Enforcement of Commission Orders and Other Agreements

Issued Date
March 03, 2020
Agency/Authority
Public Service Commission

Objective

To determine whether the Public Service Commission (Commission) monitors utilities’ compliance with merger/acquisition Commission Orders and other agreements (including performance plans) and uses its enforcement power to hold utilities accountable when the terms and conditions of those agreements are not met, including applying monetary penalties and other sanctions. The audit scope covers the period January 1, 2015 through July 10, 2019.

About the Program

The Commission regulates 650 utilities responsible for a wide range of services across the State. Through its Department of Public Service (Department), the Commission works to ensure affordable, safe, secure, and reliable access to electric, gas, steam,telecommunications, and water services for New York’s residential and business customers.

As part of its responsibilities, the Commission reviews and approves utility companies’ applications for potential mergers and acquisitions, rate cases, and other agreements. Often, approval of these applications is based on conditions, such as pledges to replace or upgrade infrastructure, provide access to services to outlying areas, or enhance quality of service. These conditions are listed in Commission Orders (Orders), and any violation of an Order’s terms is grounds for the Commission to seek reparations, terminate the approved acquisition/merger, or even revoke a utility’s license. The Commission also has the statutory authority to pursue civil penalties against gas and electric utilities.

The Department’s responsibilities include advising the Commission on rate determinations, utility financing, consumer protection, and safety and reliability of utility services. The Dpartment also develops and implements regulatory and energy policies; inspects utility facilities; conducts and participates in hearings; oversees management and operations audits; and receives, investigates, and resolves complaints regarding utility practices. Additionally, the Department monitors major electric and gas utilities’ performance related to benchmarks set in utility performance plans.

Key Findings

  • The Department does not sufficiently monitor utilities’ compliance with all conditions listed in Orders, and in some cases even lacks the equipment necessary to do so. For example, until 2019, the Department did not have equipment to measure Internet speeds, despite setting minimum speeds in Orders to be implemented as early as the end of 2017.
  • Some Order conditions lack interim measures of performance and consequences for non-compliance. The Department lacks policies and procedures for staff to follow when monitoring Orders for compliance, and, rather than imposing penalties, prefers to work with utilities on compliance, creating little incentive for utilities to meet all Order conditions.
  • Utilities, in some cases, are submitting inaccurate data that the Department is using – without verification – to calculate electric reliability, gas safety, and utility service quality. While this information has not been used in determining rates utilities can charge, it is sometimes used for determining fines and for general decisions made by the Department and the Commission regarding utility monitoring.

Key Recommendations

  • Actively monitor all conditions listed in Orders to ensure all utilities are in compliance.
  • Develop and issue Orders that include well-defined, measurable, and enforceable conditions. The Orders should also include the consequences for non-compliance, as appropriate.
  • Verify the accuracy of data submitted by utilities used by the Commission or Department to evaluate or make decisions concerning the utilities, including data submitted for performance metrics, safety standards, and reports.

Brian Reilly

State Government Accountability Contact Information:
Audit Director: Brian Reilly
Phone: (518) 474-3271; Email: [email protected]
Address: Office of the State Comptroller; Division of State Government Accountability; 110 State Street, 11th Floor; Albany, NY 12236