Utilities Attack Creation of Independent State Utility Consumer Advocate Office

Most states have a state agency devoted to representing residential customers with the resources to participate in legal and regulatory proceedings and the independence to challenge actions of the utilities and their regulators.  Unsurprisingly, the regulated utilities have registered their opposition to bills under consideration by the New York legislature that would create a new independent state utility consumer advocate office.  The bills address the need for an independent state office to represent residential utility customers.  Creation of a robust state agency advocate for residential utility customers is supported by AARP and other consumer groups.  See AARP, New York’s Rising Utility Rates  and AARP: NYS Assembly on the Mark with Utility Watchdog in Budget Proposal.  

Energy Coalition New York, an association of regulated energy utilities,  argues that a residential utility customer advocate would be “duplicative and unnecessary” because “proceedings at the Public Service Commission (PSC) are already subject to significant scrutiny and regular participation by well-financed community groups, consumer advocates and similar organizations.”  The Utility_Assn_opposition_memo cites the existence of a team within the PSC, the UIU — a team within the Department of State, the Public Utility Law Project, and the Attorney General.

The first two – the PSC team and the UIU team – are not separate entities with the power to take positions on behalf of residential consumers independent of the PSC or Department of State.  They cannot challenge decisions of the utilities or the PSC unless their parent agencies, which have  missions far broader than representing residential consumers, choose to do so.  Thus if the PSC or Department of State decide to settle a case without achieving what their residential advocates urged, the residential advocates must stand down, as they lack independence.

The Attorney General’s office primarily a law enforcement agency, has done commendable work on limited issues, such as investigating and prosecuting fraudulent and deceptive ESCO practices, and monitoring phone service quality orders, but it has not been an advocate on the broad range of issues affecting residential utility customers in recent memory.  The Utility Project, an independent non profit agency, has been slated annually for extinction in Executive Budgets since 1995, traditionally has focused its advocacy on behalf of low income customers, and its funding is insufficient to engage professionally on the broad range of issues affecting residential utility service.

Verizon makes the same claim in its Memorandum in Opposition to A6239/S4550, i.e., that existing agencies, and particularly the PSC, sufficiently represent residential customers.  Its memo does not recognize that the PSC processes depend for their integrity upon active, well resourced, independent advocacy for a variety of “stakeholder” interests, which are then harmonized in the public interest by the commission through its lengthy collaborative proceedings and settlements.  Utilities and large customers are well represented in those forums but not residential customers.  Also, the scope of representation of the existing UIU lacks jurisdiction to question utiity and their regulators’ decisions in court, and the UIU lacks express power to be involved on behalf of consumers in phone matters.  The bills attacked by the utilities would give the advocate independence to argue for residential customers in any forum, and to question settlements that do not sufficiently advance or protect residential customers.

The utilities argue that funding a utility advocate would raise rates.  Meanwhile, as an AARP report shows, utility rates paid by customers include the utilities’ own expenses in seeking rate increases.  AARP Report- David v. Goliath Why consumers are losing New York’s utility game.

The independent Moreland Commission recommended improved consumer advocacy and reform of the PSC procedures, after that New York lacks well resourced, independent advocacy for residential customers in utility matters.  The proposed Executive budget for 2014, however, put forward no proposal  to address the Moreland reform recommendations on this item, or on the PSC procedure recommendations to address the ex parte practice at the PSC.  Indeed, the Governor’s budget, unless changed by the legislature, would result in shutdown of the Public Utility Project.  The legislative proposals are welcome steps to implement the Moreland Committee recommendation regarding consumer advocacy.  The utility response, while not unpredictable, is unpersuasive.

Gerald A. Norlander

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