Will LIPA "Reform" Provide Equal Consumer Protections for Long Island Electric Customers?

Under proposed “reform” legislation to revise the structure and operations of the Long Island Power Authority (LIPA), it appears that LIPA consumers will not have the full benefits of the protections and complaint adjudication process available to other utility customers of public and investor-owned utilities across New York state.

To understand the latest twist in the loss of full customer protection benefits under HEFPA to residents of Long Island we need to lay out some history.

First, what is HEFPA?

Background – HEFPA
The Home Energy Fair Practices Act (HEFPA) is New York’s utility consumer “bill of rights.” It was adopted in 1981 both to establish new rights and to consolidate existing customer rights that had been judicially declared in court cases over the years.  Codified as Article 2 of the Public Service Law (PSL) Section 30, et seq., HEFPA remains one of the strongest utility consumer protection statutes in the nation, and is a cornerstone of New York State’s universal service policy.  PSL Section 30 states

It is hereby declared to be the policy of this state that the continued provision  of all  or  any  part  of  such  gas, electric and steam service to all residential customers without  unreasonable  qualifications  or  lengthy delays  is  necessary for the preservation of the health and general welfare and is in the public interest.

Over the years it was clarified to apply to all electric service, whether provided by utilities, ESCOs, or submeterers, it was extended to address shared meter situations and customers of large private water companies, and by regulation, with some modification, its principal features were made applicable to telephone service.

HEFPA addresses matters such as the duties of utilities with respect to the commencement and continuation of service, it limits  the use of deposits, it requires budget billing options, it limits the use of back bills and estimated bills, it requires plain language bills, it provides for third-party notices for elderly and other vulnerable customers, it requires utilities to proffer deferred payment agreements before service termination, it creates a hotline remedy for customers at risk of losing service, it limits the interruption of service for bill collection purposes for households experiencing medical emergencies and where the loss of service would aggravate existing serious medical conditions, it provides remedies for tenants whose landlords have not paid for utility service, it gives added protections for households with elderly, blind or disabled customers, increases protections during the cold weather season, and it requires information and referral of customers in arrears who are subject to service termination to departments of social services to obtain assistance.

As can be imagined, all the rights and remedies of HEFPA are not self enforcing.  The procedural backbone needed to secure HEFPA rights is he complaint handing function of the Department of Public Service and the Public Service Commission.  HEFPA gives speedy recourse into the evening hours to the DPS Emergency hotline (800-343-3377) to aid in negotiation of payment agreements and to halt terminations or require utilities to provide service where appropriate, and  the complaint adjudication process of the Public Service Commission, accessible by phone, email, mail, or in person.  Public Service Law Section 43.2 requires the PSC to issue a written decision upon the request of a complaining customer regarding nearly any aspect of service, including bill disputes and denials or terminations of service. A customer can lodge a complaint with the PSC without a lawyer by phone or file e-mail complaints  involving electric, gas, telephone , water and cable TV service. The PSC has toll free telephone complaint lines available at 1-(800-342-3377). The PSC does not entertain a complaint until the customer has first complained, without satisfaction, to the utility, and in recent years has adopted a policy that requires customers to complain twice before a complaint is counted and a decision is issued, because in the first instance the complaint is kicked back to the utility, even though it has already taken adverse action and has not responded to the customer.  Though far from perfect, the complaint handling process helps enforce customer rights and remedies every day, corrects mistaken or wrongful utility actions, can be an aid in monitoring practices of the utilities, and advances the state’s goal of safe, continuous residential utility service.

What happened when LILCO was replaced by LIPA?

The Implementation of HEFPA by LIPA Weakened Complaint Adjudication Rights
LILCO customers on Long Island had available all the substantive and procedural protections of HEFPA, before the advent of LIPA. LILCO was an “electric corporation” subject to HEFPA because Section 30 makes HEFPA applicable to residential service provided by municipalities and electric and gas corporations. That was altered, however, when to reduce rates by 20% through more economical public ownership, LIPA purchased the assets of LILCO.  LIPA, however, is an “authority,” and applicability of HEFPA to authorities was not contemplated when HEFPA was adopted in 1981.

Even though LIPA was generally exempted from Public Service Law provisions for PSC regulation of electric companies and municipalities, a special provision addressed the issue of customer protections when LIPA took over LILCO.  The Public Authorities Law states

§  1020-cc.  Authority  subject to certain provisions contained in the state finance law, the public service law, the social services  law  and the  general  municipal  law. * * * * The  authority shall also establish  rules  and regulations with  respect to providing to its residential gas, electric  and steam utility customers those rights  and  protections  provided  in article  two and sections one hundred seventeen and one hundred eighteen of the public service law and section one hundred  thirty-one-s of the social services law.

This language indicates no intent on the part of the Legislature to erode or impair Long Island utility customer rights under “article two,” which is HEFPA,  when ownership of the utility shifted to the authority.  Indeed, Long Island natural gas customers who receive gas service from National Grid retain the full panoply of HEFPA protection and the right to pursue complaints through the PSC.

When LIPA wrote the regulations required under PAL § 1020-cc, however, it did not give its customers exactly the same  rights that HEFPA provides under the PSC complaint handling procedures, which include an initial DPS determination of the complaint and then the opportunity for either an informal review or an in-person informal hearing and decision, and subsequent opportunity to seek PSC review and a final PSC decision.  Here is what HEFPA requires in Section 43 of the Public Service Law regarding complaint adjudication:

§ 43. Complaint  handling procedures. 1. The commission shall maintain regulations for the handling of residential customer  complaints,  which  at  a  minimum  shall  require  that  each  utility or municipality: (a)  maintain procedures for prompt investigation of any complaint on a  bill   for  gas  or  electric  service  rendered  or a deposit required and for prompt reporting to the complainant of the result of such investigation.   If such report is made orally, the utility corporation  or  municipality  shall  offer  the  complainant upon a written request the opportunity to  receive  the  report  in  writing;  (b)  inform  any  complainant  whose complaint   is   resolved   in  favor  of  the  utility  corporation  or  municipality,  in  whole  or  in  part,  of  the  availability  of   the  commission’s complaint handling procedures; (c) refrain from terminating  service  for  nonpayment  so  long  as  a  complaint is pending before a   utility, municipality or the commission and for fifteen days thereafter,  or for such period as the commission for  good  cause  shall  establish;   provided  however,  that  as a condition of continued service during the  pendency of any such  dispute,  a  customer  shall  pay  the  undisputed  portions  of  any bill for service including bills for current usage, or  such amounts as the commission determines reasonably reflect the cost of  usage to such customer; and  (d)  refrain  from  treating  the  disputed  portion  of any bill as late during the pendency of any complaint before  the utility or municipality.
2. The commission shall maintain regulations  for  complaint  handling procedures  including  complaints  with  respect to the negotiation of a deferred payment agreement  which  shall  include,  at  a  minimum:  (a) provision  for  investigation  and informal review and for appeal to the commission in its discretion; (b)  that  the  burden  of  proof  in  all proceedings  shall be on the utility corporation or municipality, except as otherwise  provided  by  the  commission  for  good  cause;  and  (c)  provision  for  parties  to  receive  a  written  determination  of  any   complaint,  upon  request,  in   plain   and   simple   English,   which determination  shall  set  forth  the  relevant  facts  established, the reasons for the determination, what  actions  must  be  taken  and  what further procedures are available to a complainant.
3.  The  commission  shall  use  its  best  efforts  to  complete  its investigation and review and to issue, within  ninety  days,  its  final  written determination of any appeal to it pursuant to this section.

Instead of arranging for PSC adjudication of its customers’ complaints, LIPA adopted rules that created its own complaint handling procedure.  Unlike HEFPA, the LIPA rules have no provision for a face to face informal hearing for customers aggrieved by its operating company contractor (National Grid, and soon to be PSEG),  Rather, LIPA’s complaint handling procedure provides for written reviews by LIPA only.  The LIPA tariff containing the complaint procedures is here.

Last year, when the subject of PSC oversight of LIPA rates was under consideration, LIPA was not put under the complaint adjudication jurisdiction of the PSC.  Instead, a new provision was added to the Executive Law §94-A(4) which created a new “mediation” role for the Department of State Utility Intervention Unit.  The provision, applicable only to LIPA customer complaints, states:

(b) The utility intervention unit shall have the power and duty to:    ****
(iii) accept and investigate complaints of any kind from  Long  Island power  authority  consumers,  attempt  to  mediate such complaints where appropriate directly with such authority and  refer  complaints  to  the appropriate  state or local agency authorized by law to take action with respect to such complaints.

Note that this language does not empower DOS UIU to decide a complaint or take any binding action against LIPA.  Rather, if an “attempt to mediate” is not successful, DOS UIU can only refer the LIPA customer complaint “to the appropriate  state or local agency authorized by law to take action with   respect to such complaints.”

To our knowledge, there is no “appropriate agency” that  decides LIPA customer complaints.

The logical agency to do so is he PSC, which has a robust complaint handling system and decades of expertise from continuous interpretation and administration of the relevant law.  But under current practice, the PSC does not decide LIPA customer complaints and the benefits of its complaint handling procedures and toll-free emergency Hotline in situations involving imminent or recent shutoff of utility service are simply not available to LIPA customers.

As a consequence, LIPA customers currently lack the full measure of HEFPA protection — what they have have is an internal LIPA process by which LIPA itself reviews contested actions of its operating company agent.

It could be worse…

The Current Proposals for LIPA Reform Do Not Clearly Provide for Complaint Adjudication Under HEFPA 

A current proposal for LIPA reorganization has surfaced that again gives short shrift to proteciton of Long Island utility customers:

The governor laid out a proposal Monday that would shift the embattled utility company’s day-to-day operation to PSEG, the New Jersey-based company slated to replace National Grid next year, and would freeze rates for three years, slash LIPA’s staff considerably and reduce LIPA’s debt load.

Essentially, LIPA would become a holding company, but would remain under government ownership for tax purposes and to ensure reimbursement from the Federal Emergency Management Agency (FEMA), the governor said.

****

The proposal would also impact LIPA’s staff, cutting it from 90 to 20, the governor said, and would slash the number of board members from 15 to five.Cuomo is looking to push the proposal through this legislative session, which ends at the end of June. The top leaders in the state Senate and Assembly gave no indication that they would pass the bill through their respective chambers.

Rashed Mian, Cuomo Announces Proposal For LIPA’s Future, Long Island Press.com, May 13, 2013.  WIth the slashing of LIPA staff from 90 to 20, one must question whether sufficient resources will be left for investigation and adjudication of customer complaints from actions of its operating agent.

Looking to the language of the draft LIPA “reform” bill it appears that it would make a dog’s breakfast of utility consumer protection.  First, it sets out provisions which completely exempt the operating company hired by LIPA from all Public Service Law requirements of electric companies:

The service provider, however, shall not be considered an electric corporation under this chapter.

A plain reading of this language is that it would exempt LIPA’s operating agents, National Grid and its successor PSEG, from all duties to customers under HEFPA.  Customers would lack recourse to administrative remedies through the PSC hotline and complaint procedures, and if injured by HEFPA violations, customers may have no tort claims arising from violation of HEFPA requirements.  See Lawsuit Involving Death of Velma Fordham Settled by National Fuel.

The omission of HEFPA rights could have been very easily cured: the LIPA operating agent could be exempted from the obligations of an electric corporation under the Public Service Law, except for those in Article 2 (HEFPA).

Instead, the bill would continue the murky provision contained in existing Section 1020-cc of the existing Public Authorities Law which required LIPA to adopt regulations to provide “its residential gas, electric and steam utility customers those rights and protections provided in article two.” which is the Home Energy Fair Practices Act (HEFPA). As discussed above, any current LIPA staff handling the  complaints of its more than one million customers may be decimated, and in any event, the current process is defective, and there is no recourse to binding PSC complaint adjudication and emergency hotline remedies.

But there is more.

The bill would repeal the odd provision recently added to the Executive Law that charges the Department of State Utility Intervention Unit with complaint mediation and referral services with respect to LIPA customers, but then adds an equally strange provision to the Public Service Law, creating a new role for the staff of the Department of Public Service (but not for the Public Service Commission) regarding LIPA customer complaints:

3. General powers. In undertaking the requirements of this section, the department shall be empowered and authorized to:

****
(e) Accept, investigate, mediate to resolve and make recommendations to the Long Island power authority and/or the service provider regarding the resolution of complaints from consumers in the authority’s service territory relating to, among other things, the provision of electric service provided by the service provider.

So there we have it:  The staff of the Department of Public Service can make nonbinding “recommendations” and efforts to “mediate” customer disputes with LIPA’s agents while they shut off the lights, and there apparently is no customer access to the HEFPA complaint handling process that once was available to Long Island customers when LILCO ran the utility, and is available every day to customers elsewhere in the state.
The draft memorandum in support of the “reform” legislation makes a ludicrous assertion not supported by the language of the bill, perhaps to assuage those who do not know the history or read bills.  It claims
DPS would take over the role — currently with the UIU — of investigating and mediating customer complaints, consistent with the role it plays in resolving complaints made by customers of investor-owned utilities.
This is untrue.  The role of the DPS and PSC “in resolving complaints made by customers of investor-owned utilities” includes far more more than ADR “mediation” and “recommendation” to utilities.  To be sure, many complaint cases are efficiently resolved short of coercive PSC orders.  But when mediation fails, it is the duty of the DPS and the Commission actually to decide complaints under its PSL Section 43 powers and under its complaint handling regulations, and to direct utilities to take corrective action when that is needed.  After an initial decision there are two levels of administrative appeal which can culminate in a final decision of the commission in a few cases.
It is unclear how LIPA customers would be notified of the opportunity to complain to the DPS, or whether this would supplant the existing, inferior internal paper complaint process now within LIPA.
The quoted statement above may suggest that the PSC only has complaint jurisdiction over actions taken by investor-owned utilities.  Actually, HEFPA has always applied to customers of municipal utilities, and the Long Island municipal utilities of the Villages of Rockville Center and Freeport are publicly owned utilities subject to full PSC enforcement of HEFPA.  Here is what non-LIPA customers of both investor-owned and municipally owned utilities can get from the PSC when they complain:
(a) When necessary information has been obtained, a staff member will make an initial decision on the complaint, based on his or her findings, applicable State laws, commission rules, regulations, orders and opinions, and utility tariffs.
(b) Staff shall call or write the customer or his or her representative to inform him or her of the decision, the reasons for the decision, and what actions must be, or may be, taken by the customer or the utility. The utility will be notified of the disposition of the complaint and of any action which it must take. A customer or utility may request a written copy of the initial decision. If the decision is communicated orally, the customer will be informed that he or she may receive the decision in written form.
In addition, non-LIPA customers must be advised of their rights to an informal hearing or review, prior to termination based on disputed facts. The PSC Complaint Handling Regulations provide this opportunity are here.  LIPA customers do not have similar rights to an informal hearing before an independent decisionmaker, which may create due process violations.   See Memphis Light, Gas & Water Div. v. CraftPilchen v City of Auburn,  Gruber v. Erie County Water Authority, cases where the Supreme Court and other courts held that publicly owned utilities have due process duties to offer notice of the availability of a hearing to decide customer disputes prior to shutoff of utility service.
Thus, if this “reform” bill were ever to become law, the opportunity to afford LIPA electric customers full HEFPA rights and procedural remedies, including the right to a hearing on disputed issues, may have been lost, unless corrected by the courts or future legislative action.
***************
Follow PULP on Twitter
Pin It

Leave a Reply