December 15, 2022 To: The Legislative Commission on the Future of the Long Island Power Authority From: Laurie Wheelock, Esq. Executive Director and Counsel, the Public Utility Law Project Re: The Public Utility Law Project’s Testimony Before the Legislative Commission on the Future of the Long Island Power Authority ______________________________________________________________________________ Good afternoon, members of the Legislative Commission on the Future of the Long Island Power Authority (“Legislative Commission”). My name is Laurie Wheelock, and I am the Executive Director of the Public Utility Law Project (“PULP”). PULP is a 40-year-old nonprofit whose mission is educating, advocating, and litigating on behalf of New York’s’ low-income utility customers. PULP operates a Direct Services Program, which helps individual low-income New Yorkers with their utility problems. We also participate in policy proceedings and rate cases before the NYS Public Service Commission. Introduction PULP appreciates the opportunity to testify this morning about the future of LIPA in the Rockaways and on Long Island. It’s important to start this testimony by acknowledging the unique and difficult history the Rockaways and Long Island have experienced when it comes to electric utility service. From Superstorm Sandy and Tropical Storm Isaias to the COVID-19 health pandemic and the resounding economic downturn, it is clear that reliability, resiliency, and customer service matters are of prominent concern. Geographically, the service territory is distinct and expansive, stretching from the Rockaways to Long Island and crossing several counties and municipalities.1 The Legislative Commission now has a vital opportunity to help lay the foundation to move the Long Island Power Authority (“LIPA”) forward during a pivotal moment in our energy future. Between the increase in supply prices due to commodity constraints, the need for major infrastructure projects to accommodate the state’s policy to phase out fossil fuels, the necessity to strengthen the grid and make it more resilient to handle storms 1 See, Exhibit A, Timeline outlining the change in electric operators on Long Island and the Rockaways between 1911 through November 16, 2022, which helps define the service territory’s unique experience and history. This chart was created by Carolynn Duffy, a Legal Aide and Research Analyst with PULP, in December 2022. intensified by climate change, and more, PULP thanks the Commission for their efforts to plan for the future of the Rockaways and Long Island in the evolution of LIPA. 1. Transparency and accountability To begin, in PULP’s experience, monitoring the activities of LIPA and the New Jersey based company it hired to operate its electric system, Public Service Enterprise Gas (“PSEG”), can be more difficult than doing so for the regulated utilities. For instance, the regulated energy utility companies are required by the Commission in Case 91-M-0744 to file monthly collections activity reports (“CARs”). The data included in these CARs help PULP track the financial health of residential utility customers. The data includes information concerning how many residential customers are behind on their electric/gas bills by 60 days or more, the total amount of debt owed by customers for the last 60 days or more, how many termination notices have been issued in the last 30 days, the total number of residential accounts scheduled for field action (which means termination), and more. The information contained in these CARs is tremendously important for advocacy purposes, including demonstrating the need for a moratorium on utility service terminations during the COVID-19 health pandemic, and in supporting the Department of Public Service’s work in 2022 to address debt relief through the COVID-19 Electric and Gas Bill Relief Credit Program. Unfortunately, PSEG Long Island (“PSEG LI”) was not filing these reports until relatively recently. However, even this otherwise universal filing requirement for New York's regulated utilities became applicable to PSEG LI only after multiple failures in PSEG LI's provision of electrical service,2 a post-Tropical Storm Isaias investigation by the Department of Public Service (“DPS”) which found multiple violations, and finally, six months of negotiation between LIPA, PSEG LI, and DPS, which resulted in a “Reformed Operation Services Agreement” (“Reformed OSA”) between LIPA and PSEG LI.3 Prior to the Reformed OSA, PULP used to obtain this information, pursuant to Article 6 of the Public Officers Law, by submitting Freedom of Information Law (“FOIL”) requests. PULP would issue FOIL requests 2 Matter 2020-01633, Investigation into the Utilities' Preparation for and Response to August 2020 Tropical Storm Isaias and Resulting Electric Power Outages, Notice of Apparent Violations Related to Tropical Storm Isaias and Direction of Prompt Interim Remedial Action (issued August 19, 2020). 3 Matter 20-01764, DPS Investigation into PSEG Long Island's Preparation and Response to Tropical Storm Isaias. regularly, every 3-6 months, and then wait for the utility to respond to our request for information. While obtainable through FOIL, it was a burden on our organization, as well as any other member of the public who wanted to obtain this information. When submitting our FOILs, PULP would also include a request for LIPA/PSEG to file the reports with the Department in the same proceeding, so that all the electric/gas utilities would be filing in the same docket. Pursuant to options provided to it under the Reformed OSA, LIPA/PSEG did begin to file their CAR reports in Department Case 91-M-0744 on or around December 2021 for November 2021.4 This has made tracking the residential customer information easier. PULP knows that as of October 2022, PSEG LI has 119,976 residential accounts behind on their bills by 60 days or more, for a total of $147,211,358. When you look at the entire state, in October 2022, 1.4 million accounts were behind on their electric/gas bills by 60 days or more for a total of $1.5 billion. These numbers are important as PULP continues to work through the Energy Affordability Program Working Group to help the State develop a plan for addressing this growing utility debt. Finally, PULP’s inclusion of the process obtaining CARs is important for today’s discussion as it is evidence of how LIPA has and is allowed to operate differently, which ultimately has consequences for the public.5 4 See, Exhibit B, PSEG Long Island’s arrears and collection activity report for the month of October 2022. 5 NB: A small, but informative, indicator of another difference regarding PSEG LI's unique position, and this time in relation to its stance on customers, pertains to its filings in Case 91-M-0744: All utilities in the proceeding submit identical Excel spreadsheets reporting the same categories of data. All other utilities in the case label their monthly reports 'Monthly Collections' whereas PSEG LI labels its filing as 'Monthly Terminations,' where terminations are but one of more than two dozen categories. Similarly, it is detrimental to the residents of the Rockaways and Long Island that their electric operator is not automatically subject to policy decisions of the Public Service Commission that involve all the other regulated electric/gas utilities. As it stands, ensuring that, as well as determining if, PSEG LI is covered by any particular utility-related policy or regulation can require a time-consuming, piece-meal approach. Such a potentially fragmentary regulatory scheme precludes easy monitoring, detection of lapses, and accountability in the performance of a long-historically-troubled utility entity. It also prevents ratepayers, the general public, media, and other vested parties from readily staying informed and participating in meaningful and impactful ways. For instance, PULP and the American Association of Retired Persons (“AARP”) filed a motion in September 2022 to open a proceeding to require and track the regulated energy utilities’ applications for federal funding under both the Inflation Reduction Act of 2022 (IRA) and the Infrastructure Investment and Jobs Act of 2021 (IIJA).6 PULP remains hopeful that the regulated utilities will appreciate the urgency and opportunities and identify clean energy projects and apply for funding through these two programs. PULP believes that PSEG LI should be reporting their efforts to apply for these federal funds. However, as the Public Service Commission currently lacks uniform regulatory authority over this area in relation to PSEG LI, PULP and AARP’s motion does not include PSEG LI. PULP urges the Legislative Commission to consider this example as but one of many potential consequences to avoid when determining what the future will hold for LIPA. 6 Matter No. 22-01783, Petition of AARP New York and PULP to Institute a Proceeding Regarding Utility Applications for Federal Funding, September 6, 2022. As stated above, monitoring LIPA/PSEG’s activities can be more difficult than doing so for the regulated utilities. PULP, as an informed advocate, finds it challenging to navigate the different websites and proceedings for LIPA/PSEG. The complicated process may be even more burdensome for customers who are trying to navigate the websites to find more information on their rights, how to make a complaint against the utility, or to find out more about proceedings related to LIPA/PSEG. Finding a simplified process for the public to track LIPA/PSEG’s activities will promote accountability and transparency no matter how the future of LIPA is formed. 2. Customer Service Protections Through PULP’s direct services program, our organization helps low-income customers in the Rockaways and on Long Island address problems and questions with their PSEG LI bills. We help customers read their bills, understand their energy usage, and direct them to potential forms of financial assistance like the Home Energy Assistance Program (“HEAP”) and Emergency Energy Assistance. Additionally, we help consumers apply for PSEG LI's unique Household Assistance Program (“HAP”), which is a monthly discount program that helps low- income customers. PSEG LI is required to follow Article 2 of the Public Service Law, known as the Home Energy Fair Practices Act (“HEFPA”), just as all other regulated electric/gas utilities operating in New York State are required to follow HEFPA in relation to providing service to residential customers. HEFPA is an important and expansive set of consumer protections, which is related to activities including the application for electric/gas service, billing practices, the complaint handling process, payment agreements, and the termination of service. PULP’s Direct Services Team provides free advocacy assistance to low-income utility customers from across the State. In this role, PULP works with each utility company’s customer service team members to assist low-income residential customers with issues, including the prevention of utility service termination for nonpayment to the negotiation of low-cost, affordable payment agreements. It is essential to PULP’s efforts that now, more than ever, the utilities work closely with their customers to ensure customers' ability to avail themselves of all available financial assistance programs before placing people into payment agreements. Essentially, helping the customer lower their account balance, then placing them in a payment agreement will go a long way toward insuring that the customer will thereby be able to enter into an affordable payment agreement, that is, one that does not set them up to fail. Under HEFPA, utility companies can offer their residential customers a “standard payment agreement” which takes the total amount due on the account and requires a 15% down payment, followed by monthly installments calculated at an amount spread out over a certain period of time.7 However, the utilities are also required to negotiate terms tailored to the customer’s financial circumstances, which often results in a more affordable option. The lowest deferred payment agreement allowed under HEFPA, a “minimum payment agreement,” is a $0 down payment, then $10 per month off the balance, plus the current bill.8 7 16 NYCRR 11.10(c)(2)(ii). 8See, 16 NYCRR 11.10 (a)(1); see also, 16 NYCRR 11.10(a)(1)(iii); Sometimes this specific type of deferred payment agreement, which is the $0 down payment, $10 per month off the balance plus the current bill, is also known as a “minimum payment agreement.” 9 16 NYCRR 11.10 (a)(1)(ii) “A utility may require that a customer or applicant complete a form showing assets, income and expenses, and provide reasonable substantiation of the information on that form, provided that all such information shall be treated as confidential.” 10 Id. Residential customers can speak with their utility provider to request affordable payment agreement terms different from the term offered under the typical initial standard agreement. However, the utility has the right to request financial documentation to determine whether they are eligible for this type of agreement.9 The form can ask for information including “assets, income and expenses, and provide reasonable substantiation of the information.”10 PSEG LI uses a Declaration of Customer Responsibility (“DCR”) packet, also called a “Financial Hardship Agreement,” to help determine whether its customers are eligible for lower, more affordable terms provided by a “minimum payment agreement.”11 11 See, Exhibit C, PSEG LI Declaration of Customer Responsibility packet. 12 See, Exhibit C, page 2. 13 Id. 14 HAP is PSEG's monthly low-income discount program. The regulated utilities also all have a monthly discount program (some call it EAP others use different names). But they all have a program. The difference here is that PSEG has different eligibility programs and no qualifying benefit category (making their eligibility pool for low- income customers narrower). In PULP’s opinion, the DCR is unduly burdensome and invasive, and should be modified. For instance, for the evaluation of the customer’s ability to pay their electric bill, PSEG LI requests “only paid bills.”12 The list of the types of bills that the customer can share with PSEGLI to help demonstrate their expenses can include mortgage/rent receipt, childcare, and car/mass transit expenses, but the fact the Company limits these bills to only those that have proof of payment can significantly limit what a person who is experiencing financial hardship is able to provide.13 For instance, if the customer did not pay their bill last month, or they did pay their bill, but such payment was made after the window of time where said bill was generated, that payment may not appear on the bill they receive until the next billing cycle. Any of those bills would not be accepted by PSEG LI in its financial assessment, when time may be of the essence for the customer. PULP is concerned that financial assessments are not as accurate as they need to be because of the utility’s ability to exclude bills that have been unpaid. In contrast, PSEG LI should accept every bill provided as it will be a more accurate and fuller representation of the financial situation facing the person. PULP does not want to see customers being set up to fail when it comes to their payment agreements with PSEG LI. More affordable terms have a higher likelihood of customers being able to remain in their payment agreements and thereby, not at risk of service termination or even multiple time-consuming interactions with PSEG LI to re- negotiate payment agreements when a more affordable agreement could have been possible from the start. Another area PULP is concerned about relates to two aspects involving PSEG LI’s HAP monthly discount program for low-income residential customers.14 To begin, PSEG LI, the electric provider, has a low-income monthly discount program, just like all the regulated electric/gas utilities operating across the State, including National Grid, who supplies natural gas service on Long Island. However, HAP has narrower eligibility requirements than the regulated utilities Energy Affordability Programs (“EAP”). First, the HAP application can be used to self- enroll people in PSEG’s low-income monthly discount program, with the goal of lowering their energy burden to 6% of their income. However, unlike the regulated utilities, PSEG LI does not have a space on its HAP application for “Benefit Qualifying Person if different than Customer” as is customarily asked by all other regulated utilities.15 This line is critical because it expands the group of households that will qualify for the monthly discount program. For example, if the account holder is the mother of the household and she is not receiving any of the public benefits listed on the HAP, she will be ineligible for PSEG LI’s monthly discount program. In sharp contrast, if the mother’s name also appears on the National Grid account, and she has a child in the household who receives Supplemental Nutrition Assistance Program (“SNAP”) benefits, the mother will be eligible for National Grid’s monthly discount program by having a household member receiving an eligible benefit. Another important example of why the benefit qualifying person being different from the customer is important is in instances where households have mixed immigration statuses. A customer with a “non-satisfactory immigrant status” is ineligible for the public assistance programs included on the eligibility list.16 However, having a child, sibling, or other family member who is a U.S. citizen or has a satisfactory immigrant status and receives one of the qualifying benefits, would make them eligible for National Grid’s program. PULP believes that PSEG LI should follow suit and expand its HAP application to include the benefit qualifying person language, thereby expanding the number of eligible households while bringing the electric provider into line with the other regulated utilities. 15 See, Exhibit D, PSEG’s HAP application versus National Grid Long Island’s Energy Affordability Program Application for this difference in allowing a qualifying benefit person to be included on the application. 16 See, https://otda.ny.gov/programs/publications/4579.pdf The second aspect of PSEG LI’s HAP that concerns PULP is that the eligibility requirements include fewer qualifying programs than the other regulated utilities’ EAPs, making them inconsistent. For example, PSEG LI offers only eight qualifying assistance programs for enrollment into HAP, whereas National Grid offers fifteen qualifying programs. National Grid’s broader inclusion of programs makes it more likely that a household will qualify for EAP, versus PSEG LI’s HAP program. This is ultimately confusing to the customer, and instantly decreases a customer’s chances of enrollment in the same programs available to customers who do not happen to have PSEG LI as their utility provider. Besides specific concerns relating to PSEG LI's DCR packet and HAP application, PULP believes that it is important to flag that PSEG LI was recently ranked last in business customer service out of 87 electric utilities across the United States.17 This is alarming, reflective of long- term on-going issues, and something PULP urges the Legislative Commission to consider when contemplating the future of LIPA. 17 Business Customer Satisfaction with Electric Utilities Deteriorate as Rates Rise, J.D. Power Finds, J.D. Power, November 16, 2022, https://www.jdpower.com/business/press-releases/2022-electric-utility-business-customer- satisfaction-study; PSEG LI ranks last in business customer satisfaction, Mark Harrington, November 16, 2022, https://www.newsday.com/long-island/lipa-pseg-business-customer-satisfaction-nkqxi5o8. 18 Public Service Commission Matter 21-00618, Matter No. 21-00618. In the Matter of a Comprehensive and Regular Management and Operations Audit of Long Island Power Authority and PSEG Long Island LLC; https://documents.dps.ny.gov/public/MatterManagement/CaseMaster.aspx?MatterCaseNo=21- 00618&CaseSearch=Search; NorthStar Consulting Group was selected by the Department of Public Service to conduct the 18-month audit (July 18 2022). 19 Id., Request for Proposals, Metrics C2.3 through C2.6, Section C2-The Overall Efficiency of the Authority's and Service Provider's Operation, pp 54-56. 20 Id. The 2013 LIPA Reform Act requires the Long Island Power Authority (the Authority or LIPA) and PSEG Long Island LLC (PSEG LI or Service Provider), which term includes the subsidiary Service Company (ServCo), to cooperate in the undertaking, by the Department of Public Service (DPS or Department), of a comprehensive management and operations audit in accordance with the requirements of the LIPA Reform Act and paragraph (d) of subdivision three of section three-b of the Public Service Law. PULP also believes that it is important to share with the Legislative Commission two existing review processes that should be monitored during your work. The first is that the Department of Public Service’s Long Island Office is currently overseeing PSEG LI's management and operations audit, which occurs on a five-year cycle.18 Based on the scope of the audit, the review process will include important aspects relating to the customer service department’s operations including complaint handling, customer service support systems and billing, the customer call center and its operations, customer outreach and communications, as well as the impacts of COVID-19.19 The outcome of this audit will be helpful for the Commission to understand current practices, which will help identify necessary changes for the future.20 Moreover, it may benefit the public to require more frequent management and operations audits, rather than conducting them on a five-year cycle, for whichever form LIPA ultimately morphs into. The second process that should be monitored is PSEG LI's customer service protection metrics, specifically the ones in place in 2022, the modified/new metrics proposed to the LIPA Board for implementation in 2023, and those included for 2024 and 2025 in LIPA's and PSEG LI's Reformed OSA.21 Essentially, PSEG LI is eligible to earn Incentive Compensation based on its performance during each contract year, but eligibility for funds is tied to performance against key metrics across different Performance Categories.22 In 2022, PSEG LI had 19 specific customer service-related metrics it was charged with achieving. These included items such as improving customer satisfaction for residential customers, contact center service level with live agents, low to moderate income program participation and automations, as well as Department of Public Service Customer Complaint Rate, and more.23 21 Attachment 1 to Appendix 4.3(A), Second Amended and Restated Operations Services Agreement between Long Island Lighting Company d/b/a LIPA and PSEG Long Island LLC, dated as of December 15, 2021, as approved by NYS Attorney General and Office of State Comptroller, incorporating Amendment No. 1, dated March 30, 2022, in effect April 1, 2022 22 See, OSA Metrics and Targets, June 27, 2014, Exhibit __-MSP-4 at page 3. 23 PSEG LI 2022 Performance Metrics, pages 53-75. , pages 53-75.https://www.lipower.org/wp- content/uploads/2022/11/PSEGLI-2022-Performance-Metrics.pdf,. 24 LIPA Quarterly Report on 2022 Performance Metrics and Board Recommendations, November 16, 2022, p. 10. https://www.flipsnack.com/lipower/lipa-quarterly-report-november-2023/full-view.html. 25 Id., p. 7. 26 Id., pp. 10-11 and pp. 29-34. As of LIPA's most recent Quarterly Report on its 2022 Performance Metrics through the third quarter, its own self-assessment summarized that its "progress” on the Customer Service metrics is “mixed."24 LIPA reported completing and meeting the metric standards on only 38 out of 53 customer service metrics, with review of five metrics in progress, three rejected for not meeting standards, two overdue with no exception requested or request denied, and two overdue with exception requested.25 Specifically, deficiencies continue in project management and implementation, in LIPA’s CIS Modernization Phase 1 (which are not reflected in the metric numbers cited above), and in LIPA's JD Power Customer Satisfaction Survey metrics, which remain in the fourth quartile. LIPA also reports that it will not meet this year's metrics concerning its Call Center Service Level with Live Agents and its Customer Email Closure Rate and will miss two of three collection metrics.26 Significantly, LIPA reported that its Quantitative Metrics for YTD Performance in Customer Service targes demonstrated that LIPA was meeting its target in only 6 of 13 Quantitative Metrics, and was behind target in 5, and completely missed 2 Quantitative Metrics.27 27 Id., p. 8. 28 PSEG LI 2023 Performance Metrics pages 35-77. https://www.lipower.org/wp-content/uploads/2022/11/PSEGLI- 2023-Performance-Metrics.pdf,. Twelve of 2022's customer service metrics are proposed to be continued in 2023, while also adding ten new ones, such as outage information satisfaction, deferred payment agreement improvement, payment transaction ease, life sustaining equipment customer compliance, estimated bill percentage, and others.28 In conclusion, there are a variety of customer service related items that PULP believes are important for the Legislative Commission to be aware of and monitor during the course of your work. These items should also prove helpful and instructive when considering the future of LIPA. 3. The Future of the Long Island Power Authority When the Commission contemplates the future of LIPA, there are several possibilities worthy of consideration when trying to determine what is best for the Rockaways and Long Island. For purposes of discussion, and not in any particular order, the future of LIPA could take on a variety of forms, including but not limited to, being purchased by a regulated utility, entering into a contract with a different operator that is not PSEG LI, exploring local municipalization for the Rockaways and Long Island, as well as being creative and investigating unique models for the service territory. Ultimately, PULP believes that it is important to take note of LIPA’s unique service territory, crossing the Rockaways and Long Island, as well as the multiple, recurring struggles it has faced over the years from its inception. Moreover, PULP believes that open, public discussion on what ultimately will be best for the Rockaways and Long Island will lead to the right model for the service territory. At the top of PULP’s priority list for this process is that public participation must be at the heart of everything and must drive deliberations. While the current set of public hearings will include six opportunities for the public to testify, only one was offered in the evening, and that was a virtual forum. PULP recommends that there be day and night sessions for every public hearing opportunity and each region. Essentially, holding two sessions in each region/virtually will increase the opportunities for the public to engage in the process. Moreover, while the website includes links to the minutes and archived video and a portal for submitting comments, it would be helpful to the public to explore active outreach to entities such as public schools, senior centers, food pantries and more. Finding ways to engage PSEG LI customers so that they are aware of the process, offered information, and encouraged to share their opinions with the Commission can have only positive consequences, and thereby benefit the Commission's decision-making and ultimate recommendations for an entity that will impact the daily lives— and health and safety—of millions of New Yorkers. Also, including an option of the Commission’s website to sign up for alerts, newsletters, and more, will help the public follow the process and engage in each opportunity. Greater public participation through all methods is more likely to yield a result with greater overall constituent support. Conclusion PULP appreciates the opportunity to testify today before the Legislative Commission on the future of LIPA. The Commission can review the current relationships that exist between LIPA, PSEG, and the Department of Public Service, to determine how best to modify this structure. The Rockaways and Long Island have had a difficult history when it comes to their electric service, from rates, to resiliency, and to customer service matters. PULP believes that the public’s input will be invaluable in helping the Legislative Commission find the right course. PULP appreciates the ability to participate in this process and assist from our perspective, in the topic areas and considerations that can lead to a better customer experience. Thank you. Respectfully submitted, /s/ Laurie Wheelock, Esq., Executive Director and Counsel The Public Utility Law Project Carolynn Duffy, Legal Aide and Research Analyst The Public Utility Law Project