Landlords Charging Tenants for Utility Service?

PULP recently received a call on its helpline from a tenant, inquiring about his landlord’s effort to collect separate charges for natural gas service. The landlord changed the lease upon its renewal to allow separate charges for electricity and natural gas service, perhaps in response to higher energy prices.

Many years ago, New York’s highest court, the Court of Appeals, ruled in Campo v. Feinberg, 279 A.D.2d 302 (3d Dep’t 1952), aff’d 303 N.Y. 995 (1952), that landlords cannot charge their tenants for utility service. That case involved electric service, but its reasoning would seem to apply fully to natural gas too.

Although the law did not change, the Public Service Commission (PSC) issued regulations authorizing coops, condominiums, and landlords to submeter electric service on a building-specific basis, when the owner or its agent petitions for an order permitting submetering. Most important for consumers, these orders cap the charges that a landlord may bill for electric service, to no more than the utility would charge for direct service. The PSC submetering orders also require landlords to comply with the requirements of the Home Energy Fair Practices Act (HEFPA), including notifying tenants of their HEFPA rights and the opportunity for recourse to the PSC’s complaint determination procedures.

In contrast, the Commission has never allowed residential landlords to charge tenants for natural gas service. Tenants may only be made to pay for natural gas service if they are provided utility meters and billed only by the utility for the amounts used in their individual dwelling units. (Under the “Shared Meter Law,” tenants cannot be made to pay for service to areas outside their individual apartments, subject to a de minimis exception.) See N.Y. Pub. Serv. Law § 52(8).

If a landlord has not enabled individual metering for service by the utility, the landlord must bear the energy costs and supply unmetered utility service to tenants without specific charge, with the utility service included in rent. This gives the landlord, who is directly responsible for equipment such as furnaces, boilers and water heaters the incentive to invest in more energy efficient equipment.

In the case that came to PULP’s attention, the landlord is charging tenants for natural gas service each month, based on the total amount used and the price paid, pro rated to the tenants based on the square footage of their apartments. The landlord is also imposing a monthly administrative charge, in addition to the charge for gas. The Public Service Law plainly prohibits the sale of natural gas on this basis. “Neither the scheduled rates nor the minimum charge for residential customers shall, after July first, nineteen hundred thirty-seven, be based in any manner on the number of outlets, number of rooms, cubic or square foot area or other such standards.” N.Y. Pub. Serv. Law § 66 (14). The Public Service Law also prohibits separate administrative charges. .” N.Y. Pub. Serv. Law § 65 (6)

Furthermore, after Campo, the Commission adopted regulations prohibiting residential gas and electricity submetering and required all utilities to file tariff provisions “prohibiting the submetering of gas or electricity for residential purposes . . . .” 16 NYCRR § 96.1 Thereafter, the Commission approved the resale of electricity to tenants in accordance with submetering regulations and individual orders, 16 NYCRR § 96.2, but the neither the utility tariffs nor the Commission allow submetering of natural gas for residential purposes.

ESCO Marketing Practices Subject of New PSC Proceeding

The Consumer Protection Board and the New York City Department of Consumer Affairs filed a Petition, supported by PULP in its Comments, seeking Public Service Commission action regarding the marketing practices of some Energy Services Companies (ESCOs). See PULP Files Comments on Regulation of ESCO Sales Practices.

On March 19, 2008, in response to the Petition, the Commission issued a Notice Soliciting Comments on Revisions to the Uniform Business Practices soliciting public input on standards to govern ESCO Energy Service Company marketing practices.

The Commission stated it is considering whether to modify its Uniform Business Practices (UBPs). The Commission issued the UBPs instead of official regulations after the Commission allowed ESCOs to sell portions of natural gas and electric service. The Commission has made the UBP standards part of the tariffs of distribution service utilities. These UBP modifications could, according to the Commission

• incorporate standards for marketing by ESCOs and third party contractors acting on their behalf;
  
• improve residential customer protections;
  
• strengthen the oversight of and expand the remedies available to Staff and the Commission; and,
  
• other related matters and housekeeping items.
  

In addition, the Commission invited comment on the following questions:

• Should the ESCOs be subject to the utility assessments provided by PSL §18-a?
• Should the customer of record be the only person qualified to enroll the residential account with an ESCO?
• Should early termination fees for residential customers be limited to: (a) a flat amount (e.g.$200); (b) an amount based upon a set fee per month multiplied by the number of monthsremaining on the contract (e.g. $8 x 20 months = $160); or (c) some other variation?
• Should there be a grace period for the application of early termination fees to residential customers, and if so, what is the appropriate length of time for the grace period?
• Is the number of Customers served by an ESCO proprietary trade secret information, under the standards set forth in the State Freedom of Information Law?
• Should the UBP provisions with respect to Marketing Standards be applicable to small commercial customers? If so, how should small commercial customers be defined?
• Should ESCOs that include early termination fees in residential sales agreements be requiredto obtain a “wet” signature on the sales agreement?
• How often do ESCOs enforce early termination fees for residential contracts? If available,fixed and variable price contracts. the Commission seeks this information on an annual basis separated by contract types, e.g.
• How should the term “plain language” as used in Section 2.B.1.b of the UBP be defined?
• Are there additional modifications to the UBP that should be considered?
  

Comments are due by April 18^th.

PSC Puts 315 Area Code Changes on Hold Pending Investigation

Responding to PULP’s Motion for Interlocutory Relief in the New York State Public Service Commission’s proceeding to consider numbering relief options in the 315 area code, the Commission issued a Notice Establishing Response Time for Comments on PULP Petition and Suspending Comment Period Regarding Staff White Paper.

The Commission requested interested parties to submit comments on PULP’s Motion regarding whether any area code number change in the 315 area is necessary. Comments on PULP’s Motion are due by March 31^st.

The Staff Report annexed to a March 3, 2008 PSC Notice requesting comments on various options for adding a new area code indicated that there are still millions of unused telephone numbers in the 315 area code. See PSC Considering "Area Code Relief" For 315 -- Where Did All The Numbers Go?. PULP believes that an artificial “shortage” may have arisen due to how the numbers have been allocated. See

• PULP Asks PSC to Investigate Need for New Telephone Area Codes in the 315 Region;
• Group Challenges Area-code Changes - Public Utility Law Project Petition Asks PSC to Probe Whether 315 Really Is Running out of Numbers
  
• Area Code Change Comments Suspended
• PSC to Study Need for New Area Code
  

Some of the issues PULP discovered include:

• That a disproportionate 83 percent (656 of 792) of the central office (or NXX) codes in the 315 area code have been assigned, yet only 34 percent (2.7 million of eight million) of the telephone numbers contained in those codes are in use.
• That numerous “thousands blocks” of telephone numbers remain available in rural areas.
• That there is no number shortage in the urban population centers, as demonstrated by the fact that the City of Syracuse has 146 active codes of its own (1,460,000 telephone numbers) for a city of 147,306 people.
• That in the past few years, 78 formerly single exchange rate centers in the 315 area code have received a second full NXX code, in some cases, several new NXX codes, each containing 10,000 numbers.
• That, for example, Star Lake, a community with about 860 residents, had been served for years by Verizon with a single 10,000 number NXX code. However, in the past few years, three additional NXX codes have been assigned to Star Lake by three different competitive carriers. Now, there are 40,000 telephone numbers assigned to this exchange

Due to the costs and inconveniences to consumers and businesses tied to area code relief, PULP’s Motion argues that it should be avoided unless absolutely necessary and that numbering relief should not be commenced due to mistakes or gaming of the number allocation process, which may have caused an artificial “shortage.” PULP asked the PSC not to proceed in its consideration of several options for adding a new area code in the 315 area until further investigation of the reasons for the impending “shortage.”

The Commission suspended its previously established dates for public comment on methods for changing area codes in the 315 area without setting new dates. The Commission will now hear comments on PULP’s Motion from other active parties, mainly telephone companies, before considering any area code relief methods.

Lou Manuta

PSC Nullifies National Grid's $1,000 "Grand Plan" Requirement for Utility Service

In October, 2007 applicants for utility service represented by PULP who had been denied service under Niagara Mohawk d/b/a/ National Grid's $1,000 "Grand Plan" requirement for utility service, and whose requests for help from the Department of Public Service Consumer Services Division Hotline (1-800-342-3355) had been denied, petitioned the Public Service Commission for a Declaratory Ruling that the National Grid "Grand Plan" is invalid.

On March 19, 2008, the PSC announced it is nullifying the $1,000 requirement. See National Grid's `One Grand Demand' Struck Down, Schenectady Daily Gazette, March 20, 2008; NY Regulator: National Grid Must Be More Lenient on Payment Plans, AP, March 19, 2008.

The petitioners and seventeen other denied applicants who moved to intervene in the case typically had arrears for service to prior accounts that had been closed years ago. National Grid made no attempt to collect the arrears, but when they applied for service, typically after a change of living arrangements such as moving to a new apartment, Grid withheld service and demanded a down payment of $1,000 as a condition of service. In many of the cases Grid refused substantial payments that were short of the "Grand" demanded.

Grid referred many of the denied applicants to local welfare departments, but they were ineligible for aid because their incomes were slightly above the welfare need standard (which has not been changed for 18 years) and because the emergency utility assistance program will provide grants or loans only to those who have had utility service within the most recent four months (PULP argued that under the Public Service Law applicants should be able to get deferred payment plans for old arrears without welfare assistance).

When the applicants did not have the money demanded by Grid, they and their families went without service, and in some circumstances, experienced homelessness because they could not get the keys to move into their new apartments without demonstrating to the landlord that they had arranged for utility service in their name. As a result of the withholding of service applicants went without utility service, causing hardship and increasing the risks of tragedy. See Candle Fires: A Symptom of "Rolling Blackouts" Affecting Low-Income Households.

The Legislature in 1981 declared the goal of continuous utility service to residential customers in order to promote safety and the general welfare of the state. PULP argued that the Grid "Grand Plan" clashes with specific provisions of the Home Energy Fair Practices Act (HEFPA) which govern the provision of service to applicants who owe money for service to prior, closed accounts.

• Section 31 requires Grid to offer a repayment plan for "any amounts due" for service to a prior account,
  
• Section 31 limits down payments to three months' bills,
  
• Section 37 requires that all payment plans must allow for consideration of individual circumstances, fairness, and equity.
  

Evidence in the case indicated that National Grid had provided "training" sessions to the PSC Consumer Services Division staff on its informal "Grand Plan" requirement. PULP argued that the rule had been adopted by Grid without filing tariffs that can only be adopted after public notice and review by the PSC. Also, persons denied under the "Grand Plan" did not receive proper notice of the reasons for denial and of their opportunity to seek review of the denial by the Public Service Commission.The case is discussed in our prior postings on the "Grand Plan":

• New Barrier to Utility Service: National Grid's "One Grand Demand", October 2, 2007
• PSC Asked to Investigate Grid's "Grand Plan", October 20, 2007
• PULP Replies to National Grid's "Grand Plan" Defense, December 4, 2007
• PULP Asks PSC to Require National Grid to Provide Answers to Questions in "Grand Plan" Case, March 14, 2008

A PSC press release announcing nullification of the "Grand Plan" issued March 19 states:

"One of our most important roles is to safeguard and protect ratepayers, in particular consumers who are financially less fortunate or have fallen on hard times,” said Commission Chairman Garry Brown. “National Grid’s practice in this matter regarding residential applicants who are in default does not conform with the intent of Commission regulations.”

The order has not yet been released. For further information, contact PULP at 1-800-255-PULP, or by email at info@pulp.tc

PULP Asks PSC to Investigate Need for New Telephone Area Codes in the 315 Region

In a recent posting we raised questions about the need for new telephone area codes in the region of central New York that now has the 315 code. See PSC Considering "Area Code Relief" For 315 -- Where Did All The Numbers Go?

A review of data from the North American Numbering Plan Administration (NANPA), the FCC-designated national telephone number allocation organization, shows that some telephone companies have been obtaining large allocations of telephone numbers for tiny rural localities in the 315 region - areas that already have a surplus of unused lines and which appear to have no need for more.

In Alexandria Bay, for example, five competing carriers assigned five exchanges and 50,000 numbers to the population of 4,097. Harrisville, with a population of 653, had four exchanges from four different carriers and 40,000 available numbers.

Group Challenges Area-code Changes - Public Utility Law Project Petition Asks PSC to Probe Whether 315 Really Is Running out of Numbers, Watertown Daily Times, March 26, 2008.

Under FCC and PSC rules, blocks of new numbers are to be used 1,000 at a time in the locality for which they are obtained, and new three-digit exchange codes containing 10,000 numbers each should not be opened until existing ones are at least 75% used.

On March 14, 2008, PULP made a motion to the PSC to conduct a thorough investigation of the reasons for the apparent number shortage, which may be due to the unlawful or mistaken opening of more three-digit exchanges than necessary.

The PSC has the power to reclaim any unused, hoarded, or possibly improperly allocated numbers. Perhaps the cost and inconvenience of new area codes and number changes can be avoided if the PSC finds that more numbers are actually available or can be reclaimed.

PULP Asks PSC to Require National Grid to Provide Answers to Questions in "Grand Plan" Case

In October 2007 PULP petitioned the PSC on behalf of customers seeking a declaratory ruling to annul National Grid's "Grand Plan." See PSC Asked to Investigate Grid's "Grand Plan" The utility demands $1,000 as a condition of service to customers who owe the company more than $1,000 for service to a prior account in their name.

Under the Home Energy Fair Practices Act (HEFPA), applicants with arrears must be offered payment plans, payment plans must be fair and equitable, and an applicant with prior arrears can be made to pay no more than three months' bills as a down payment, with the remainder to be paid in monthly installments. The opportunity to obtain utility service on this basis is not available to some applicants who are disqualified by National Grid because, in a prior episode of service, they broke a prior payment plan which then expired due to the default. There is no such disqualification in the statute, which does not allow a utility to withhold service if the customer enters into a payment plan for the arrears. The PSC regulations distinguish between applicants with arrears who are eligible to obtain service with a payment agreement, and existing customers with arrears who in certain circumstances cannot have another payment agreement after they have broken one.

National Grid responded to the petition and the case has been submitted for a decision whether the "Grand Plan" violates HEFPA since late November 2007. See PULP Replies to National Grid’s “Grand Plan” Defense.

The Commission has taken no action in the case to date. PULP is concerned that tragedies and undue hardship may occur while service is being withheld under the challenged Grand Plan.

PULP recently moved to compel National Grid to answer questions regarding other issues in the case. National Grid opposed the motion on March 12, 2008 arguing that discovery is premature "[b]ecause there is no schedule of evidentiary hearings, appointed presiding officer or determination that formal proceedings are appropriate. . . ."

The motion is now pending.

FCC Orders Telephone Lifeline Providers to Include Digital TV Transition Information in Customer Bills

In its March 3^rd Order regarding the digital television transition, the FCC announced that local exchange carriers which have been designated as Eligible Telecommunications Carriers (“ETCs”) must provide information in the monthly bills to their low-income Lifeline and Link-Up customers about the transition to digital television in February 2009. This information must be included in every such bill through March 2009.

The ETCs operating in New York include all of the incumbent local telephone companies, for example, Verizon and Frontier, several competitive local companies, and Sprint/Nextel wireless. The cable television companies and VoIP providers are not ETCs and are not presently required to offer Lifeline or Link-Up.

Importantly, there is no reference in the FCC Order regarding customers eligible for reduced rate Lifeline service -- including hundreds of thousands in New York State alone -- who do not receive Lifeline service and therefore would not receive this information deemed valuable and necessary by the FCC for low income consumers.

The information announcement can be a “bill stuffer” or as part of an information section on the bill itself and must clearly state:

(1) That on February 17, 2009, analog broadcasting will end and analog-only televisions may be unable to display broadcast programming unless the viewer takes action.

(2) That analog televisions should continue to work as before with cable and satellite television services, gaming consoles, VCRs, DVD players, and similar products.

(3) That more information on the transition can be obtained by going to www.DTV.gov.

(4) That more information about the converter box program (which provides coupons for the purchase of a converter box to permit continued viewing of television programming on an analog television) by going to www.dtv2009.gov or by calling the National Telecommunications and Information Administration (“NTIA”) at 888-DTV-2009.

Carriers required to include the notice may use languages other than English, if necessary.

More information on the transition and the $40 converter box coupons is available from the National Telecommunications and Information Administration (NTIA). Further information on the digital transition is available directly from PULP.

Lou Manuta

PSC Considering “Area Code Relief” For 315 -- Where Did All The Numbers Go?

Something isn't adding up in Syracuse, Utica, Watertown, and surrounding areas. How can an area -- the 315 area code to be specific -- with 1.4 million people run through 6.5 million telephone numbers? Short answer, it can't.

Staff at the Department of Public Service (the administrative arm of the New York Public Service Commission) drafted a report on February 27th regarding the need for "area code relief" for the 315 Number Plan Area ("NPA"). The Staff Report was officially released by the Public Service Commission ("Commission") with a Notice inviting public comment on March 3rd, followed by a press release on March 6th. The press release asserts that

The 315 area code that has served central New York since the early 1950s is running out of assignable telephone numbers, and implementation of a new area code is required.

The DPS Report proposes several options to ensure that central and northern New York State does not run out of numbers. That is, various area code split scenarios (taking the existing area code and breaking it into two areas with one keeping 315) and an overlay option (where current customers all keep their telephone number, but new customers would receive a telephone number from the new area code and everyone within the existing 315 NPA would need to dial 11 digits in order to call anyone else) have been proposed. Interested parties were asked to select which option they prefer, the Commission would consider the Staff Report and comments, and an Order would be issued directing how the number shortage should be resolved. Comments are due on March 26th, with replies due April 4th.

Very straight forward. The Commission is using a process that has been successfully employed numerous times around the state. In recent years, Long Island was split, the Catskills were broken away from Westchester County, a new code was added to New York City, and Buffalo and Rochester were given their own NPA codes. As expensive and inconvenient as it is for consumers and as difficult and expensive as it is for the telephone companies to implement, we all take part to make sure we don't run out of telephone numbers. That could cause dire economic consequences if the North American Numbering Plan ever became exhausted.

What's Unique About 315?
However, the situation in the 315 NPA raises many issues not seen in these other more populous areas so that selecting a relief path (the aforementioned proposed splits or overlay) should not even be on the table. The consideration of splits or an overlay should be brought to a complete halt and a full investigation started. The costs and inconvenience to residential and business customers are real -- cell phones will need to be reprogrammed, calls across the street will require 11 digit dialing, business cards and letterhead stationery will need to be reordered, etc. -- and are unnecessary based on the information available.

The underlying, preliminary question that needs to be answered before the expense, difficulty, and inconvenience of area code relief begins is this: Where did the all the numbers go?

Let's start with some facts and figures about the 315 NPA. It consists of all of Onondaga, Wayne, Madison, Oswego, Herkimer, Lewis, Jefferson, and Oneida Counties, most of St. Lawrence and Cayuga, about half of Yates and Seneca, and pieces of Cortland, Chenango, Hamilton, Fulton, Ontario, and Otsego Counties. Beautiful country, but with the exception of Syracuse, Utica, and Watertown, not known as a major population center. In fact, the 2000 U.S. Census states that there are only about 1.4 million people living in the area, with about 620,000 households.

According to the North American Numbering Plan Administrator, the group responsible for the telephone numbering scheme for the United States, Canada, and the Caribbean, there are nearly seven million telephone numbers designated for the 315 NPA. There are 697 central office codes, or exchange codes, in 315, of which, 671 have been assigned to carriers to distribute the telephone numbers to customers.

According to the Staff Report, there are 792 central office codes in 315, a count which must include codes that have not even been identified for usage yet. Of these 792 central office codes, the Report states that approximately 656 of these have already been assigned, leaving only 136 codes left. With 10,000 numbers per central office code (NXX-0000 through NXX-9999), that's 1,360,000 telephone numbers remaining. While that may sound like a lot, considering that it can take time to make the area code relief effective, it's not too early to start.

That is, it would be time to declare the 315 area code in jeopardy if these numbers were accurate -- and true. By using the Staff's math to this point, the assumption is that the 1.4 million residents (including infants and children too young to have their own cell phone) and the 620,000 households have taken 6,560,000 telephone numbers. Of course they have not. Most, if not all, of these 656 codes have not been exhausted and many, many, many numbers remain available.

We know this because the Staff Report continues by stating

Of the approximate 8 million assignable seven-digit telephone numbers in the 315 area code, approximately 2.7 million are currently in use.

So, why is the Commission proposing to disrupt everyone's life in the 315 NPA when only 34 percent of the numbers are in use and 66 percent are still available?

How can 83 percent (656 of 792) of the central office codes be assigned, yet only 34 percent (2.7 million of eight million) of the telephone numbers contained in those codes be in use?

PULP believes it is time for a full investigation of this unexplained anomaly.

Numbering Relief Authority in New York
The state Commission was granted authority to oversee numbering resource management by the FCC in 1999 and began to implement what is known as thousands block pooling in 2000. Under thousands block pooling, instead of a carrier receiving an entire central office code of 10,000 numbers for a single location (of which they may only need a few hundred), they would receive just 1,000 and the entire code could be shared by up to 10 different carriers. Unused "thousands blocks" would be placed in a pool for other carriers to request when they reach 75 percent saturation of their own block. By mandating thousands block pooling throughout the state and requiring unused blocks to be placed in the pool, New York has been able to stave off area code relief for a significant number of years, most notably in 518 which almost ran out of numbers in 2002. Thousands block pooling has been a success for both consumers and the carriers.

Now we have a situation in the 315 NPA which defies logic. An area with enough telephone numbers to give each man, woman, and child nearly six telephone numbers should not require area code relief.

Let's look at the numbers.
Central office codes can only be used in their designated rate center. In a city such as Syracuse, multiple central office codes can be used throughout the city (which is its own rate center), but its suburbs have their own rate centers with their own central office code or codes. A small town like Georgetown, on the other hand, also is its own rate center, so the single code assigned there can only be used in Georgetown, even though there are less than 1,000 people living there and they have 10,000 telephone numbers available to them.

Examining the Mystery
In a footnote, Staff states its belief that low-growth rate centers (i.e., rural areas like Georgetown) under-utilize their codes, which has led to the shortage. There are about 50 single central office code rate centers like Georgetown in the 315 NPA. If each of them "wasted" 90 percent of their telephone numbers, this would only account for 450,000 of the "lost" telephone numbers. Staff does go on in its Report to recognize that thousands block pooling "has helped to alleviate some of this problem," but there is only so much pooling can accomplish in a rural community with only one service provider. That said, mathematically, rural areas are not the main culprit in this mystery.

Since the comparatively few unused numbers in rural areas can not be the basis for this purported shortage, it must apparently be a problem in the cities. Even though it is true that a central office code or thousands block in Georgetown, New York can not be used in the growth areas of 315, such as the city of Syracuse, Syracuse has 143 active codes of its own (1,430,000 telephone numbers) for a city of 150,000 people. That's nearly 10 telephone numbers for every man, woman, and child in Syracuse. In contrast, currently the 1.4 million residents of 315 use 2.7 million lines for home and business, roughly two telephone numbers per person. Utica has 46 of its own codes (460,000 telephone numbers) and has a population of 61,000. Additional "unassigned" codes, with 10,000 unused numbers in each, are available in each city as well.

So, the problem isn't that the "lost" rural codes are needed in the cities and can't be used. On top of that, the cities have numerous untapped numbering resources. Something strange is going on with the telephone numbers in the 315 NPA which has not been seen in any of the other area code relief projects around the state. Before the Commission goes down the road to determine how the residents and businesses in 315 should be inconvenienced, we need to go back to step one: whether any "area code relief" is really necessary. A full investigation needs to be launched to find the cause of this artificial shortage and resolve it before a split or overlay is ordered in 315 (the only topics the Commission is seeking comments on) and before this mystery has an opportunity to expand to other regions of the state.

Lou Manuta

PSC Should Investigate Village of Ilion Utility Deposit Requirement

Ilion Village Utility Demands A $300 Deposit to Obtain Electric Service
According to the March 4, 2008 Utica Observer Dispatch, the Village of Ilion municipal utility adopted a $300 deposit requirement as a condition of residential electric service, effective January 1, 2008. See Ilion's Utility Deposit Takes its Toll. It is not clear whether this new rule was filed with and approved by the Public Service Commission (PSC). It is not contained in the Ilion tariffs posted at the PSC website. Ordinarily, a utility cannot impose any requirement for service that is not contained in its tariffs filed with and approved by the PSC. In turn, the PSC is powerless to approve a requirement for utility service in violation of the statutes that govern it.

HEFPA Generally Prohibits Deposits
The Home Energy Fair Practices Act (HEFPA) is New York's utility consumer "bill of rights." It was adopted in 1981 by the Legislature, to establish and consolidate in Article 2 of the Public Service Law the basic rights and remedies of New York's residential energy consumers. Perhaps the strongest utility consumer protection statute in the nation, HEFPA has saved many lives, and implements much of New York State's universal service policy for electric and gas service.

Under HEFPA, residential service deposits for electricity, natural gas or steam such as the requirement adopted in 2008 by Ilion have been generally forbidden for 26 years:

On and after January first, nineteen hundred eighty-two, no utility corporation or municipality shall require any new residential customer, other than a seasonal or short term customer, to post a security deposit as a condition of receiving utility service....

Under other provisions of HEFPA, residential customer deposits are allowed in very limited circumstances, e.g., when a customer requests service for a short term or seasonal basis, or when a customer is deemed to be "delinquent" by reason of his payment history, or when the Public Service Commission (PSC), after a hearing, approves a different deposit requirement, which has never been done.

In the very narrow set of circumstances when a deposit is allowed under HEFPA, a deposit is limited to "not greater than twice the average monthly bill for a calendar year...." Where a customer uses electricity for space heating, the limit is twice the "average monthly bill for the heating season." According to PSC typical bill reports, the typical Ilion electric bill for 500 kwh is about $24. According to the news article, Ilion demands a flat $300 deposit from new customers, obviously excessive for those who do not heat with electricity.

The Village of Ilion is currently listed by the PSC as one of the utilities currently subject to PSC jurisdiction and regulation - including HEFPA. HEFPA protects all customers of municipal utilities like the Village of Ilion. (Some municipal utilities that receive the majority of their power at very low cost from the Power Authority of the State of New York (NYPA) are exempted from the jurisdiction of the Public Service Commission (PSC). Even those utilities, however, are subject to residential consumer deposit limitations similar to HEFPA, under NYPA regulations). Over the years, previously exempt municipal utilities have come under the PSC's jurisdiction - and the requirements of HEFPA - as they began to purchase more of their power from non NYPA sources.

The purpose of HEFPA is to protect the public interest by assuring the continuous provision of safe utility service without unreasonable qualifications or delay. Deposit requirements impede the prompt provision of service. Energy is a modern necessity. When utility service is not provided, less safe alternatives are likely to be used at higher risk and cost to society (see Candle Fires: A Symptom of "Rolling Blackouts" Affecting Low-Income Households ) and accidents are more likely, (see Cop Who Shot Kid has Light Excuse).

The Public Interest Outweighs the Utility Interest
The public policy of continuous service, adopted in HEFPA, overrides the legitimate, but secondary, concern of the Village of Ilion to collect its bills. Utilities must pursue strategies other than imposing deposit requirements and withholding of service in the absence of a deposit.

• Customers who move owing arrears can be pursued through legal action.
  
• Customers who default in payment because they cannot afford it may be eligible for assistance to satisfy unpaid utility bills through the Herkimer County Department of Social Services. The County administers the federally funded Home Energy Assistance Program and the county-and-state funded utility emergency assistance program under Section 131-s of the New York Social Services Law, which in certain circumstances requires counties to provide utility assistance grants in amounts up to the most recent four months' bills.
  
• Many utilities assist customers in establishing eligibility for HEAP and other assistance
• Utilities are allowed by the PSC to set their rates at a level which makes a reasonable allowance for uncollectibles, which can arise from simple bad debt or customer bankruptcies.

PSC Should Direct DPS to Investigate
The Public Service Commission should direct the Department of Public Service (DPS) -- the administrative arm of the PSC -- to investigate and determine if the new Ilion utility deposit rule was properly filed and adopted and if it complies with HEFPA.

In addition, the PSC should direct DPS to undertake a broader audit of HEFPA compliance by Ilion. For example, the Application for Service form attached to the Ilion tariffs contains the following language:

Customer understands that service will be furnished by the Utility in accordance with its rules, regulations, and general rates on file with the New York State Public Service Commission.... It is the policy of the Utility not to grant electric service to a past customer if said customer owes a balance from a previous account. Electric service will be granted only when past due amounts are paid in full.

HEFPA, however, mandates that applicants who owe a utility for past service to an account in their name must be offered a deferred payment plan that is fair, equitable, and negotiable, based on the applicant's financial circumstances. The maximum down payment to obtain service cannot exceed half the amount due or the amount of three months service, whichever is less. Thus, Ilion appears to be in violation of this requirement, too.

Apparently, compliance with HEFPA is not closely monitored and enforced by the DPS, which accepted the Ilion tariffs that do not recognize the right of an applicant who owes arrears for past service to a deferred payment agreement. Indeed, the news article indicates that Ilion copied a similar deposit rule adopted three years ago by the nearby Village of Frankfort, which is also listed by the PSC as a utility it regulates.

PSC "Hotline" and Complaint Remedies for Applicants and Customers
Applicants for residential utility service from Ilion can challenge a denial of service by calling the PSC Hotline, at 1-800 342-3355. The Hotline staff have the power to order a utility to provide service forthwith.

If the PSC Hotline does not solve the problem, persons required to make deposits can file complaints with the PSC and can challenge a demand for a deposit or seek a refund of any deposit that was paid in violation of HEFPA. The PSC complaint number is 1-800-342-3377. If the complaint is not resolved informally, an administrative hearing is available, and persons still aggrieved can obtain a written ruling from the five-member Public Service Commission.

Persons denied service due to an illegal condition for service may receive $25 per day for wrongfully denied service, under PSC regulations, 16 NYCRR § 11.3. Also, if denial of service in violation of HEFPA leads to death or serious injury, the utility is potentially liable in court for damages. See Lawsuit Involving Death of Velma Fordham Settled by National Fuel .

Example: The National Grid Deposit Case
In 2003, National Grid attempted to introduce onerous new deposit requirements. First, without filing new tariffs, Grid tried to classify all customers without written leases for more than one year as "short term" customers. With respect to this rule, the Commission later said

all deposits now held by the company under its lease-based policy and which have not been applied to delinquent accounts should be returned immediately with interest at the rate established for security deposits. . . .

When PULP petitioned the PSC to annul that rule, which had not been filed with the PSC, Grid abandoned it and asked the PSC for permission to adopt a different rule that would require customers to pay a deposit if their "credit score" is below a certain level. Hearings were held on that proposal, which was withdrawn after PULP's expert witnesses testified in opposition to the "credit score" requirement and showed how a deposit requirement places undue burdens on lower income households. Then, a third National Grid deposit proposal - this time contained in a proposed settlement that was agreed to by National Grid, DPS Staff and the Governor's CPB - was opposed by PULP, and ultimately was not adopted by the PSC in its decision.

In the National Grid deposit case, PULP argued for return of wrongfully required deposits and statutory penalties for wrongful service denials. The PSC rejected an argument that the utility had reasonably relied on informal approval or acquiescence of the DPS:

PULP continues to urge that all lease-based security deposits be immediately returned to customers and that a forfeiture be imposed for customers whose service was delayed as a result of the lease-based policy. PULP does not believe that Niagara Mohawk's mistaken belief that the lease-based policy was legal together with the silence of Staff on the subject should provide "good cause" for the company's delay in providing service to applicants.**** The record suggests that the company disclosed its plan for a lease-based policy to the Department and was never specifically told it could be illegal; the record also shows that the company never specifically asked the Department if the policy was legal. In arguing that the company had good cause to deny utility service to residential customers under the lease-based policy, Niagara Mohawk and Staff rely on the Department's silence, which, in our view, is not a strong position from which to argue good faith or due diligence.

The utility was required by the PSC to rectify wrongful denials of service and to return deposits to customers, with interest. The PSC indicated that individual customers whose service had been denied due to the deposit rule might be eligible for the $25/day statutory penalty on a case by case basis.

Needy Households Must Stop Paying Energy Providers to Obtain Supplemental HEAP Benefits

Good News: Additional Federal HEAP Funds
With much fanfare, in February, New York received $82.3 million in supplemental federal funds for operation of the HEAP program this winter. See, e.g., Governor Spitzer Announces Additional Heating Assistance To Combat Rising Energy Prices; N.Y. OKs Extra Aid to Pay for Heat Bills: Needy Families May See Added Payment of up to $700 this Winter, N.Y. Officials Say.

The added funds are, of course, good news. They will permit the chronically underfunded HEAP program, to which the state adds no state funding, to extend its closing date to May 15, 2008, so more households will receive benefits needed to defray high energy costs.

After May 15, households with energy emergencies may receive assistance, but in a more limited and restrictive state-funded utility emergency program. For example, the state emergency utility assistance program generally requires benefits to be repaid if the applicant's income is above the level of public assistance. HEAP eligibility limits are more realistic and recipients are not required to repay a HEAP grant.

Not So Good News: Limited to Emergencies
Overlooked, however, was the significance of a decision taken by the New York Office of Temporary and Disability Assistance (OTDA) to limit the bulk of the additional payments with the $82.3 million supplemental funds to the category of "Emergency HEAP." According to the OTDA Press Release

The program offers two components – a Regular Benefit and an Emergency Benefit. This season, the state increased the maximum Regular Benefit a household can receive to $540, up from $440 last winter. Additionally, qualified applicants facing an energy-related emergency, such as a power shutoff or less than 10 days supply of heating fuel, can apply for an Emergency Benefit.

Under the program changes announced today, a second Emergency Benefit of up to $700 will be available to those without sufficient resources to address another crisis situation, if it should arise.

The Emergency Benefit is not available unless the applicant lacks resources to resolve a heat-related utility emergency. This is defined as having received a termination notice for natural gas service or electricity needed for heat or to operate a heating system. Similarly, Emergency HEAP is not available for those who heat with oil, kerosene, propane or other fuels unless the supply is running out.

In order to qualify for a second supplemental HEAP payment, OTDA provides the following information

How to Apply for the Second HEAP Emergency Benefit
A second HEAP emergency benefit is available, effective February 11, 2008, to HEAP eligible low-income households to assist in meeting their energy emergency needs. A household that has already received a regular and emergency HEAP benefit may be eligible for an additional HEAP emergency benefit. Applicants must be in an energy emergency situation, which is defined as having less than a 10 day supply of fuel, having utility service terminated, or having utility service scheduled for termination. In addition, applicants must not have enough resources to take care of their emergency themselves.

Households that have already received a first HEAP emergency benefit during the 2007-08 HEAP season (the season that started on November 1, 2007) may apply for the second emergency benefit by either calling their local social services office or by completing a “Request for Second Emergency Benefit” form in person. This form is available at your local social services office.

To Pay or Not to Pay
As stated by PULP in recent comments, the allocation of the new funds to the Emergency HEAP component

ignores customers with very high energy burdens who have been scrimping on other household necessities to pay high energy bills. Unless these customers promptly stop paying, they will receive no additional energy assistance, and they may suffer hardship. Thus the clear message sent by this allocation to these customers who also need help with their high energy burdens is to stop paying their utility and fuel bills now, so as to precipitate the preconditions needed to qualify the household for a crisis assistance payment.

Unlike the supplemental funds, the initial allocation of HEAP funds was paid as "Regular HEAP" to eligible households without any requirement that they be facing imminent shutoff. The initial plan was to use 59.33% of the HEAP funds for Regular HEAP and 15.59% for Emergency HEAP crisis assistance. (The balance is allocated for the weatherization program and administrative costs).

Perhaps due to improvements in the Regular HEAP system, the number of Emergency HEAP payments is actually lower, at this point, than it was last year, despite the much colder winter this year and high prices. A significant portion of the new funds could have been allocated to provide a supplemental Regular HEAP payment, which could have been automatically and efficiently paid (by vendor payments to the utilities and fuel vendors on behalf of households) without a requirement that households reapply individually and demonstrate that they are in emergency circumstances.

The clear message being sent by OTDA for those unable to pay all their household bills, after receiving a Regular benefit, or a Regular and First Emergency payment, and who seek additional help this winter, is to qualify for an additional Emergency payment by halting payment to their utility or other energy vendor, to precipitate a home energy crisis.

The allocation creates obvious moral hazards, by encouraging more people to stop paying their bills. It will surely result in hardship to those who do not understand the new path to help charted by OTDA, or who are fearful of energy crisis brinkmanship.

In addition, the Public Service Commission has not been requiring utilities to reinstate deferred payment plans after they receive an Emergency HEAP payment, as it once did. The OTDA only requires utilities to continue service for 30 days after an Emergency HEAP payment, under its "vendor agreements" with the utilities. Thus, an Emergency HEAP payment may simply postpone the emergency for 30 days, when the utility again demands payment of all arrears or an amount the customer cannot afford. This could put the recipient in a situation, after the HEAP program closes, of having to apply for welfare benefits. And, due to a restrictive regulation of OTDA, they may be ineligible for that if they previously received utility assistance and did not repay it.

Focusing HEAP on Emergencies Lightens State and County Emergency Aid Budgets
According to the OTDA press release, the new HEAP funds - the bulk of which will be used for Emergency and not Regular benefits - will save the state and counties money they otherwise would be required to spend under the state's utility emergency assistance program.

Enabling county social services agencies to authorize a second HEAP Emergency Benefit for those eligible will avoid approximately $10 million in local costs by reducing the need for state and locally-funded emergency assistance payments.

In essence, some of the supplemental HEAP funds are being used to supplant pre-existing state and local obligations to assist the poor that would be borne by the general public in the absence of HEAP. Funds intended by Congress to be targeted to relieve the high home energy burdens of the poor this winter are, in effect, being used to reduce the budgets of state and local governments, and thus to benefit the general body of taxpayers.

More Public Input Is Needed Before Allocating Significant Sums of New HEAP Dollars
This allocation of the $82.3 million in supplemental federal LIHEAP funds, roughly 25% of this year's total HEAP funding for New York, was decided without any input from the HEAP Block Grant Advisory Council or other public participation. PULP recently filed comments regarding the needs assessment for next year's HEAP plan mentioning the lack of public participation in this year's decision, pointing out that

[s]uch action is contrary to the spirit of the federal law, which allows states to tailor their programs on condition that they have an open and transparent advisory process, i.e., “timely and meaningful public participation in the development of the plan....” 42 U.S.C.A. § 8624(b)(12) (emphasis added).

For more information, see the OTDA HEAP web page and PULP's web page on HEAP.

PULP Urges HEAP Program Reforms

Background
On February 15, 2008 PULP filed comments with the New York State Office of Temporary and Disability Assistance (OTDA) urging changes in the state's Home Energy Assistance Program (HEAP). HEAP is a federally funded block grant program, supervised by OTDA and implemented by local social services districts. The Low Income Home Energy Assistance Act of 1981 (LIHEAA), 42 U.S.C.§§ 8621, et seq., sets broad parameters within which federal funding, appropriated annually by Congress and distributed through the federal Department of Health and Human Services (HHS) must be utilized. There are a few specific requirements in LIHEAA that all states must observe in their administration of the funds, e.g., a mandatory emergency component requiring prompt resolution of energy crises within specific time frames, the federal definition of eligible households, and maximum income eligibility standards. In general, however, most program design elements and benefit levels are left to be developed by the states through transparent needs assessment and public advisory processes.

The State legislature authorized the HEAP program by enactment of New York Social Services Law § 97. OTDA implements the program under its regulations in 18 NYCRR Part 393, and the annually developed State HEAP Plan, which is submitted by the Governor to HHS for federal approval. OTDA, the lead state agency, develops the annual HEAP Plan and supervises its implementation. Social services districts (the City of New York and departments of social services in each county outside New York City) administer HEAP locally. The State Office for the Aging and community organizations are also involved in program outreach and eligibility certification.

Each year, as part of the process of developing the State HEAP Plan for submission to HHS, OTDA conducts “needs assessment” hearings at which interested parties are invited to testify as to the home energy needs of low income households that should be addressed and the design of the program for the next year’s winter season. PULP submitted its comments pursuant to that request.

PULP's Comments
PULP's comments made the following points:

1. HEAP Payments Should Not be Diverted by Utilities to Pay Stale Arrears of Applicants for Service, Which Should be the Subject of a Deferred Payment Agreement.
   
2. Utility Vendor Agreements Need to be Clarified to Assure that Regular HEAP Payments Provide Assistance Primarily to Meet Immediate Home Energy Needs, and Are Not Allocated to Reduce Utility Bills from Prior Years
3. The Plan Should Provide for Public Input Regarding Allocation of Supplemental Appropriations
4. The HEAP Plan Should Specify that the Heating System Repair and Replacement Assistance Program will Use Energy Star Equipment
5. The Heating System Repair and Replacement Program Should Not Exclude HEAP Eligible Households who Have a Contract for Deed.
6. The Tenant of Record Requirement Excludes Eligible HEAP Households, is Unnecessary, Should be Reconsidered, and Eliminated
7. HEAP Funding Must Be Increased
   

PULP raised these points at the February 27, 2008 meeting of the OTDA HEAP Block Grant Advisory Council. At the meeting PULP also urged OTDA and the State to oppose reductions in the HEAP program and complete elimination of the low income weatherization program proposed by President Bush in his budget for 2008 - 2009. See Bush Proposes LIHEAP Cuts in 2009 Budget, and Bush Proposes Elimination of Low Income Home Weatherization Program.

The webcast of the February 27 HEAP meeting is available at the OTDA public meetings web page.

For more information see PULP's web page on the New York HEAP program.

Verizon Re-Launches Automatic Enrollment for Lifeline

In recent meetings with Verizon’s regulatory and Lifeline staffs, PULP has learned that automatic enrollment for Lifeline has returned. Although the automatic enrollment initiative, which compares public assistance recipient rolls with the carrier’s list of Lifeline customers, had been abandoned a few years back due to unexplained privacy concerns, the company has assured PULP that the program is back in place.

The return of automatic enrollment is good news for New Yorkers, as a successful Lifeline program promotes universal service and makes service available without hardship to the poor. In fact, in April 2004 the FCC stated that “Nationally, the telephone penetration rate is 94.7%, in large part due to the success of the Lifeline/Link-Up program and our other universal service programs.”

But, these numbers do not answer a most perplexing question about telephone subscribership. FCC statistics tell us that telephone penetration in New York in 1996 exceeded 94 percent and there were over three-quarters of a million Lifeline subscribers throughout the state. However, while overall subscribership in New York increased to over 96 percent by 2002, the number of Lifeline customers actually dwindled during the same time period. In fact, according to the FCC’s findings, in 2006 (the most recent year with results) there were 3.2 million households in the state with annual incomes under $20,000, but only 2.8 million of them had telephone service. That’s 400,000 households which could not reach 911 in an emergency. While the Lifeline totals for 2007 will not be available until March, with our state’s telephone subscribership back down to just about 94 percent (in the latest FCC figures from July 2007), it is not expected that Lifeline subscribership will approach the 1996 levels despite the return of automatic enrollment.

Why would that be?

Keep in mind that well over 900,000 households in New York are food stamp recipients, one of the primary eligibility categories for Lifeline. Shouldn’t actual Lifeline enrollment approach, or even exceed, this figure?

First of all, customers have left the incumbent carriers, Verizon, Frontier, Citizens, and Windstream (formerly ALLTEL), in unprecedented droves in the past few years. Some have cut the cord and have gone exclusively wireless. Access line counts have also decreased because many have cancelled second lines at their homes no longer needed for a separate fax line or for dial-up Internet access. Even more have switched to VoIP providers, primarily the local cable television company. These jumps have not just occurred in the biggest cities; rather, even in rural parts of the state, the cable companies have taken a significant number of independent telephone company customers as well. The figures for Verizon had been upwards of 100,000 access line losses per month in New York alone, but these have settled down to about 50,000 lines per month.

It is unclear whether services provided by wireless and cable operators are included in the FCC’s line count statistics. The specific question asked by the FCC in its three-times-per-year consumer surveys is: “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.” However, through November 2004, this question had been worded: “Is there a telephone in this house/apartment?” Because of the increasing number of households that have selected alternative providers, there was concern that some of these households may not think of their phones when asked if they have a telephone. As a result of the “intermodal” shift, it is certainly conceivable that a two percent drop in telephone subscribership since 2002 could be attributable to misinterpreting this question. However, how many actual Lifeline customers and Lifeline-eligible customers have made this shift -- and how many can afford to?

Has automatic enrollment brought about the boost in Lifeline enrollment that we envisioned?

A possible factor in answering these questions is the lack of Lifeline discounts with service bundles. Packages combine basic local service with a host of vertical services (such as call waiting, Caller ID, and voice mail) or even toll service, at a substantially reduced rate compared to subscribing to each on an a la carte basis. The traditional telephone companies offer packages and so do the wireless and cable companies. However, at least for Verizon, Lifeline customers are ineligible to participate in these package deals unless they abandon Lifeline.

Of course, low income customers would benefit from reduced prices for these service bundles. For example, they may be victims of domestic violence and harassment and would place a very high value on services such as Caller ID. Others living in crowded situations may want call waiting or voice mail for household members in order not to miss important calls. Customers with poor eyesight, language, or literacy difficulties may find service offerings with unlimited directory assistance to be of particular value to them.

Back in the mid-1980s, the New York State Public Service Commission required that Lifeline be offered regardless of the service package selected by the customer. In an October 11, 1985 decision the Commission held:

[W]e did not adopt the company’s proposal to limit Lifeline service to customers subscribing to basic budget service, finding it would be better to require telephone utilities to provide a Lifeline discount to any income-eligible customer, regardless of the type of residential service the customer had. . . . Accordingly, all residential customers, regardless of the type of service they take, are now eligible for a Lifeline discount.

Apparently, times have changed.

To what extent do Lifeline-eligible customers forego subscribing to Lifeline in order to take advantage of package offerings by Verizon, T-Mobile, or Cablevision? While Sprint and Nextel have recently rolled out wireless Lifeline in New York, (see Reduced Rate Wireless Lifeline Service Now Available in New York) generally, Lifeline is still a landline telephone company offering. Why can’t Verizon Lifeline customers retain their Lifeline discount and enroll in a service bundle? Frontier Telephone of Rochester does not bar customers from receiving Lifeline rate reductions when they have a service package.

A study published in the Journal of Telecommunications and High Technology Law in 2007 supports this result and found that “a more general low-income assistance program that lets consumers use the subsidy for whatever communications services they most value, might improve participation and would make it more economical for low-income households to migrate to more advanced technologies.” Isn’t such improved participation the purpose of the Lifeline program?

Accurate reporting of local service provided by all types of providers is a necessity in order to ensure that the underlying premise of the Lifeline program is met -- that is, everyone who needs telephone service will be able to afford it. Is this basic tenet of universal service now being met? Based on the clients who come through PULP’s doors who either lack a home phone or have never heard of the Lifeline program, much more needs to be done. Perhaps the time has come for the Legislature to direct its own statewide survey of all types of telephone subscribers based on income and whether vertical or toll services are included in the price.

Lou Manuta

Queens Outage Update: ALJ Requires Con Edison to File Testimony on Prudence and Negligence Issues

In July 2006 a major electrical outage occurred in Queens. The outage was far broader than initially disclosed by Con Edison, and it lasted several days. The PSC commenced an investigation. Con Edison issued reports on the outage, as did the staff of the Department of Public Service. The staff report recommended on February 7, 2007 that the PSC undertake a prudence investigation of the utility conduct. In an April 18, 2007 order, the PSC initiated a prudence investigation phase of the case. For more background, see Queens Power Outage Update, February, 2007, and The Queens Blackout, August 10, 2006.

The Administrative Law Judge issued procedural rulings regarding the scope of the case, and parties filed their assertions. PULP raised a number of issues in its filing, including known conditions in the system that had overloaded secondary mains in the area where a fire triggered a series of cascading events that led to outages, whether the system had sufficient reactive power, whether Con Ed lacked sufficient information regarding the status of the system, whether the system was often run at its reliability design limits, and whether Con Edison lacked sufficient information regarding large numbers of submetered customers and any special medical needs they may have. Many of the papers in the case are available here and at PULP's website page on the 2006 Queens outage.

Settlement discussions ensued. When no resolution was reached, the ALJ on February 8, 2008 issued an order requiring Con Edison to file testimony by March 14, 2008 to justify its claim that it acted prudently.

The ALJ's Ruling on Scope of Company Testimony, Schedule, and Discovery included in the scope of issues whether Con Edison had acted with "gross negligence," as requested by the Attorney General. A finding of "gross" negligence could make Con Edison liable to its customers for their damages due to the blackout, because the Company's tariffs only exclude liability for ordinary negligence. In addition, the ALJ's ruling requires Con Edison to come forward with evidence to justify its prudence on numerous issues the Company had sought to exclude from the scope of the case.

Residential Submetering Update

The Public Service Commission (PSC) requires submeterers who resell electricity to apartment dwellers to agree, as a condition of permission to submeter, not to charge more than the customers would be charged if they were directly metered customers of the utility, and to provide all of the protections of the Home Energy Fair Practices Act (HEFPA). Since posting our PULP website article tracking the history of residential submetering PULP has received several calls from tenants and tenant organizations raising serious concerns and complaints about the practices of submeterers. The complaints fall mainly into two categories:

• Lack of price transparency which impedes submetered customers’ ability to determine whether they are being over-charged, and
  
• Violations of Home Energy Fair Practices Act (HEFPA).

Submetering Promoted
The New York State Research and Development Authority (NYSERDA) promotes submetering as an energy conservation measure, citing studies that tenants in master-metered buildings with electricity included in their rent, consume more electricity than those in submetered buildings who pay separately for electricity. NYSERDA supports building owners recovering the cost of their submetering equipment investment by passing it through to tenants in a variety of ways, and it urges owners to offer submetered electricity at less than direct-metered rates, to induce residents to approve the conversion to submetering. See NYSERDA Residential Electrical Submetering Manual (Oct. 2001).

Also, rental apartment buildings where customers have received individual metered service from the local utility are often converted to submetering when the building is converted to a cooperative or a condominium. Here, the individual customer charges imposed by the local utility can be avoided, and there may be differences in the rates for service to the owner of the building, which may be provided at higher voltage and in a rate class other than residential.

The NYSERDA Manual contains some troubling advice to submeterers regarding the intended consumer protections contained in the PSC orders granted in connection with each authorization for submetering.

New York State has extensive regulations in place to protect residents against their electric service being shut off. An owner seeking to continue the tenancy while discontinuing the service will most likely be required to comply with all tenant-protection regulations applicable to utilities for discontinuing the service. These include various notice and payout [Deferred Payment Agreement] requirements and protections for the elderly and disabled, which are time-consuming, burdensome to the owner, and inconsistent with continuation of the rental tenancy. Moreover, special arrangements with respect to electric charges are likely to cause confusion in billing and collection procedures. As a result, owners may want to consider legal action for eviction of the resident or recovery of unpaid amounts as the primary enforcement mechanism for nonpayment of submetered electric charges.

Thus, the NYSERDA manual suggests that HEFPA consumer protections, such as the duty to offer negotiated repayment agreements to customers in arrears, can be avoided simply by evicting them or suing them in court for unpaid charges. PULP notes, however, that under PSL § 75 no court action can be maintained for charges for electricity that have not been "fixed" by the PSC, and the PSC does not "fix" submeterers charges. Also, in general, courts have held that tenants cannot be evicted in summary proceedings for nonpayment of utility charges. Still, the thrust of the advice in the NYSERDA manual -- for submeterers to avoid compliance with HEFPA -- is contrary to the expectation of the PSC, that submetered customers will be no worse off than directly metered customers. Those who are worse off as a result of submetering may be able to challenge it in court on the ground that only electric companies may sell electricity.

Price Transparency Problems
Public Service Commission submetering regulations prevent “charges to tenants from exceeding the utility’s tariffed residential rate for direct metered service. . . .” 16 NYCRR § 96.2(3). The problem, however, is that most tenants have no way to know whether they are being overcharged. Several factors make it difficult to compare the bills

• Bills received from submetering landlords often fail to adequately explain charges for service
• The utility supplying electricity to the building does not provide submetered customers information about what the charges would be if they were direct metered customers of the utility
• Rate information for direct metered utility customers on utility websites is obscured in voluminous tariff leaves and separate monthly adjustment filings. Arithmetic calculations must be performed to adjust the posted rates for variations in "market supply" charges and "monthly adjustment clauses"
• The PSC provides utility typical bill information only twice a year on a delayed reporting basis

Thus, even assuming that all submetered tenants have internet access and are conversant in English and mathematics, they are still virtually precluded from making a quick and meaningful monthly rate comparison between the utility rates and the rates being charged by a submeterer.

HEFPA Violations
Under Public Service Law definitions, submeterers are “utilities” for purposes of HEFPA (PSL § 53) and must provide all HEFPA protections to submetered tenants. In their zeal to shift electricity and submetering equipment investment costs to tenants, some submeterers have overlooked their consumer protection obligations.

In addition to complaints that submeterers' bills do not explain service charges in “clear and understandable form” as required by PSL § 44, PULP has received all of the following complaints:

• Submetered customers are not being offered budget or levelized billing, in violation of PSL § 38(1)
• Elderly submetered customers are not being offered quarterly payment plans, in violation of PSL § 38(2)
• Submetered customers are not receiving annual notification of their HEFPA rights, in violation of PSL § 44
• Submetered customers who require electricity to operate life-support equipment have not been identified, in violation of PSL § 65
• Submeterers have not established complaint handling procedures, in violation of PSL § 43
• Submetered customers have received termination notices that lack information required by HEFPA and that were not accompanied with information about Deferred Payment Agreements and possible availability of assistance.

In sum, building owners are ignoring specific requirements of PSC Orders granting submetering approval and the PSC regulations requiring compliance by submeterers with HEFPA.

Conclusion
The PSC’s attention to submetering in recent years has been largely limited to routine approval of petitions of building owners for submetering. As submetering approvals have increased, so have complaints against the practices of submeterers. It is time for the PSC to investigate the practices of submetering building owners to ensure their compliance with HEFPA and with the obligation to charge no more than the tenants would be charged if they took service directly from the utility instead of through the landlord. Submeterers should also be assessed their fair share of the Department of Public Service and PSC operating costs under PSL § 18-a, in return for their being allowed to operate as if they are utilities.

We also find it odd that NYSERDA, a state entity that administers the system benefits charge funded by electricity customers, would, in its submetering manual, describe basic compliance with state law provisions designed to protect those very rate payers (HEFPA) as “time-consuming [and] burdensome” or would tolerate the use of eviction rather than compliance with HEFPA “as the primary enforcement mechanism for nonpayment of submetered electric charges.” See NYSERDA SubmeteringManual, above, at p. 30.

In our view, HEFPA imposes no undue burden whatsoever upon submeterers who promise in their petitions to comply with HEFPA as a condition for PSC permission to engage in submetering that is otherwise unauthorized by law. See Campo v. Feinberg.

Governor Spitzer's Budget Leaves PULP's Survival to the Legislature

PULP Background
Since 1981, the Public Utility Law Project (PULP) has received state funding to support its mission of advocacy on behalf of low and fixed income utility and energy consumers. PULP vigilantly enforces rights of utility consumers under the laws, and has sparked and contributed to major initiatives affecting affordability, universal service, and customer protection.

PULP's work contributes to New York's reputation as a leader in utility consumer protection, with pioneering work regarding the Home Energy Fair Practices Act, the Energy Consumer Protection Act of 2002, the telephone lifeline program, low income rates, and numerous other utility low income assistance programs approved by the PSC in utility rate cases. PULP's highly qualified staff

• provides assistance to individual consumers and local advocates through PULP's telephone hotline, often in crisis situations when other avenues for help and local advocates have failed;
  
• conducts training programs throughout the state on topics such as prevention of utility service termination;
  
• participates in rate cases and generic utility policy cases at the Public Service Commission, providing comments informed by PULP's expertise and mission;
  
• participates on numerous state advisory panels regarding low income customer concerns on energy and telecommunications matters;
• participates actively in bar association and other professional activities, and
  
• provides information regarding energy and utility matters through the PULP website including customer self-help information at the PULP website Help Center.
  

History of PULP's State Funding
PULP has received state budget funding since 1981. Prior to 1995, PULP was included in the executive budgets of Governor Cuomo. Typically, PULP received at least two state appropriations, one funded with general revenue funds and one funded with utility "special revenue" funds raised by utility assessments under Public Service Law 18-a. PULP's grants were "deemed" to be expenses of the Public Service Commission, which are in turn funded through utility rates and not the general state tax revenues.

In contrast, when Governor Pataki took office in 1995, all funding for PULP was completely omitted from his proposed budget in that year, and in every subsequent budget he proposed through his twelve years in office. During the Pataki years, PULP survived, with great hardship and difficulty, only due to legislative additions to the Governor's budget achieved by the state Assembly. In some years, PULP appropriations added by the Legislature were vetoed. Assembly leaders, including Speaker Sheldon Silver, Committee Chairs Destito, Brodsky, Pheffer, Weinstein, Cahill, and many other Assembly members repeatedly acted to overcome veto threats and successfully preserved PULP through the member item process.

Late budgets frequently led to late pay, partial pay, and during some intervals, no pay for staff who remained determined that PULP and its work should continue. During those years, staff retrenchment became necessary due to reduced funding levels. In 2001, after 9/11, funding for PULP and other agencies that had been funded through legislative initiatives was cut by about 25%. Since then, PULP's funding has been basically frozen at a level that, taking inflation into account, now amounts to considerably less than half of PULP's total resources in 1994.

Governor Spitzer's budget proposals in his first year continued to follow the pattern set by Governor Pataki: he proposed no funding at all for PULP. But for the Assembly's continued support and the addition by the legislature of funding for PULP in the 2007 - 2008 budget, PULP simply would not exist today.

PULP Funding Again Omitted in Governor Spitzer's 2008 - 2009 Budget
PULP is seeking additional funding for 2008 - 2009 in order to rebuild its staff and to increase its services during this crucial period of rising energy prices. Four Assembly Committee Chairs supported the inclusion of PULP in the Governor’s Budget for 2008 – 2009, urging the use of utility special revenue to increase the funding to bolster PULP's services, State Budget Director Laura Anglin replied, stating

“The Governor asked me to respond to your joint letter regarding funding for the Public Utility Law Project (PULP). While we recognize the importance of PULP and its advocacy services on behalf of New York’s utility consumers, there is no specific funding for PULP included in the Executive Budget. However, there are $70 million in Civil Legal Services funds from the Interest on Lawyer Account that PULP may apply for. . . .”

Reliance on IOLA Funding is Not the Solution
The Governor's solution as suggested by State Budget Director Anglin is for PULP to replace all of its state budget funding with a grant from the IOLA Fund. Contrary to the suggestion of the Budget Director, however, there is no "$70 million in Civil Legal Services funds from the Interest on Lawyer Account that PULP may apply for. . . ." IOLA simply has nowhere near that amount of money to distribute. See the IOLA revenue reports. Moreover, the bulk of IOLA revenues are categorically targeted by its enabling legislation to fund local legal aid groups.

Even under the most rosy scenarios for future IOLA funding, however, PULP will exhaust all its funds long before any new IOLA funds could be granted and received for 2009. The next regularly scheduled round of applications for IOLA funds is in September 2008, for 2009. PULP’s existing funding expires March 31, 2008 and PULP would completely run out of funds long before the next round of IOLA funding.

Historically, IOLA provided some supplemental funding to PULP, in addition to its core state budget funding. IOLA grants were never more than 15% of total annual PULP funding, mainly to enhance the training and local advocate support portion of PULP's work, in the "Administration of Justice (AOJ)" category. Under the Pataki administration, the IOLA Fund gradually eliminated even the small AOJ grants for PULP by 1998. Since then, the IOLA Fund repeatedly denied all PULP funding requests, including the most recent request, made for calendar year 2008 funding, which was denied by IOLA in December 2007. Thus, upon scrutiny, the suggestion of the State Budget Director assumes a major change of available grant revenue, policy, board, and staff at the of which there is scant evidence. See Spitzer Urged to Stay Away from Defense Fund. Reliance upon IOLA simply is not a viable short or long term funding solution for PULP.

It is again necessary for the Legislature to make additional appropriations in the 2008 - 2009 state budget to ensure not only the survival of PULP but also to provide the increased funding needed to assure fuller representation of the interests of low income energy and telecommunications consumers at the PSC and in other forums.