BILL NUMBER:S3712

TITLE OF BILL:

An act to amend the public service law, in relation to gas corporations

PURPOSE OF THE BILL:

The purpose of this bill is to encourage energy conservation and demand
reduction through "on-bill financing" - the installation of energy effi-
ciency improvements financed by the gas utility company and paid for by
the customer over time through a charge on the customer's gas utility
bill.

SUMMARY OF PROVISIONS:

Section 1 of this bill amends Public Service Law (PSL) §65(6) to permit
service charges on natural gas bills for the installation of capital
improvements and fixtures to promote energy efficiency upon the request
and consent of the customer.

Section 2 of this bill provides for an immediate effective date.

EXISTING LAW:

PSL §65(6) prohibits gas corporations from imposing additional charges
              

or fees for service or for the installation of apparatus, or for the use
of apparatus, with certain exceptions. These exceptions include:  (1)
where entry, inspection or examination of meters, pipes, works, etc. is
denied; (2) for reconnection of service after lawful disconnection for
non-payment of bills for service; (3) for reasonable expenses incurred
in cases of meter tampering or theft of service; and (4) for remote
meter reading devices requested by and installed with the consent of the
customer. The prohibition on imposing additional charges or fees for gas
service or apparatus is intended to ensure that a fair and reasonable
price is charged for gas supplied.

PRIOR LEGISLATIVE HISTORY:

This is a new proposal.

STATEMENT IN SUPPORT:

In June 2008, the Public Service Commission issued a decision establish-
ing New York's Energy Efficiency Portfolio Standard (EEPS) (Case
07-M-0548 - Proceeding on Motion of the Commission Regarding an Energy
Efficiency Portfolio Standard) with the goal of reducing forecast elec-
tricity usage by 15% statewide by 2015, with comparable results in
natural gas conservation. Among proposals to achieve such goals is the
installation of energy efficiency improvements (i.e., light bulbs,
appliances, HVAC equipment, insulation, weatherization measures). Recog-

nizing that the initial cost of these measures can be high, it is
proposed that local electric and gas distribution companies finance the
cost of these improvements and equipment, with the customer repaying the
loan via a charge to his or her utility bill based on estimated savings.

As noted in Multiple Intervenors v. Public Service Com., 166 A.D.2d 140
(3d Dep't 1991), the courts have permitted such rate charges not direct-
ly related to the provision of the utility commodity, including recovery
of lost profits and incentive payments for encouraging energy conserva-
tion.

Without this amendment, gas customers participating in an on-bill
financing program would have to be charged in rates designed on a volu-
metric basis linked to the amount of gas commodity consumed.  Because
customer consumption varies every month, such a rate design would be
burdensome to establish and more difficult for customers to understand
than a monthly service charge. Electric customers can be charged a
monthly service charge. Establishing this narrow exemption would allow
gas customers to be treated the same as electric customers for the
purposes of on-bill financing of the installation of energy efficiency
improvements. The purpose of the prohibition on imposing additional
charges or fees for gas service or apparatus, to ensure that a fair and
reasonable price is charged for gas supplied, would be maintained as the
gas service charge authorized could only be charged upon the request and
consent of the customer and because participation would result in gas
bills for the customer that are lower than they otherwise would be.

BUDGET IMPLICATIONS:

None.

EFFECTIVE DATE:

This bill would be effective upon enactment.