The PSC is considering whether to relax its submetering regulations and “streamline” its procedures for allowing landlords to provide electric service to their tenants. Under current rules and tariffs, resale of residential electric service is prohibited without a specific PSC order. Among other things, the PSC is proposing to abolish all tariff prohibitions on submetering, which have existed since 1951, and also to eliminate the need for PSC orders allowing submetering. The approval process would be delegated to staff. PULP previously filed comments in February 2009 urging the PSC not to relax its regulations but instead to enforce existing requirements and existing orders, and to take additional steps needed to protect captive customers who now must pay for monopoly electric service from their landlords. See PULP Files Comments on PSC Proposal to Relax Submetering Rules; Submetering Landlords Clamor for More PSC Deregulation of Electric Service.
On March 13, 2009, PULP filed supplemental comments which tell the story of low-income tenants in a recently submetered 343-unit building with electric heat in Westchester County. As seems typical in these situations, the downward rent adjustments made when the landlord shifted electricity costs to the tenants did not come close to offsetting the high electric bills received by the tenants. As a result, low-income tenants were unable to pay their electric bills. When they sought assistance from the local department of social services, they were denied Home Energy Assistance Program (“HEAP”) benefits to help defray their high heating bills — some were $500 or more — because the bills are rendered by a Long Island submetering company that is the landlord’s agent.
PULP contacted the New York State Office of Temporary and Disability Assistance (“OTDA”), which advised that a vendor agreement must be in place in order to issue HEAP payments. Neither the landlord nor his submetering agent is a HEAP vendor.
To assure that HEAP-eligible tenants in electrically heated submetered buildings have access to the same energy assistance benefits as customers of a distribution utility, PULP urged the PSC to require, as a condition of submetering approval, that the applicant provide a copy of a currently effective vendor agreement, demonstrating that it has agreed to accept regular and emergency HEAP payments.
PULP also urged the PSC to require landlords, in their function as utility service providers, to have in place the necessary arrangements and authorization to enable them to accept voucher payments of energy assistance benefits from local department of social services for for HEA, SHEA, FFH and § 131-s emergency utility assistance.
PSC regulations currently in force do not require submetering landlords to have these arrangements in place. Indeed, in practice, the PSC allows landlords simply to evict tenants who have difficulty in paying their utility bills, circumventing HEFPA protections and utility assistance programs. For example, the lease tenants are required to sign by a PSC-approved submetering landlord provides:
The electricity charges will be billed to the Tenant as additional rent and will be payable on a monthly basis by the Tenant as additional rent. Tenant specifically understands that if the electricity charges are not paid in full on a monthly basis by the Tenant, that the Landlord may commence a summary proceeding to recover a money judgment and a judgment for possession against the Tenant and that the Tenant can be evicted from the apartment for failure to pay electricity charges.
The PSC order that applies to the landlord using the above lease requirement gives only lip service to the applicability of HEFPA protections, such as deferred payment agreements, when a tenant is behind in payments and termination of electric service is threatened. The landlord is allowed to skirt the HEFPA requirements by terminating the tenancy instead of the electric service.
This is an illustration of the practice urged in a NYSERDA-funded submetering manual co-authored by a submetering industry consultant. See PSC and NYSERDA Spend Millions for Submetering Projects Violating Residential Tenants’ Rights. The NYSERDA Submetering Manual contains this advice to submeterers regarding avoidance of 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 to landlords that HEFPA consumer protections, such as the duty to offer negotiated repayment agreements to customers in arrears, can be finessed simply by evicting tenants for unpaid utility charges. As a result, the panoply of protections and utility assistance benefits ordinarily available to a utility customer are abrogated under the PSC and NYSERDA’s submetering regime.
Putting it all together, the submetering system
- is engineered to require tenants to pay significantly more for electricity and rent combined than they paid before for rent including electricity;
- low-income tenants cannot access utility assistance to defray these higher costs; and
- the PSC allows landlords to deem the electric charges to be rent.
This is an engine for displacing low-income tenants that may be attractive to some landlords who can charge higher market rents if the low-income tenants can be evicted. This seems to be occurring particularly in former Mitchell-Lama housing projects where the mortgage obligation to provide housing affordable to low and moderate income tenants has ended, and landlords are able to rent at market rates when a low-income tenant leaves.