have contributed to the root cause of the explosion.44 Con Edison also argues that Staff properly revised its initial draft of the Report because the evidence did not support such a conclusion. Here Con Edison asserts the initial draft of the Report did not include any evidence, and contained no discussion, as to how Con Edison’s alleged procedural violations may have contributed to the root cause of the explosions.45

The PSC Order approved the settlement of the case without taking action regarding Liberty's claims on these issues:

Given the limited purpose of this case, Liberty’s objections relating to the Company’s alleged wrongful conduct after July 25, 2008, are not controlling with respect to the acceptance of the Agreement as a basis for settling the penalty action.  At most, they suggest we have valid grounds for exercising our enforcement powers to the fullest extent allowable under the law. In effect, however, this is what the Agreement achieves. It provides for a monetary payment by Con Edison’s shareholders in an amount at least as great as what the Commission could possibly obtain if it successfully pursued all available penalties under the Public Service Law. Thus the Agreement fully achieves the discrete purposes of Section 25 of the Public Service Law.This is not to say that we dismiss the concerns Liberty raised. Rather, we view them as largely outside the scope of this case. We do, however, clarify that we regard Clause II.3 of the Agreement pertaining to the relinquishment of penalty claims, as reaching only gas safety violations associated with the “Gas Incident,” defined in the Agreement the explosion that occurred on July 25, 2008 at 147-25 Sanford Avenue, Queens. We do not read the Agreement as limiting and we preserve our authority to bring any penalty action for violation(s) beyond gas safety violations, which was the focus of our investigation, (i.e., PSL §15, which prohibits, among other things, gifts to Department employees). 56 While Clause II 3 of the Agreement provides the Commission will not pursue a penalty action with regard to Con Edison actions “directly or indirectly related to the Gas Incident” we do not construe that as reaching conduct improperly affecting our Staff’s investigation. We will require Con Edison to accept this reading of the Agreement as a condition of the approval of the Agreement.

In the footnote to the mention of "gifts to Department employees, the PSC Order stated "This clarification should not be read to imply that we have evidence of such violations."  


In June, 2011, a court case brought by victims of the explosion against Con Edison and Liberty Plumbing was settled.  Con Edison agreed to pay the entire award of $25 million.  

PULP Moves to Intervene in Proceeding Regarding Deterioration of Customer Service During Con Edison Lockout

The Consolidated Edison Company of New York ("Con Edison") locked out about  8,500 of its unionized employees on July 1, 2012.  On July 11, the Utility Workers Union of America, AFL-CIO Local 1-2  and others petitioned the Public Service Commission requesting an immediate investigation regarding safety, reliability, and customer service deterioration due to the lockout, and seeking interim relief requiring an end to the lockout.  The PSC directed Con Edison to respond by Tuesday, July 17.  See  PSC Directs Con Edison to Respond to Petition for Investigation of Service Impairment Due to Company's Lockout of Unionized Workers.  

PULP filed a motion to intervene on July 12 supporting the union petition for an investigation regarding the possible erosion of vital customer services, including the alleged closure of customer service walk-in centers, and the cessation of most meter reading (with apparent reliance on estimated bills). 


PULP pointed out that historically, in June and July of last year, Con Edison shut off more than 5,000 customers per month and negotiated more than 30,000 individualized deferred payment agreements each month.  These agreements are essential to maintaining or restoring service to customers who owe arrears for prior service.  PULP argues that if customers cannot obtain service, or cannot restore service after a shutoff with full payment or a payment agreement negotiated with Con Edison, or promptly obtain service after a payment of utility assistance is made, the utility may be violating its basic duty to serve its customers and the public, the Home Energy Fair Practices Act, and Social Services Law 131-s.


PULP's intervention motion cites a prior PSC Order in Case 99-M-0851 approving the settlement of a prior case that stopped Con Edison from closing its walk in customer service centers, in which the Company was mandated to reopen and to keep full service customer service centers open in each borough of New York City and in Westchester County.  The Order states:  

Consolidated Edison Company of New York, Inc. shall establish and maintain at least one facility in each of the five boroughs of New York City and in the County ofWestchester, whether at an existing Customer Service Center, or at a Walk-in Center to be established in the nearby vicinity of a Customer Service Center to be closed. All Walk-in Centers must be accessible by public transportation and must be open to customers from no less time than 8:30 am to 5:00 pm, Monday through Friday each week, holidays excluded. Each Walk-in Center must provide, at a minimum, all of the services formerly available to customers at the company's Customer Service Centers. All such services shall be provided by Customer Care Professionals employed by Consolidated Edison Company of New York, Inc., except that the   function of accepting payments may be provided by tellers or cashiers employed by Primary Agents.

PULP cited a one-Commissioner ORDER INSTITUTING PROCEEDING AND DIRECTING
ROCHESTER GAS & ELECTRIC CORPORATION TO SUSPEND CLOSURE OF ITS CUSTOMER SERVICE CENTERS of former PSC Chairman Maureen O. Helmer in PSC Case 02-M-1465 in which she directed the investigation of impending NYSEG customer service office closings and possible diminution of customer service which, on an interim basis, halted the closure of the customer service offices.  The Order states:

Due to RG&E's failure to notify the Commission of its intention to close its Centers and or to provide supporting information, the Commission does not have information upon which to determine the reasonableness of the company's action.[footnote omitted] Inasmuch as the Centers may provide an important and essential role related to customers' ability to apply for and continue service and enable the company to carry out its customer service obligations (see e.g., Public Service Law Article 2), the Commission must determine whether the closures would adversely impact customer service quality. The Commission's concerns relate to continuation of the customer service functions that are typically provided at customer service centers (e.g., application for service, billing complaints, payment arrangements to avoid service termination, bill payment), traffic volumes at the Centers, and RG&E's outreach plan to educate customers about their customer service options.

PULP also cited a similar interim Order of former PSC Chairman William M. Flynn 03-M-0380 which directed New York State Gas & Electric ("NYSEG") to keep customer service offices open. The ORDER INSTITUTING PROCEEDING AND DIRECTING NEW YORK STATE ELECTRIC & GAS CORPORATION TO SUSPEND CLOSURE OF ITS CUSTOMER SERVICE CENTERS states:

The closure of the Centers may be inconsistent with, and impair, NYSEG's obligation to provide safe and adequate service and customer service protections, as required by
Articles 2 and 4 of the Public Service Law. Therefore, this proceeding is commenced to examine NYSEG's proposal, including, but not limited to, the impact, if any, of the proposed closures on customer service quality, the nature, scope and extent of notice provided to customers, and the quality of available alternatives. To ensure that NYSEG's customers are adequately protected until the investigation of this matter is completed, NYSEG is directed to continue the full operation of its Centers until the Commission issues a final order in this proceeding.

PULP's motion asked the PSC to provide appropriate interim relief and to conduct a thorough investigation whether, during the lockout, Con Edison's customer service deteriorated and whether it breached its universal service obligations or violated the Public Service Law and the prior Commission Order requiring maintenance of full service walk in customer service centers.

PSC Directs Con Edison to Respond to Petition for Investigation of Service Impairment Due to Company's Lockout of Unionized Workers

On July 12, 2012, the New York Public Service Commission (PSC) directed Con Edison to respond by July 17, 2012 to a Motion for Initiation of Expedited Investigation and Interim Relief "seeking that the Commission: 

(1) initiate and conduct on an expedited basis an investigation into the quality, reliability, and safety of the service currently being provided by Consolidated Edison Company of New York . . .  to its utility customers; 

(2) investigate whether customers are being charged for a quality and level of service that ConEd is not providing, and for costs that ConEd is not incurring associated with some 8,500 workers who are involuntarily off the job; and

(3) provide interim relief by directing the Company to terminate immediately its lockout of employees represented by UWUA Local 1-2 and direct their return to work during the pendency of the Commission’s investigation.

The Petition was brought by the Utility Workers Union of America, AFL-CIO Local 1-2.

The Petition references duties required of the utility under the New York Public Service Law, such as the duty to to provide safe and adequate service, points out services which are not being provided or which are diminished due to the lockout, and contends that the company lockout has "imperiled the safety and reliability of utility services provided to its customers."  


The Petition cites certain specific services mandated by statute which are not being provided, such as meter reading and maintaining walk-in offices where people can apply for service, make payment arrangements, and make complaints in person, and notes that ":using estimated bills (which may be much too high) and closing the Company’s walk-in centers, are likely to disproportionately affect the Company’s most vulnerable, low-income customers."


In addition, the Petition states that work essential to service reliability is being reduced.  The petition gives examples, including 

• Transformer Inspections
• Manhole Inspections
• Coating Refurbishment Program
• Stray or Contact Voltage Work
• Preventive Maintenance to Avoid Voltage Reduction.Heat Event Response
• Permanent Repairs
• Gas Service, and
• Steam Services.

The Petition maintains that 

This is not a crisis caused by an outside force; it is a self-inflicted wound.
Likewise, the Company should not be heard to claim that its implementation of a strike
contingency plan satisfies the current concerns. There is no strike. Instead, the Company
has made a decision to drastically downsize its workforce and, as a result, unduly
jeopardize safety and reliability by providing substandard service—presumably in an
effort to try and gain an advantage in pending labor negotiations. 

Even more fundamental, while not currently receiving service from the thousands
told by ConEd not to report for work, the Company’s customers continue to pay rates that
include the costs associated with the salaries and benefits for the 8,500 persons who are
currently subject to the lockout as well as the higher managerial salaries to employees
who are not now performing managerial tasks, but are instead doing craft work. The
Commission should not permit the Company to charge rates for services that are not
being received, and for employees who—as a result of ConEd’s unilateral action—have
no ability to service Company customers.

The Petition emphasizes that

The Commission is not being asked to mediate a labor dispute. It is instead beingasked to act in accordance with its statutory mandate and in recognition of the obvious:
5,000 managers (many of whom lack field experience) cannot be performing the utility
work routinely performed by 13,500 employees, including 8,500 craft personnel who are
now off the job.

The Petition cites decisions of other state utility regulatory commissions that have acted to protect the public and consumers in situations where utilities proposed to lay off workers needed to fulfill public service duties.

The Petition asked the PSC to order Con Edison to respond by July 13; the Commission Secretary issued a directive "[b]alancing the need for expedition and our interest in a robust response, [directing] Consolidated Edison to provide a response to the Motion by Tuesday, July 17, 2012 by 4:30 P.M.


Papers filed with the PSC in the case are at http://documents.dps.ny.gov/public/MatterManagement/CaseMaster.aspx?MatterSeq=40285

FERC Urged to Use Portion of Funds Disgorged by Alleged Wholesale Electricity Market Manipulator to Bolster Utility Consumer Advocacy

Utility consumer advocates from the PJM RTO region are asking FERC to allocate $1.2 of the $6 million for electric consumers in the PJM region to enhance policing of the wholesale markets.  See MOTION OF INDICATED JOINT PJM STATE CONSUMER ADVOCATE AGENCIES TO PROPOSE APPORTIONMENT OF MONIES IN PJM FUND AND PROPOSAL, FERC Case No. IN12-7, filed July 10, 2012. 


Background
On March 8, 2012, FERC issued an Order approving a Stipulation and Consent Agreement in which FERC agreed to halt an electricity market manipulation investigation, and the target, Constellation Energy Commodities Group (CGC) -- without admitting wrongdoing -- agreed to disgorge $110,000,000 “for the benefit of electric energy consumers." CECG also agreed to pay a fine of $135,000,000 to the government.  
The disgorged profits stemmed from alleged manipulation or gaming, mainly of the wholesale electricity spot markets of the NYISO.  


After using some of the disgorged profits to upgrade ISO and RTO computer systems so that a similar recurrence of market gaming is less likely, the balance is being split among the regions served by the wholesale electric utilities whose markets were affected by the alleged manipulation, i.e., NYISO ($78,000,000), ISO-NE ($20,000,000) and PJM ($6,000,000).  A FERC Administrative Law Judge is conducting a proceeding to allocate the money.


Proposal of the PJM Advocates
The RTO and ISO utilities are set up as non-profit organizations, with complex governance structures that include consumers as one of numerous "stakeholders":

PJM stakeholders develop market rules which guide PJM’s energy, capacity and ancillary services markets. Adopted market rules impact generation clearing prices in all wholesale markets and directly impact retail customer bills; in fact, generation costs makes up the majority of ratepayers’ electric bills. Stakeholder processes are also used to develop transmission expansion planning rules to address reliability, economic and policy goals, develop region-wide load forecasts and determine how to best integrate demand side resources such as demand response and energy efficiency. CAPS would facilitate retail load participation in these processes.

The PJM advocates in the multi state PJM region cite the need for more consumer representation in proceedings at PJM, pointing out the difficulty of participation in the "stakeholder" process:

Residential and smaller commercial consumer interests are routinely underrepresented in the PJM stakeholder process. Meanwhile, market participants with generation and transmission interests in PJM are generally well-represented at each PJM meeting. While there is some representation of large industrial customers, the vast majority of customers in PJM, as well as their designated state Consumer Advocates, are absent from most meetings; particularly at the lower-level committees where proposals are first developed and participation is vital to influencing market rule development. Consumer Advocate participation is often limited to higher-level committee meetings, such as the Members Committee where proposals have already been fully-formed and fully vetted. The perpetual problem of limited state consumer advocate office participation is directly tied to persistently-limited resources and can best be remedied through the funding of CAPS

The PJM state consumer advocates propose to create a new organization that would be accountable to the advocates in the states served by PJM, and funded for three years with a $1.2 million initial grant of the disgorged funds.   The staff of  the proposed new entity would participate at the PJM, representing the participating offices in matters such as changes in market rules.  Consumer Advocate Offices are independent and have the capability of challenging regulatory decisions at FERC or in court.  Consumer Advocate Offices that support this proposal include: 

the Delaware Division of Public Advocate; the District of Columbia Office of People’s Counsel; the Illinois Office of the Attorney General; the Illinois Citizens Utility Board; the Indiana Office of Utility Consumer Counsel; the Maryland Office of People’s Counsel, the Pennsylvania Office of Consumer Advocate, the Virginia Office of the Attorney General; and the West Virginia Consumer Advocate Division. In addition, the Office of Ohio Consumer Counsel and the New Jersey Division of Rate Counsel support the proposal in principle but are not signatories to this filing.

New York
In New York, consumer groups are urging the Governor, the Attorney General, and the Public Service Commission to use a portion of the $78 million for the state's electric customers for bill assistance to reduce the number of service terminations for bill collection purposes, for energy efficiency programs, and to bolster utility consumer advocacy.  See New York Formulating Plans to Use $78 Million Disgorged by Energy Trader for the Benefit of Electricity Consumers, PULP Network, June 16, 2012.  Eventually, the utility consumer representation function, could be funded through a small non-bypassable charge at the ISO/RTO level, in the same way the ISO/RTO operations are funded, with the cost incorporated in wholesale electric rates.  

FERC ALJ Decides Motions of Parties Seeking Role in Proposing to FERC Uses of Disgorged $78 Million NYISO Market Gaming Profits, Clarifies Process.

On July 11, 2012, a FERC ALJ decided motions regarding "eligiblity" of parties to recommend how FERC will allocate disgorged profits from alleged gaming of NYISO electricity markets.  The fund is for the benefit of electricity consumers.  See New York Formulating Plans to Use $78 Million Disgorged by Energy Trader for the Benefit of Electricity Consumers, PULP Network, June 116, 2012.


In the order beginning the case, FERC said recommendations for apportionment of the money “may only be made by the appropriate state agency or agencies of those respective states, including, for example, state public service commissions, state attorneys general, or state consumer advocates, for the benefit of electric energy consumers.In rejecting motions from out of state parties, non-state agencies, and non-consumer interests, the ALJ clarified the process.  A New York power generator,IES, had sought eligibility status, which was opposed by several parties, including AAEP.  The ALJ stated:

On May 15, 2012, AARP filed an opposition to IES to be eligible for funds in the
NYISO and ISO-NE region. AARP noted that the Commission ordered that the funds in
this proceeding are to be allocated for the benefit of electric energy consumers, and thus,
are not intended for a party such as IES, a power producer and seller. AARP noted thatthe proper role of any party representing consumer interests that does not qualify as an eligible state agency is to convey their recommendations to the eligible state agencies, as AARP and other consumer groups are doing. IES disagreed with this recommendation in their May 30, 2012 response, but IES did agree with AARP’s connotation that IES is a “party representing consumer interests that does not qualify as an ‘eligible’ state agency in this proceeding.”
* * * *
AARP is correct in noting that the proper role of any party to this proceeding
representing consumer interests of market participants harmed by the market distortions
created by CCG’s manipulative practices that does not qualify as an ‘eligible’ state
agency in this proceeding is to convey its concerns and recommendations to the
appropriate state agencies that do meet the Commission’s criteria for eligibility to
participate in requests for apportionment of the Fund, as AARP and other consumer
groups are doing. Further, any such party will be permitted to file comments should itbecome necessary and appropriate to do so to address the allocation and distributionmethodology ultimately proposed by the eligible state agencies. Any such comments
must be submitted within fifteen (15) days of the filing date of the proposed allocation
and distribution process to which the comments are intended to pertain.

AARP and other consumer groups have urged New York agencies, and the governor, to use a portion of the $78 million fund for customer assistance to reduce service terminations, for energy efficiency, and for enhanced utility consumer advocacy.

Con Edison Locks Out Employees Who Are Union Members

On July 1 Con Edison locked out approximately 8,000 of its employees who are union members in a dispute over concessions sought by the company.  According to Crain's, "[m]any of the biggest and most politically powerful unions in the state are putting their resources behind the small utility workers union that represents the 8,500 employees locked out by Consolidated Edison since Sunday."

The Con Edison utility subsidiary has been prospering of late, due in part to previously allowed rate increases and customer growth. See the video of "Mad Money's Jim Cramer's May 22, 2012 interview with Con Edison's CEO Kevin Burke and the article Con Ed is the New Treasury. Major server farms are locating in New York City to handle internet business, increasing revenues on the electric side, and due to the decline in natural gas prices, buildings that customarily heat with heavy oil are switching to natural gas, increasing revenues on the gas side.

The company and the Public Service Commission agreed in the last rate plan to "revenue decoupling" adjustments designed to make the company indifferent to increased sales.  In order to advance environmental goals, the perceived incentive for the company to stimulate additional customer usage of electricity and natural gas was ostensibly removed.  (This is an article of faith in the environmental community, but it may overlook the reality that it is customers, not utilities, who make consumption decisions).  The decoupling formula allows the company to keep increased revenues from new customer growth. 


Con Edison's most recent three year rate plan, based on an agreement approved by the Public Service Commission,will expire next year.  In a notable departure from past practice, the company has not sought an increase in rates by filing a rate case eleven months in advance of the expiration date.  Normally this would be welcome relief to ratepayers, who for years have seen rates go up with every rate case, but now the current rate formulas will stay in place. 


Perhaps due to growth in revenues outside the decoupling formula, the company may be overearning.  If so, it might be possible for the PSC to lower the rates while still giving a reasonable return to shareholders on their investment.  

Supreme Court Denies Review of Consumer Groups' Challenge to FERC's "Market-Based Rates" Scheme, Leaving Issue Unresolved

Over the past decade or so, in a series of orders, the Federal Energy Regulatory Commission (FERC) began to allow producers and traders of wholesale electric service to sell at "market-based rates."  In doing so, FERC effectively eliminated requirements in Section 205 of  the Federal Power Act that all rates, charges and contracts -- and changes to them -- be transparently filed with FERC in advance, allowing for public and FERC scrutiny before they take effect.  The flip side of the filed rate regulation coin is that once filed and if not modified by the agency, the filed rates cannot be changed, except prospectively.

FERC adopted the fiction that by filing a so-called "market-based rate" tariff, which simply says charges will be determined by seller and buyer, the rate and rate change filing requirements are satisfied.  Further, to satisfy the statutory command that all rates be just and reasonable, and the corollary that any that are not are illegal, FERC assumed that prices would be reasonable if the seller singlehandedly lacked power to change the market price.  This system allows sellers and traders to change prices hourly, without disclosing their price demands and without filing in advance the prices that will be charged.  This system is vulnerable to market malfunction, price rigging and manipulation, and has resulted in huge overcharges without meaningful remedies for consumers.  See  Mohler, Has the “Complete and Permanent Bond of Protection” Provided by FERC Refunds Eroded in the Transition to Market-Based Rates?, 33 Energy L.J. 41, 44 (2012).

In 2004, FERC began a rulemaking proceeding to consolidate its market rate policies.  Consumer groups pointed out the apparent inconsistency of the market rate system and the filing requirements of the Federal Power Act, and the absence of any meaningful measure of whether a market rate is just and reasonable.  FERC adopted its proposed rules, rejecting the legal challenges, in its Order 697 and adhered to its market rate doctrines on rehearing  in 2008in Order 697-A.

Public Citizen, PULP, and the attorneys general of Connecticut, Rhode Island and Illinois petitioned for  judicial review of the FERC order adopting regulations to implement the market rates system.  The case was heard by the Court of Appeals for the Ninth Circuit.

In its decision, the Ninth Circuit acknowledged that the Supreme Court had said in a recent opinion that the legality of the "market-based rate" scheme was not decided, but considered itself bound by its prior decision in another case, Lockyer v FERC.  (In Lockyer, the Ninth Circuit rejected a broad challenge to the market rate system but found that FERC had not followed its own guidelines regarding quarterly reporting of charges, and remanded the case, which resulted in some refunds because the sellers had violated the subsequent reporting requirements of their market rate tariffs).

The consumer groups filed a petition for a writ of certiorari with the Supreme Court, asking it to review the Ninth Circuit order dismissing the case.  FERC filed a brief in opposition, which was supported by an amicus brief from a group of sellers and traders.  They argued, among other points, that there was no "split" in the circuits and that Congress, in some language mentioning energy markets, had ratified FERC's scheme.  The petitioners filed a reply brief arguing that a divergence among circuit courts is not determinative when a case is of national importance, and that Congress has not repealed or amended the critical requirements of the Federal Power Act, i.e., the procedural requirement that all rates and changes in rates be filed publicly in advance, and the substantive requirement that all rates and rate changes demanded and charged must be reasonable.

The Supreme Court issued an order denying the petition for a writ of certiorari on June 25, 2012.

The denial of certiorari is not a ruling on the merits of a case.  Consequently, the legality of FERC's scheme remains undecided by the Supreme Court and by circuit courts of appeal other than the Ninth Circuit.  Other litigants, for example, a utility buying wholesale electricity for its retail customers who objects to excessive unfiled market rate charges, are free to pursue relief.

If FERC asks Congress to regularize its system through amendments to the Federal Power Act, Congress would have the opportunity to reject or modify FERC's market system, add market reforms and consumer protections.  Also, modest non-bypassable surcharges on transactions in the wholesale markets could fund  environmental, universal service, affordability and utility consumer advocacy functions.  There is precedent for this.  In the aftermath of the Supreme Court's nullification in MCI v AT&T of the FCC attempt to abolish rate filing and deregulate the telecom industry, Congress adopted the Telecommunications Act of 1996, establishing a new regulatory platform designed for multiple utility providers to replace the old system geared toward monopolies, adopting consumer protections, adding affordability requirements for Lifeline and Linkup, and establishing a universal service funding mechanism.

Greg Sayre Confirmed as New PSC Commissioner

In the busy last week of the regular legislative session, Greg Sayre was quietly nominated by the Governor and on June 21, 2012 confirmed by the State Senate to be a Commissioner of the New York State Public Service Commission. Putting aside the continued lack of  public involvement in the streamlined selection process for New York PSC Commissioners, (who have important policy-making and quasi-legislative responsibilities affecting vital public services), this appears to be an excellent appointment.  

Commissioner Sayre brings state and federal telecom regulation expertise to the Commission,  from his more than two decades of legal work for Frontier Communications (nee Citizens, nee Global Crossing nee Rochester Telephone).  This is much needed at a time when broadband deployment, universal service, consumer protection, competition, and regulatory policies are in flux, in order to assure all New Yorkers have affordable and reliable broadband and telephone service on reasonable terms and conditions, with customer protection.  

Sayre has a background of public service.  In addition to his more recent work in the private telecom utility sector, he began his utility law career litigating electric utility rate cases as a member of trial staff of the well-regarded Pennsylvania Public Utilities Commission.  With solid undergraduate educational experience in the Midwest, a law degree from a Massachusetts law school, prior utility law work in Pennsylvania,  knowledge of the turbulent telecom area, including work at the FCC in Washington, and familiarity with western and rural areas of New York State, Sayre brings welcome geographical and subject matter experience to the five-member Commission, which now has two other members from Long Island and two from the Albany area.  For many years he has also been active in work of the  New York State Bar Association' Public Utility Law Committee.  


In a 2001 academic thesis, Regulatory Distortions of Local Exchange Telecommunications Infrastructure, Sayre indicated a personal preference for less economic regulation and more reliance on competition, antitrust law enforcement, and price cap regulation.  However, he also recognized and emphasized the need for regulatory attention  in order to achieve policy goals in areas of likely market failure:

Regulators therefore must define a new role for themselves, one less concerned with the details of utility pricing and operations and more focused on social policies that a competitive market cannot be expected to achieve. For example, regulation, likely in the form of some kind of subsidization mechanism, is probably required in the long run to assure the affordability of telephone service in remote and sparsely-populated areas.

Time and experience may have tempered Y2K Reagan/Thatcher era hopes about competition replacing economic regulation of utility services, after the Enron debacle and dysfunctional wholesale markets in the energy area, and the evolution of the telecom industry into functional oligopolies lacking important characteristics of a fully competitive market.  


In his new role as a Commissioner, Sayre will have the opportunity to develop sound state and Commission policies to accomplish what "a competitive market cannot be expected to achieve," for example, universal service, consumer protection and affordability goals.  In addition, he will have the bedrock duty under the Public Service Law to assure that all utility rates, charges, terms and conditions of service, no matter how they are established, are just and reasonable.

New York Formulating Plans to Use $78 Million Disgorged by Energy Trader for the Benefit of Electricity Consumers

On March, 2012, the Federal Energy Regulatory Commission (FERC) announced a $245 million settlement of its enforcement staff's investigation of Constellation Energy Commodities Group, (CECG), for alleged manipulation of wholesale electricity markets.  CECG was an electricity trader and participant in the wholesale electricity market operated by the New York Independent System Operator (NYISO).  CECG was investigated for making uneconomic transactions in order to create artificial price movements in the NYISO markets.  This movement generated large profits on financial derivative contracts, which paid CECG based on changes in the NYISO spot market prices. 

To settle the investigation, CECG agreed to pay a $135 million penalty to the government and also to disgorge $110 million of its profits from the trading gambit, $104 million of which is to be used for the benefit of electric consumers. New York's share is $78 million. 

There is no indication in the FERC order approving the settlement of how much CECG may have profited from the alleged manipulation. CECG admitted no wrongdoing, claiming it was only engaging in legitimate hedging transactions within the law.  Although the case was settled with no actual finding of market manipulation, the FERC Chairman issued a statement indicating his belief in correctness of FERC enforcement staff's conclusions regarding market manipulation:

As a final point, I note that since the issuance of the Commission’s order, a senior Constellation official has stated publicly that the company’s practices at issue here were “lawful portfolio risk management transactions.” In my opinion, clearly that is not the case. The Stipulation and Consent Agreement sets forth a detailed description of the transactions that I believe Constellation knowingly and willfully engaged in that form the basis of Enforcement Staff’s conclusion that Constellation engaged in market manipulation, fraud, and misrepresentation. I urge anyone who has any question as to Constellation’s actions in this case to read that Stipulation and Consent Agreement." 

Under the FERC Order approving the agreement between FERC enforcement staff and CECG, a FERC Administrative Law Judge will entertain recommendations from certain state agencies on how to allocate disgorged funds.   

There are disputes over which agencies are "eligible" to make recommendations to FERC:

AARP opposed a petition of a New York power generator seeking to be included in the group of agencies eligible to make recommendations to the FERC ALJ regarding distribution of the $78 million for the benefit of New York's electric customers.  

The New York PSC, the Attorney General, and the DOS opposed motions of the Long Island Power Authority (LIPA) and small New York municipally owned utilities to participate in apportionment of the fund by FERC. LIPA filed a response in support of its motion.

A ruling from the FERC ALJ on which entities are eligible to make recommendations regarding allocation of the funds has not yet been issued.  The ALJ has indicated she will look favorably upon consensus recommendations from the agencies deemed eligible to make therm, which would avoid the need for FERC to decide contested allocation proposals.

Meanwhile, New York's large industrial and commercial customers (represented by their association, Multiple Intervenors) petitioned the NY PSC on April 10 asking the PSC to seek control of 100% of the CECG settlement fund for NewYork, and, if specific harm from the Constellation trading gambits cannot be readily measured (as is likely), they ask the PSC to use all the $78 million as refunds, based on customer elcetricity usage. MI further said they will oppose any use of the money other than for refunds.

AARP opposed the MI petition.  AARP pointed out that spreading the benefit fund over all consumers based on their usage would likely result in a one time credit that would be insignificant for most residential customers.  Also, the proposal of MI would steer the majority of the funds to the largest users.  As customers taking service at spot market based rates, MI's members may have been incidental beneficiaries of the alleged market manipulation, if spot market prices were lowered by CECG to make profits on derivatives.  Derivatives are often purchased by utilities to hedge small customers against the risk of NYISO spot market volatility, and any artificially inflated costs of the derivatives could have been passed through to small customers.

Consumer groups, including AARP, Consumers Union, and NYPIRG are urging the Governor, the Attorney General, and other officials to use some of the $78 million settlement funds to assist New York consumers at risk of electric service termination, to augment energy efficiency programs, and to provide support for consumer advocacy in state and federal utility regulation proceedings. See Times Union, A Consumer Energy 'Seat' Wanted, Power settlement Spurs Advocates to Push for an Independent Voice, May 31, 2012. 

New York State provides very little support for utility consumer advocacy. Typically, independent utility consumer advocate offices have the independent capability to challenge commission decisions in court, are separate, or operate quasi-autonomously within an office such as the attorney general's office, and their leadership is not appointed by the same entity that appoints the utility regulatory commission.  In contrast to most other states, New York has no independent or quasi-independent state office providing residential consumer advocacy in the lengthy and complex regulatory proceedings that affect prices, terms, and conditions of utility service.  Last year, the two person staff of the vestigial Consumer Protection Board's utility intervention unit (which prior to its abolition had shrunk to about one tenth its prior size) was transferred to the Department of State, an Executive agency.  

Resources currently available to PULP -- an independent nonprofit organization -- are insufficient to support the analysis, expertise, and advocacy required to participate fully in all the major NYISO, state, and federal regulatory proceedings which affect the rates, terms and conditions of electric service.

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PULP Intervenes in the Central Hudson/Fortis Merger Case

Fortis, a Canadian holding company, has petitioned the Public Service Commission for approval to purchase Central Hudson Gas & Electric Company.   PULP intervened this week as a party in the Central Hudson/Fortis merger case at the NY Public Service Commission.  The petition for approval of the transaction under Section 70 of the Public Service Law, and other documents filed in the case, are available here.

Updates

• The Public Service Commission received an initial briefing on the case at its June 14, 2012.  See PSC June 14 session transcript beginning at page 54.
• Central Hudson shareholders voted to approve the transaction on June 19.  See, Poughkeepsie Journal, CH Energy shareholders OK sale to Fortis; stockholders seek investor benefits, $20 million consumer package being examined, June 20, 2012.

Public Utility Law Project to Restart Soon

PULP wound down nearly all its operations in 2010, due to a halt, after 28 years, in state funding.   In the state budget for 2012-13, the legislature resumed funding for PULP.  Phoenix-like, the Public Utility Law Project is slated to resume operations soon.

Good News - Tenant wins Water Service Case; Bad News - Governors Kill PULP

Good News
United States District Judge David N. Hurd of the Northern District of New York issued a decision on August 5, 2010 vindicating the due process and equal protection rights of a tenant user of municipal water service. The City of Auburn terminated and denied water service due to her landlord's unpaid bills for past service, and then condemned her home due to the lack of water: See City of Auburn Violated Tenant's Constitutional Rights in Denial and Termination of Water Service. The tenant was represented by PULP

Bad News: Governors Paterson and Cuomo Eliminate PULP
As we repeatedly reported, PULP funding and survival again was put in jeopardy in the 2010 - 2011 state fiscal year when none of Governor Paterson's proposed budget bills contained core funding for PULP. No Governor since Mario Cuomo included funding for PULP in his proposed state budgets.

PULP sought a legislative addition to the budget, as it had since 1995, and continued its operations without interruption even as the April 1 budget deadline passed. This meant exhausting its reserves and credit and running up bills to vendors and staff in expectation that as in the past 28 years, eventually the final budget passed by the legislature would contain the necessary appropriation.

The state budget, however, was passed in 2010 in sections attached by the Governor to short term funding extension bills, none of which contained PULP's core appropriation. Short of shutting down state operations, there was no real opportunity for the legislature to modify the weekly budget extension or other bills to include funding for PULP. See PULP Closure Imminent as Legislature Adjourns Without Appropriating Funds for PULP, PULP Network, July 2, 2010.

As a result, for the first time in 30 years PULP had no significant core funding source. See Larry Rulison, PULP's Funding Plug Pulled, Times Union, Aug. 5, 2010. "The Public Utility Law Project of New York, an Albany nonprofit group that has fought for decades for the state's utility customers -- especially the poor -- appears to be on the verge of closing."

Having exhausted its fund balance and credit in anticipation of an appropriation that never came, PULP became insolvent. laid off its staff, vacated its offices, and after more than thirty years, halted its operations. Its Executive Director is working on an uncompensated basis to fulfill obligations to clients in cases that PULP had undertaken for them, and on winding up administrative matters.

Efforts to restore funding in Governor Cuomo's budget for 2011 - 2012 were unavailing.

For further information on this situation, listen to Susan Arbetter's interviews of Assemblyman Kevin Cahill and PULP Executive Director Gerald Norlander on the August 6, 2010 WCNY Capitol Pressroom radio program. The discussion of PULP's financial crisis situation begins after minute 22 of the recording.

Articles
Mark Harrington, Group Fighting for Utility Customers Faces Shutdown, Newsday.com, September 15, 2010. "A watchdog group that has gone to bat for low-income utility customers around the state to prevent service shutdowns and push for lower rates is itself in danger of being shut down because of budget cuts. The Public Utility Law Project, a 29-year-old group based in Albany, saw its state funding vanish in April, and fail to be renewed in the recently passed 2010-11 budget."

Cathy Woodruff, In tough times, fight for consumers must go on, Albany Times Union, October 3, 2010. "Consider this: the Public Utility Law Project, a non-profit agency that represented low-income utility customers, closed its doors this year after state leaders failed to continue the funding that makes up the bulk of its $500,000 annual budget."

David Robinson, Residential phone book going way of dinosaur, Verizon’s White Pages reach the end of an era, Buffalo News, Oct. 15, 2010. "The Public Utility Law Project, an Albany-based advocacy group for low-income consumers that has since shut down because of the loss of state funding, opposed the elimination of the residential listings."

Nick Hirshon, Utility Fighter May Fade Out, Likely Doomed by Budget Cut, N.Y. Daily News, Dec. 7, 2010. "For three decades, the advocacy group - known as PULP - has provided free legal advice and representation to utility consumers who, in some cases, faced being tossed from their homes.But now PULP is facing its own battle for survival after the group, which relies almost entirely on state aid, was excluded from the governor's latest budget."

James Odato, Money Flows to Friends, Times Union, Dec. 20, 2010. "The governor still has $9 million in unused funds from that appropriation from a total of $30 million."

Sara Foss, State Cuts to Hit Hard, Schenectady Gazette, March 6, 2011. "Many nonprofit organizations and local agencies that depend on state funding are facing severe cuts. Some, like PULP, have seen once-reliable funding lines all but eliminated. In the most extreme cases, groups and agencies are contemplating the possibility of closure, drastic restructuring or the elimination of programs. And while they acknowledge that the state's fiscal crisis makes cuts necessary, they say they never expected to see a zero replace a budget line formerly at thousands, even millions, of dollars."

Craig Wolf, Impact of sale of Central Hudson Parent: Widespread but Uncertain, Poughkeepsie Journal, Feb. 27,2012: "The Public Utility Law Project advocated for homeowners and small businesses until its state budget item was decreased and eliminated under the David Paterson administration. The Consumer Protection Board was defunded also, and its functions transferred to the Department of State."

City of Auburn Violated Tenant's Constitutional Rights in Denial and Termination of Water Service

Today U.S. District Judge David N. Hurd issued a decision and order granting the motion of an Auburn tenant for partial summary judgment declaring that her constitutional rights were violated when the City refused to provide water service to her without her paying her landlord's bill for past service, and for terminating service without timely and adequate notice, including notice of an opportunity for a hearing.

The tenant rented a house whose absentee owner had stopped paying the mortgage, tax, and water bills. When the owner didn't pay the water bills, service was shut off, and the City insisted that the tenant agree to pay the owner's bill as a condition of obtaining service. When she was unable to make installment payments on the owner's bill, service was shut off, the premises were posted as unsafe and unsanitary, and she was directed to move out. After the case was brought and a motion for a preliminary injunction was filed, the City relented and turned the water on, and the action now involves the remaining claim for damages. The court found that the City

• violated plaintiff’s right to procedural due process by not providing adequate notice prior to terminating water service and by failing to provide a written explanation for refusing to accept an application for water service from her;
• violated plaintiff’s right to substantive due process when it refused to provide water service unless she paid her landlord’s debt; and
• violated plaintiff’s right to equal protection when it refused to provide water service in her name because of her landlord’s delinquent obligation.

The plaintiff is represented by PULP.

With rising water costs and more owner defaults in paying mortgage, tax, and water bills, similar problems have arisen across New York state. See Water Shutoff Issues Boil Over in Syracuse, PULP Network, Feb. 19, 2010. When municipal water service is shut off, premises are then condemned by the municipal code enforcement office as unsafe and unsanitary. In some cases this leads to displacement of tenants, hardship, disruption of family life and potential homelessness for those who cannot afford either the cost of their landlord's old water bills or the cost of renting and moving to other premises.

Municipalities and water authorities, unlike large private water companies, are not covered by the Home Energy Fair Practices Act, which prohibits denial of service based on unpaid bills of another person. For background, see

• Municipal Water Companies Exempt from HEFPA Must Still Provide Due Process and Equal Protection to Tenant Users, PULP Network October 3, 2008;
• Auburn Restores Water Service After PULP Files Federal Lawsuit and Seeks Preliminary Injunction for Tenant in Property Subject to Foreclosure, PULP Network, October 16, 2008; and
  
• Auburn Tenant Seeks Judgment that Water Termination was Unconstitutional, December 04, 2009.