Hochul Vetoes Bill to Create Utility Consumer Advocate

Published in partnership with City & State.

Sarah Gorenstein was one of more than half a million New Yorkers to lose power when Tropical Storm Isaias barrelled up the East Coast in August 2020. “We didn’t have anywhere to go,” Gorenstein recalled. She and her husband and two teenage sons stuck out the heat in their home in the Bronx until power returned six days later.

By then, all of Gorenstein’s perishable food had spoiled. She filed a claim with her utility, Con Edison, to be compensated for the spoilage. She received a letter from the company, reviewed by New York Focus, a few months later: “Con Edison’s responsibility is limited to food and medication spoiled due to loss of power for a period greater than 48 hours. Due to this, we regret to inform you that we must deny your claim.”

Perplexed by the denial, Gorenstein reached out to her state Assembly member, Jeffrey Dinowitz, who suggested she contact the Public Service Commission, which regulates utilities and has an office tasked with consumer services. She and her husband filed a formal complaint and repeatedly called the office, as well as contacting Con Edison again, but never received a response from either, Gorenstein said. “Over a year later, despite filing everything I needed to file, I’ve been denied,” she said.

Asked about Gorenstein’s case, a Con Edison spokesperson told New York Focus that it had reviewed the claim and would be in touch with Gorenstein. The company then contacted her directly and said her claim had been improperly denied, according to Gorenstein. Now she’s waiting for her $340 claim to be paid. “I did absolutely everything the right way, and still didn’t get my money. If my [Assembly member] hadn’t connected me with you, I wouldn’t be any closer to getting my money,” Gorenstein said. 

If Gorenstein had lived in any of 43 other states, she might not have needed a journalist to raise her case with the company—she could have contacted an independent state consumer advocate office for help. Earlier this year, the legislature passed a bill sponsored by Dinowitz to create such an office in New York, with the votes of nearly every Democrat in both chambers.

Last month, Gov. Kathy Hochul vetoed it.

In a memo explaining her veto and in statements to New York Focus, Hochul has argued that existing offices already advocate on behalf of consumers. “The vetoed bill would have duplicated functions that are already being performed, and there are strong protections already in place,” a Hochul spokesperson told New York Focus.

Proponents of the legislation say that the already existing offices that Hochul referred to don’t perform several key roles that the proposed office would – including advocating and taking legal action on behalf of consumers like Gorenstein when their claims are denied – and, in the roles that they do perform, like testifying on proposed rate increases, are compromised by dual mandates and a lack of independence.

“[Hochul’s] veto memo basically said, ‘we don’t need this legislation because we already do it. But that’s just not true,” Dinowitz said.

Rate Cases

Hochul issued the veto on November 8, the same day she signed a package of consumer protection legislation that would protect utility consumers from abusive debt collection practices, prohibit utilities from retaliating against customers that file complaints, and require that one member of the Public Service Commission have a background in consumer advocacy. 

In her veto memo, Hochul argued that the proposed utility consumer advocate would be a “superfluous construct” duplicating the functions of two offices that already exist: the Office of Consumer Services, which Gorenstein had contacted, and the Utility Intervention Unit at the Department of State. (The reasoning echoed similar arguments made by then-Gov. Andrew Cuomo, who vetoed a previous version of the bill in 2019.)

Proponents of the bill respond that the Utility Intervention Unit has a narrower mandate and less independence than the proposed office would, and that the Office of Consumer Services’ ability to advocate on behalf of ratepayers is compromised by the fact that it’s housed within the Public Service Commission, which is legally required to balance the interests of ratepayers and utilities.

The proceedings which most directly impact ratepayers are rate cases, hearings at which regulators at the Public Service Commission approve or deny rate changes proposed by energy utilities. At the hearings, utilities make the case that increases are necessary and justified, while other entities – the Utility Intervention Unit, as well as outside consumer advocacy organizations like the Public Utility Law Project and the AARP – can bring expert witnesses, file briefs and give testimony opposing the increases.

Rate hearings tend to be imbalanced, according to Charlie Harak, a senior attorney at the National Consumer Law Center. “It’s a lopsided battle where utilities get to bring millions of dollars and all kinds of experts to the table – at ratepayer expense – and unless there’s some kind of publicly anointed advocate on the other side, it tips the table in favor of the companies,” he said.

The Utility Intervention Unit intervened in 20 utility rate and policy proceedings before the Public Service Commission last year, according to Erin McCarthy, a spokesperson for the Department of State. “In each rate proceeding, [Utility Intervention Unit] advocates aggressively on behalf of consumers with the goal of limiting the utilities’ proposed rate increases,” she wrote in a statement.

AARP lobbyist Bill Ferris, who lobbied in favor of the bill, said that the Utility Intervention Unit “can only go so far” in its advocacy on behalf of ratepayers, since it ultimately is under the authority of the governor. “When push comes to shove, in rate cases or anything else, an independent advocate would answer to ratepayers,” he said. 

Harak, the National Consumer Law Center attorney, agreed. "In order for the utility advocate to be an effective advocate for consumers – rather than just another gubernatorial appointee carrying out the Governor's policies – that advocate must be completely independent of the Governor and the utility commission," he said.

Richard Berkley, executive director of the Public Utility Law Project of New York, a legal nonprofit that represents low-income utility consumers, argued that the Utility Intervention Unit faces another challenge in rate cases: It’s tasked with representing both residential and commercial interests, which he says are frequently at odds.

“The way that rates are designed in a rate case, you allocate the amount of how much the increase is going to be across the different classes of customers,” Berkley said. “So residential customers are in one class, business is in another. When the rates are being designed by the company and by the [Department of Public Service], it could be designed in a way that puts more cost on one class than another class.” 

"Active intervention"

Beyond rate cases, the utility advocate could also participate in policy debates, conduct original research and bring legal proceedings against utilities and even the Public Service Commission.

The AARP in New York has been one of the main groups advocating for the legislation, in part because utility shutoffs and high bills disproportionately burden elderly people. Ferris, the AARP lobbyist, pointed to the lack of data on water debt in light of the looming expiration of a shutoff moratorium as a place where an independent advocate could have made a difference.

“Nobody has any idea how many people owe, or how much is owed, in water bills, or internet or cable bills,” Ferris, the AARP lobbyist said. “An independent advocate has the ability to go to a utility and get that data.”

An independent office could also pursue more active intervention, including bringing lawsuits against utilities or even the Public Service Commission. “You would never see the [Utility Intervention Unit] bringing any type of legal action against the [Public Service Commission.] That would be unprecedented,” Ferris said.

In December 2020, Dinowitz sent a letter to Cuomo urging him to sign the legislation in light of the aftermath of Isaias. Several of Dinowitz’ constituents had contacted the Public Service Commission for help resolving claims against their utilities, but were told that they should pursue the matter through the courts instead.

An independent advocate, he wrote, could help consumers directly, rather than “foist[ing] them onto the judiciary, which is incredibly time consuming and labor-intensive for individual consumers to utilize.”

In March, Dinowitz received a response from Rory Lancman, the state’s special counsel for ratepayer protection. “Our Office of Customer Service assists thousands of utility customers each year with complaints and questions concerning billing, service, reimbursements – you name it, they use all the powers available to us to resolve issues in their favor,” Lancman wrote. (Lancman did not respond to requests for an interview for this story.)

But asked about its response to complaints like Gorenstein’s, an Office of Consumer Services spokesperson suggested a more limited role for the office. “​​The Department of Public Service [which houses the Office of Consumer Services] does not have authority to adjudicate claims or award damages. We can help facilitate communication between a customer and their utility about a damage claim. However, OCS would not in the normal course of business investigate or adjudicate a damages claim,” the spokesperson said.