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LIPA trustee seeks review of tariff that may be overcharging 600 customers

Members of the LIPA/PSEG board address ratepayers and

Members of the LIPA/PSEG board address ratepayers and trustees during a discussion of refinancing PSEG's debt, June 26, 2015.

A LIPA trustee is calling for an expedited review and possible change to utility rules after a report that some 600 small businesses and schools may have been overcharged by being put in the wrong rate class.

In an email to LIPA trustees Monday, board member Jeffrey Greenfield said a Sunday story in Newsday about the issue "took me by surprise." He asked that the topic be discussed further at the next LIPA board meeting on Aug. 7, including the subject of a "possible tariff change." The tariff is LIPA's official book of rates and rules.

Greenfield said he was concerned by revelations that hundreds of small businesses, schools and government offices could be paying excess fees after being placed in a rate class made for larger commercial customers. Because of a "no-exit" clause in the tariff, those in it must remain in it, even though they don't meet the minimum power requirements.

Trustees had been scheduled to vote on a change to the rules proposed by PSEG Long Island and the Department of Public Service later this year, but Greenfield, a Senate appointee, said he wants action sooner. "I want it on the agenda by the next meeting," he said.

At least one other board member agrees. "If there are any inequities, we should move as fast as possible to correct them," said Matthew Cordaro, an Assembly appointee to the board. "We shouldn't let red tape get in the way."

The state Department of Public Service also supports the change. "DPS plans to recommend that LIPA change the rules so that customers can move to the appropriate rate class as soon as possible," DPS Long Island director Julia Bovey said Monday.

PSEG Long Island, which is fighting refund requests from Smithtown schools and Astoria Bank stemming from the misclassification, said that if LIPA trustees approve its rate request, the no-exit clause will be ended by January.

But Doug DiCeglio, president of Utility Rate Analysis Consultants in Lynbrook, said removing the no-exit clause is only half the battle. "I think the utilities should refund the money [they overcharged] and make everybody whole, but I doubt that's going to happen," he said."It affects the entire public."

PSEG has been battling refunds largely on technical and jurisdictional grounds.

In the case of two Smithtown public schools seeking refunds, DiCeglio showed they had not exceeded the power threshold to be classified in the large commercial rate since at least 2006. But state officials reviewing the case noted that documentation showing prior years' usage and the original contract for service, in one case prior to 1960, was not produced by the schools and LIPA could not provide them with documentation before 2004.

The DPS ruled in LIPA's and PSEG's favor, saying it was incumbent on the schools to document how they were misclassified when LIPA was unable or not required to keep proper documentation.

"While I can find no evidence showing that the customer's account was placed on the incorrect electric service classification, it is recommended that the company review Rate 285 in more detail, to assess its applicability today and especially to consider the removal of the existing exit clause," DPS wrote. "The tariff presently does not offer relief for the customer whose energy needs change once being placed on the rate."

In a case in which Astoria Bank said it was overcharged, PSEG attorney Vaughn McKoy invoked changes in the LIPA Reform Act that limit the DPS role in such cases.

While the Reform Act provisions of the state Public Service Law "gives the Department of Public Service the authority to review and make recommendations to LIPA concerning customer complaints, it is respectfully submitted that parties must still adhere to the procedures set forth in LIPA's tariff with respect to filing an appeal."

That requires Astoria Bank's appeal by consultant Utility Check to be filed with LIPA and its chief executive officer.

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