Directs public service commission to require electric and steam corporations to provide rate reductions or refunds for inadequate or interrupted service

Summary of provisions

Bill § 1 amends subdivision 20 of § 66 of the Public Service Law to require the Public Service Commission (PSC) to impose prompt, meaningful rate refunds or reductions in instances where electric corporations fail to meet objectively measured service quality standards. Refunds or reductions shall at a minimum equal 5% of the amount billed to a customer for at least a 12-month period, subject to possible minimum and maximum cutoffs prescribed by the PSC. The bill also establishes minimum reimbursements for service outages in cities with populations of at least 1 million. Where an outage lasts more than 12 hours in a 24-hour period, such reimbursements shall be at least:

* $500 for spoilage of food and medications,

* $1,000 for damages to electrical equipment and instruments, and

* $10,000 to commercial customers for lost business.

The PSC may also establish reasonable aggregate limits on reimbursements.

The bill provides that additional rounds of reimbursement consistent with the foregoing are required for each additional 48-hour period that the service interruption continues, and that any voltage reductions that are extensive enough to damage electric equipment or render it inoperable shall be treated as covered interruptions in service.

Bill §2 adds a new subdivision 13 to §80 of the Public Service Law, establishing provisions for rate refunds or reductions for substandard service quality, and reimbursement for damages caused by service interruptions, applicable to steam corporations.

Bill §3 requires the PSC to report to the Governor and Legislature by April 1, 2013 on whether additional legislation, regulations or

other actions are needed to ensure that all electric and steam corporations adequately reimburse their customers for losses due to service interruptions and other performance failures.

Effects of present law which this bill would alter

Current law does not provide any standards to ensure prompt, meaningful rate refunds or reductions when an electric utility fails to provide safe and adequate service.

Justification

In 2006, the western part of Queens suffered a massive power outage that lasted 9 days. The Assembly Queens power Outage Task Force studied the outage's causes and the inadequate responses by the company responsible for the transmission and distribution system, Consolidated Edison, and by the Public Service Commission. One underlying cause of this debacle was found to be the reliance by New York is utility regulators on antiquated laws, regulations and policies that let companies engaged in energy transmission and distribution operate without effective oversight.

The Task Force found that current PSC practices fail to incentivize utilities to meet their statutory Obligations to provide safe and adequate electric service. Findings that a utility has failed to meet service reliability standards result at best in token penalties, and even these amounts are routinely amortized or are deferred until a subsequent rate proceeding. As a result, ignoring service quality targets may well make economic sense for the utility.

After the bill was initially drafted, a major steam explosion and consequent damage to persons and property demonstrated that similar requirements were needed for steam corporations.

This bill sets forth a standard - generally, 5% of annual billings that is substantial enough to restore meaningful incentives for utilities to take service quality standards seriously. At the same time, the bill provides realistic reimbursement standards for utilities serving metropolitan areas in cases where the utility fails to maintain the electric grid or steam system in good working condition. In circumstances where electric or steam service is interrupted for large swaths of a metropolitan area, customers should not be expected to bear the brunt of expenses caused by unwise deferrals of maintenance or other utility mismanagement.

Prior legislative history

None.

Fiscal implications for state and local governments

None.

Effective date

180th day after enactment; provided that the Public Service Commission is immediately authorized and directed to promulgate rules and take other actions needed to fully implement the bill on such date.