Proposed Budget Bill Would Erode State Utility Policy Against Shared Meters

The Governor’s  Executive Budget contains a proposal, ostensibly to reduce costs at the PSC, that will reduce charges to landlords who illegally wire or pipe their buildings so that tenants pay for utility service outside their apartments.  The new proposal is in the Executive Budget in Part R of the Transportation and Economic Development Bill at page 109-110.

New York’s “Shared Meter Law” establishes a strong public policy that residential electric and gas customers cannot be required by landlords or utilities to pay for utility service to areas outside their dwelling units.  With some of the highest energy costs in the country there is a strong temptation for owners to shift their costs for common areas to tenants.  Customers who believe their meter is registering usage outside their apartments can request a shared meter inspection by the utility.  If the utility discovers a non minimal shared meter condition, the law  requires adjustment of prior bills to reimburse the tenant shared area charges, and requires the owner to pay charges for the past year.  The latter provision is intended to be an economic sanction against landlords who shift energy burdens onto tenants with miswired or mispiped facilities under the owner’s control.   The law  is not overly harsh because it allows for exceptions when rewiring/repiping is not economically feasible and rent is reduced by the estimated amount of diversion, with tenant consent; and  there is also a  de minimis exception when the condition is minor.

An owner can petition the PSC to shift responsibility for the account back to the tenant if the owner proves that the shared meter condition is corrected. Or the owner can rent the premises with utilities included, and may be able adjust the rent.   For more information, see  descriptions of the law provided by National Grid or the Shared Meter Chapter of the Utility Project Manual.

The PSC has power under current law to reduce the assessment of 12 months’ bills  to 25% of the prior year charges. The PSC has delegated the power to grant reduction of landlord charges to the Director of the Department of Public Service Office of Consumer Services.  Apparently numerous landlord applications to reduce the charges by 75% have been granted.  It is this provision that would be amended, in the name of reducing landlord applications,  to automatically set the charges to be paid by the landlord at 25% of the prior year charges.     The new law would  then place the burden on the tenant to petition the Department of Public Service for a higher chargeback to the landlord.

Reducing the sanction may make it economically efficient for some landlords to violate the shared meter law if the chances of being found out are low and if monetary consequences are less than the potential gain from creating and perpetuating a shared meter condition.   Tenants, particularly low-income tenants, may not be able to bring petitions to achieve a more equitable assessment in cases of significant diversion.  Reducing the economic liability could encourage more diversion of service and more shared meters because the consequences of violating the law would be reduced.

Under current law, the burden to justify a reduction of the assessment based on equities or other conditions is on the owner.  This is just because the owner is responsible for the property and the wiring or piping that shifted costs to tenants, and the owner is more likely to know  there is a shared meter condition.  Under the proposed amendment, tenants would  be required to file cases at the DPS or PSC to seek chargebacks more than 25%.  Thus, tenants such as those whose in cases where landlords were required to pay a 32%  chargeback and a 39% chargeback would, under the new law, need to bring petitions for this relief.

There is little evidence that the proposed change would really lighten the caseload burdens at the PSC, and there is even a possiblity that landlord petitions seeking reduction of chargebacks under the current law would be supplanted by tenant petitions seeking increased chargebacks under the proposed amendment.  While the putative savings from this amendment are not knowable, it is certain that the bill puts a thumb on the scale to ease the consequences for landlords who violate  the shared meter law.



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