Grid’s “Grand Plan”
National Grid is withholding service to applicants who owe money for service to closed accounts if a prior written payment agreement on the old account was not paid in full when the account was closed. The utility has been insisting upon an up front payment of $1,000 (“one grand”), or the entire balance owed if the amount is less than one grand, and has been refusing to negotiate for a lower amount based on the applicant’s ability to pay. See New Barrier to Utility Service: National Grid’s “One Grand” Demand, PULP Network October 2, 2007.
As a result, low income applicants for utility service are unable to meet the impossible demands of National Grid and live in dark homes, sometimes for weeks, without utility service, increasing the risk of loss of life. See Candle Fires: A Symptom of “Rolling Blackouts” Affecting Low-Income Households See also, Mom sought state help before fatal fire, describing recent Pennsylvania deaths while utility service was off.
This is squarely in conflict with the state legislature’s declaration in the Home Energy Fair Practices Act (“HEFPA”) Section 30 that residential service is to be provided by the state’s utilities without unreasonable qualifications and without lengthy delays. HEFPA Section 31 requires applicants for service who owe the utility for prior service to closed accounts to be given the opportunity to repay “any amounts” owed for service to a prior account in a deferred payment plan, with a maximum down payment of half the amount due or the cost of three months’ service, whichever is less. Further, HEFPA Section 37 requires that all deferred payment plans must be “fair and equitable” and negotiable based on the customer’s financial circumstances, and HEFPA Section 43 gives authority to the department of public service staff to resolve disputes over the appropriate terms of repayment plans.
Petition Asks PSC for Relief
On behalf of applicants denied utility service by National Grid under its “Grand Plan” (as the company names it in a recent denial notice) PULP petitioned the state Public Service Commission on October 17, 2007, to investigate the practices of the utility. The petition seeks an interim order directing a halt to the practice of demanding large payments as a condition of service, pending completion of an investigation and conclusion of the case. The petition asks for a one-Commissioner order granting interim relief pending full action by the Commission.
In addition to interim relief, the petition seeks an investigation by the PSC, a declaration that the challenged practices are unlawful, remedial relief for applicants who have been denied since implementation of the “Grand Plan,” and a rate reduction if the evidence shows systematic denial or delay of service to applicants based on unreasonable and unlawful conditions. The relief requested includes a minor $25 per day payment to wrongfully denied applicants. That remedy has not been adjusted for inflation since 1981.
Bad Advice From Grid: Ask Welfare to Pay Old Bills for Accounts Closed More than Four Months Ago
Instead of providing service, National Grid has been telling applicants who lack the “grand” demanded for service to apply for welfare assistance.
The state welfare assistance program for utility customers now contained in Section 131-s of the Social Services Law was enacted together with the Home Energy Fair Practices Act in Chapter 895 of the Laws of 1981. It will cover utility arrears for a needy person not now on public assistance, and can provide a loan if the person’s income is above the welfare income eligibility levels. The program will only pay an amount equal to the utility bills for the four months immediately preceding the month of application. Upon receiving notice of that payment, Section 65-b of the Public Service Law requires the utility to provide service, even if the four-month amount is less than the total owed.
A person who has not had utility bills for an account in their name in the past four months can be denied the welfare assistance. The welfare scheme simply was never intended to pay old bills for prior service to a closed account, because the HEFPA changes assured that an alternative payment arrangement is available under the Public Service Law to the applicant with arrears for service to a prior account. HEFPA requires the utility to offer a DPA to an applicant who owes money from a prior closed account, and thus the welfare offices may deny aid on the theory (if not the reality) that a payment agreement with the utility should be available to the applicant as an alternative to public assistance.
In addition, the federally funded HEAP crisis assistance program provides emergency benefits only in situations where the applicant for HEAP is the “customer of record” with an energy vendor. An applicant for utility service is not a customer.
As a result of Grid’s “Grand Plan,” utility service to low income applicants and their households is denied or delayed because they are unable to pay the large up-front amounts insisted upon by Grid as a condition for service, and they cannot receive public assistance. In some situations, another household member may be able to apply for and receive service, but this is not always possible, for example, when there is no other adult in the household.
National Grid apparently claims that despite HEFPA Section 31, which establishes a deferred payment plan option for applicants to repay “any amounts due for service to a prior account in his or her name,” it can refuse to offer a plan if the applicant had defaulted on a prior payment plan when the prior account was closed. Section 31, however, does not limit the availability of a deferred payment plan.
In 1981, when HEFPA and the companion SSL 131-s welfare program were enacted the PSC Chairman submitted a memorandum in support recognizing that the new safety net of HEFPA combined with the limited public assistance program was designed to overrule prior requirements of full arrears payment as a condition of service. Also, in a report, the PSC Chairman observed that HEFPA had removed “unrealistic restrictions on obtaining utility service.” The statutory deferred payment provisions coupled with the limitation of welfare assistance to the most recent four months, along with other HEFPA provisions such as a prohibition on termination of service for stale bills, encouraged utilities not to let customers unable to pay fall far behind and accrue large arrears. Instead, utilities could pursue termination of service for arrears that would be within the scope of the four-month welfare payment. Also, such early action might identify needs for referral to weatherization services or other social services needed by the household to help manage their bills.
Grid’s referral of denied applicants to welfare offices abuses the welfare system and taxpayers because the welfare program was intended to be a last resort and was never designed to aid the company in collecting old bills and bad debt from prior closed accounts. Indeed, when utility rates are set by the PSC, the rate level is set so as to make a reasonable allowance for bad debt and uncollectibles.
Emergency HEAP Situation Unclear
The federally funded Home Energy Assistance Program (“HEAP”) begins November 1, 2007. The HEAP program is inadequately funded by the federal government, is not supplemented by New York State, and closes in the Spring when federal funds are exhausted.
New York’s HEAP Plan contains a “crisis assistance” component called “Emergency HEAP” to resolve the home energy crises of individuals who meet all income eligibility standards and other program requirements. Because deferred payment plans should be available under HEFPA to persons now being denied utility service under the National Grid “Grand Plan” due to old bills from long closed accounts, however, there really should be no “emergency” or “crisis” to consider addressing with Emergency HEAP or any other welfare program.
Further, state OTDA regulation 18 NYCRR 393.4(d)(1) contains a requirement that limits Emergency HEAP payments to those who are the “customer of record” with “an account in their name with an energy vendor.” Persons denied utility service by National Grid under the “Grand Plan” are not the “customer of record” as defined under the welfare regulations cited above, because they do not now have an account in their name. Also, a person denied utility service under the “Grand Plan” is an “applicant” and not a “customer” as defined in the regulations of the Public Service Commission at 16 NYCRR 11.2(a)(2).
It is possible that some counties administering the 100% federally funded HEAP program may respond sympathetically to a person denied utility service by National Grid by proffering an Emergency HEAP payment. Under the vendor agreements negotiated between the utilities and OTDA, however, utility vendors are given the option to refuse an Emergency HEAP payment. As a result, it is not clear whether Emergency HEAP grants could solve the problem. Moreover, the limited funds available under the federal LIHEAA program should be conserved to meet this winter’s home heating needs, not to help utilities collect bad debt for years past which can be addressed with a deferred payment plan.
Insensitivity to Low Income Customer Predicaments
Some of the applicants denied service under the “Grand Plan” owe large amounts for closed accounts for unaffordable natural gas service. National Grid introduced more volatile natural gas rates with unpredictable spikes in recent years. These often cannot be absorbed by low income customers, who live from check to check and often lack savings. Many people may have lost service and closed accounts, perhaps moving to new situations with utilities included. Now, sometimes years later,when their situations change and they need service again, they cannot obtain it because of Grid’s “Grand Plan.” Compounding the problem, National Grid
- Lacks meaningful low income rate plans such as those of other National Grid companies in Massachusetts to make service more affordable
- Closed all its New York walk-in customer service offices where customers could negotiate payment agreements
- Reduced its staff who provide services to persons with payment difficulties
- Appears not to have empowered its representatives to negotiate fair and equitable payment agreements based on financial circumstances of applicants
- Withheld service in some instances without providing notices of possible commission remedies
- Misadvises people regarding the availability of public assistance and
- Is reverting to harsh pre-HEFPA tactics that endanger the public.
Before the Home Energy Fair Practices Act (HEFPA) was enacted, New York’s utilities had harsh policies that often led to hardship, sometimes with tragic consequences. See PULP’s HEFPA History web page. In 1981 HEFPA required the provision of service to applicants who owe the company money if they agree to pay back the arrears through a deferred payment agreement. There is no bar to a new agreement or disqualification of applicants who had an unpaid DPA that was terminated when their old account was terminated and a final bill was rendered for all outstanding charges.
HEFPA does allow a current customer’s service to be terminated if he defaults on a signed payment agreement. If the customer cannot afford to pay the arrears, and is not eligible for a renegotiated payment plan based on a change of financial circumstances. It is then that he may be able to obtain a 4-month welfare payment, to forestall the termination or restore recently terminated service. Also, if a current customer has been terminated for nonpayment in the past six months, the utility can require a deposit. In this manner, HEFPA balanced the rights of applicants and utilities in a way that favors the timely provision of service to all residential applicants, even those who owe the company for past service to previously closed accounts.
Implications for the Current Long Term Rate Plan
National Grid is enjoying the benefits of a lengthy rate plan in which it can keep the benefits of improved practices, cost reductions, and revenue enhancements, instead of cost savings or increased revenue being taken into account through more frequent recalibration of rates. The petition alleges that National Grid’s “Grand Plan” is a means to enhance revenue during the long-term rate plan at the expense of needy applicants for service, in violation of the expectation that the utility would extend service to applicants in accordance with law, and asks the PSC to make a downward rate adjustment.
DPS Staff Acquiscence to Grid’s “Grand Plan”
Some staff of the Department of Public Service (DPS), which is overseen by the PSC, apparently have supported implementation of Grid’s “Grand Plan,” as in the case of National Grid’s initiation of harsh and illegal deposit policies several years ago. The Public Service Commission, however, is not bound by informal acquiescence of any DPS Staff to a utility rule or practice that has been changed informally without filing new tariffs approved by the Commission. As the Commission stated in the deposit case
The record suggests that the company disclosed its plan *** 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 *** 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.
Thus, even though the staff of the utility regulator have gone along with a utility’s practices, the PSC itself is not bound by their acquiescence.
Withholding of Service Without Notice?
In some instances denied applicants do not have written notices of denial of service, which is required by law. Notice must include a detailed statement of the reason for denial, a precise statement of what must be done to qualify for service, and notice of the PSC Hotline number, 1-800-342-3355. These notices must be provided if service is not provided within three days of an application
Denied Applicants may Join in Petitioning the Commission
Individuals denied service under the National Grid “Grand Plan” have received service after joining in the proceeding. For further information and possible intervention in the case contact PULP at 1.800.255.7857.