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PA Bulletin, Doc. No. 98-617


Petition of Metropolitan Edison Company for Waiver of the Landlord-Tenant Provisions of Chapter 56, 52 Pa. Code §§ 56.121--56.126, under § 56.222 with Respect to the Electric Service Account of Thomas R. Kilhullen; Doc. No. P-00971254

[28 Pa.B. 1903]

Commissioners present: John M. Quain, Chairperson; Robert L. Bloom, Vice Chairperson; John Hanger; David Rolka; Nora Mead Brownell

Public Meeting held
February 26, 1998

Opinion and Order

By the Commission:

   Metropolitan Edison Company has filed a petition concerning the account of Thomas R. Kilhullen, a residential service customer. None of the individuals listed in the petition's certificate of service have filed an answer to the petition. The Commission will therefore deem the allegations set forth in the petition as admitted facts.

History of the Proceedings

   On September 9, 1997, Metropolitan Edison Company (Met Ed or the Company) petitioned the Commission for a waiver of the Commission's Landlord Ratepayer regulations concerning termination at residential dwellings where service is in the name of the landlord. The regulations are at 52 Pa. Code §§ 56.121--56.126. Met Ed also requests waiver of the Commission's regulations regarding wintertime termination procedures at 52 Pa. Code § 56.100. The Company cites as authority for its request the Commission's regulation at § 56.222 which permits application for modification or exemption from the requirements of a regulation if unreasonable hardship to a person or utility results from compliance with a section of Chapter 56.

   Mr. Kilhullen is an electric service customer who has three accounts with Met Ed: (1) the Kilhullen home; (2) the Pool Service Station; and (3) an account for service to 10 rental cottages that are all served by one meter. Met Ed's petition concerns the account for service to the 10 rental cottages. Nine of the cottages are occupied by tenants. The tenth cabin is used for the storage of lawn mowers and other equipment. At the time of the filing of Met Ed's petition, this account was $23,234.06 in arrears. This arrearage has accumulated since May 3, 1993.

   Pursuant to the terms of the Commission's Landlord Ratepayer regulations, current bills may be paid by tenants when the utility issues a termination notice to the landlord. 52 Pa. Code § 56.125. These payments result in the continuation of service. Met Ed states that Mr. Kilhullen's rental cabin account arrearage has continued to rise because payments are generally made on the account only when termination notices are issued, and those payments are made by tenants only for the current bill. Consequently, the arrearage continues to grow. A payment history for this account from August 1, 1995 through July 31, 1997 was attached to the Met Ed petition.

   Met Ed's representatives have maintained contact with Mr. Kilhullen and attempted to establish payment arrangements with him. According to the Company's petition, ''Mr. Kilhullen has steadfastly refused to make payment arrangements with the Company.''

   The Company has issued numerous termination notices to Mr. Kilhullen as a result of his failure to pay for electric service to the rental cottages. In response, Mr. Kilhullen has made sporadic payments, some with checks that were returned for nonpayment. At other times, tenants have made payments of current bills in order to continue service. Mr. Kilhullen's daughter, who is allegedly one of the tenants, generally makes the payments which have prevented Met Ed from terminating service to the rental cottages.1

   Met Ed states that while it is reluctant to initiate service termination procedures under the circumstances of this case, the Company is concerned about the customer's failure to make regular payments for electric service and the apparent abuse of the Commission's Landlord Ratepayer regulations. Met Ed avers that the customer's failure to meet his payment responsibility has required the Company and the other Met Ed ratepayers to subsidize Mr. Kilhullen's electric service.

   Because termination of service would affect all the tenants in the rental cottages, Met Ed has notified the Monroe County United Way which stands ready to provide assistance to Mr. Kilhullen's tenants if it is required. Met Ed's CARE representative also is prepared to assist the tenants in the event of termination of electric service.


   The fact situation set forth in Met Ed's petition clearly describes a misuse of the protections provided by the Commission's Chapter 56 regulations and the Public Utility Code at 66 Pa. C.S. §§ 1521, et seq. The payment history of this account indicates that the minimum number of payments necessary to require service to be continued has been made and no more. Indeed, the petition suggests that there has been collusion between the landlord and one of the tenants, his daughter, to make these tenant payments. Such behavior is clearly egregious and contrary to the public interest. Nonetheless, the relief sought by Met Ed cannot be granted.

   Met Ed requests a waiver of the Commission's Landlord Ratepayer regulations. Section 56.222 allows for an application for modification or exemption of a Chapter 56 regulation. However, the granting of a waiver, exemption or modification is not possible in this instance since the requirements of the Public Utility Code override the regulations, and it is axiomatic that the Commission does not have the authority to waive a statute.

   The Commission's enabling legislation contains provisions that are essentially identical to our Landlord Ratepayer regulations. The tenants' right to continued service upon payment of current bills is found at 66 Pa.C.S. (§ 1527. Since Met Ed is requesting a waiver of a tenant's right protected by statute, its request cannot be granted.2

   The statute does provide a remedy to utilities when a landlord ratepayer is two or more months in arrears in his utility payments. Section 1533 gives the affected utility the right to petition the court of common pleas of the county where the leased premises are located to appoint a receiver to collect the rent payments otherwise due the landlord ratepayer. 66 Pa.C.S. § 1533. The statute authorizes the receiver appointed by the court to collect the rent directly from the tenants and to pay all overdue and subsequent utility bills from the rent collected. This section applies only to premises like Mr. Kilhullen's that are not individually metered by the utility. In this manner, the tenants receive continued utility service and the utility receives payments for current service and towards the accumulated arrearages. The receiver is to continue collection of the rents until the landlord ratepayer has paid the undisputed amount of all outstanding utility bills and otherwise satisfied the court that he is ready to resume his obligations to the utility and the tenants.

   The statute does not require Met Ed to carry account arrearages that accrue after one of the tenants makes payment pursuant to section 1527. Section 1528(2) provides that Met Ed may include in any termination notice sent to the tenant the amount due, including any arrearage from an earlier bill due from the tenant. Met Ed can utilize this provision to limit the amount of arrearages that accumulate.

   Met Ed's petition alleges that Mr. Kilhullen's daughter, who has made payments to Met Ed so as to prevent termination of service, is not a tenant. Sections 1526(a)(5) and 1527(b) of the Public Utility Code expressly allow Met Ed to request identification in order to verify that Mr. Kilhullen's daughter is actually a tenant.

   Met Ed's petition also alleges that Mr. Kilhullen made some rent payments with checks that were returned for nonpayment. The Commission's regulation at 56 Pa. Code § 56.94 states that a utility can refuse checks from a ratepayer if the ratepayer has tendered a check within the past year which has been returned for insufficient funds. The regulation at § 56.94 is applicable in this case because it involves residential service.

   Additionally, if Met Ed believes it is appropriate, it may initiate criminal proceedings against Mr. Kilhullen. Issuing checks which are returned for insufficient funds constitutes a violation of section 4105 of the Crimes Code, 18 Pa.C.S. § 4105. Met Ed's petition suggests that Mr. Kilhullen and his daughter are colluding to make the minimum number of payments in order to continue service. These actions, if proven to be true, could also constitute theft of services pursuant to 18 Pa.C.S. § 3926. If Mr. Kilhullen's conduct is as egregious as Met Ed suggests, it should consult the Monroe County District Attorney about initiating criminal proceedings.

   Met Ed has indicated a reluctance to terminate service in this case. A utility should not be reluctant to pursue those collection procedures that are available to it under the Public Utility Code. The collection of damages and the appointment of a receiver, however, are remedies that must be pursued through the Court of Common Pleas since the Commission is without authority to award damages, and the statute specifies the process for appointing a receiver.

   Met Ed also requests, pursuant to 52 Pa. Code § 56.222, a waiver of the wintertime termination procedures at 52 Pa. Code § 56.100. Section 56.222 does not provide for a waiver but for a modification or temporary exemption from any section in Chapter 56. However, § 56.100(2) sets forth the procedure to be followed for winter termination. The instant petition does not contain all of the information that is necessary to determine whether a wintertime termination would be justified. If the Company wishes to institute winter termination procedures against Mr. Kilhullen, it should file a request with the Commission for permission to terminate service accompanied by a utility report containing the information as described in 52 Pa. Code § 56.152.

   It is understandable that applying the Landlord Ratepayer regulations has proven to be a difficult proposition for the utility industry. Moreover, full compliance with the regulations may be further compromised by a customer's abuse of the administrative process. Given this difficulty in interpreting and applying the Landlord Ratepayer regulations, we have attached to this Opinion and Order a summary of these regulations provided by the Commission's Bureau of Consumer Services in the hope that it might prove helpful to jurisdictional utilities confronting Landlord Ratepayer concerns.

   The purpose of this summary is to provide an outline of applicable regulations and laws rather than an interpretation of such provisions. The summary is not intended to have any precedential value, and is provided merely for the information of the utility industry.

   In conclusion and for the reasons set forth above, we hold that we must deny the Petition of Metropolitan Edison Company to waive the Commission's Landlord Ratepayer provisions of Chapter 56 with regard to termination of service to the rental cottages of Thomas R. Kilhullen and to waive the Commission's wintertime termination procedures at 52 Pa. Code § 56.100; Therefore,

It Is Ordered That:

   1.  The Petition of Metropolitan Edison is denied consistent with the discussion in the body of this Opinion and Order without prejudice to the Company's right to seek authority for winter termination or to pursue alternative remedies as set forth herein.

   2.  A copy of this Opinion and Order, with attachment, shall be served on the Office of Consumer Advocate and the Small Business Advocate.

   3.  A copy of this Opinion and Order, with attachment, shall be published in the Pennsylvania Bulletin.


Bureau of Consumer Services' of the Landlord Ratepayer
Termination and Discontinuance Law (66 Pa.C.S. §§ 1521--1533)

   This is a summary of the above cited law pertaining to the termination of regulated fixed utility service to rental locations where the account is billed in the name of someone other than the tenant. It is sometimes difficult to determine if a particular location is subject to this law because the account is billed to a person or entity that is not the landlord/owner of the property. The law defines ''landlord ratepayer'' so as to encompass third parties who act on behalf of the landlord. Services covered by the law are gas, electric, steam, sewer and water supplied by a PUC regulated utility. Specific types of accounts not covered by this law are nursing homes, hotels and motels. Hospitals and other similar facilities also are not covered by this law. Note however, that the PUC has termination and discontinuance procedures for nursing homes, hospitals, domiciliary care homes and other similar facilities (see 52 Pa. Code § 55.101). For the complete definitions pertaining to the landlord ratepayer termination and discontinuance see 66 Pa.C.S. § 1521.

Summary of Termination Notice Activity and the Highlights of Events or Actions Associated with the Notice Activity

Notice Activity Events or Actions Associated With Notice Activity
37-day notice to landlord or responsible party for billing to property covered by statute *  Notice must be in writing.
*  Method of notice to landlord ratepayer: 1)  Certified mail if utility receives signed return receipt; 2)  Personal service of landlord ratepayer or agent during normal working hours and posting of the landlord ratepayer's principle place of business or business address; 3)  If personal service is unsuccessful, notice can be by first class mail. This notice can be sent on the same day as the attempt at personal contact; 4)  If the landlord ratepayer's place of business is in another state and there is no agent in this state, notice is to be by certified and first class mail on the same day. See 66 Pa. C.S. § 1525(b).
*  Appropriate government agencies are to be served with a copy of the notice.
*  The notice must state that the landlord ratepayer is to provide the names and addresses of every affected tenant; and, advise the landlord of the right to contact the Commission. The notice also must include: the date tenants will be notified of termination, the amount owed and the date of termination.
*  The list of affected tenants must be provided within seven (7) days or arrangements made to satisfy the reason for termination. The utility is permitted to pursue legal acton to obtain the list of affected tenants.
Notice Activity Events or Actions Associated With Notice Activity
*  If landlord ratepayer files a complaint with the PUC within the 7/ day termination period, action is stayed pending adjudication. However, the landlord ratepayer remains obligated to pay all undisputed portions of the bill.
*  During the 7/day period between notice to the landlord and the 30/day notice to tenants (described below) a representative of the utility ''shall visit the affected premise'' and attempt to obtain the name and address of the affected tenants by contacting one or more of the tenants.
30-day termination notice to affected tenants. *  Notice to tenants is to be by first class mail or hand delivery. If hand delivery is not made on the first attempt (between the hours of 8 a.m. to 5 p.m. Monday through Friday), a second try must be made. The second attempt must be made between 6:00 p.m. and 10:00 p.m. Monday through Friday or 8 a.m. to 5 p.m. on Saturday or Sunday.
*  Notice must explain rights of tenants to continued service or for restoration of service by paying the prior monthly day bill and each subsequent bill for current service. Payment by tenant(s) does not change the name the account is listed under. Tenants can deduct payments from rent without retribution by landlord.
*  Tenants have 30 days to pay each subsequent monthly bill after notice by the utility of the amount of each monthly bill.
*  Notice must contain: 1)  The date the notice is rendered; 2)  The date of scheduled termination; 3)  Amount of prior current months bill; 4)  Tenants rights and how to contact the utility and PUC. If tenants do not pay all of the current months bill or all of any subsequent monthly bill, the partial payment must be returned to the tenant(s) who made the partial payment.
*  Utility is permitted to require ''reasonable identification'' from tenant(s) who elect to pay the prior 30 day bill and subsequent monthly bills. ''Reasonable identification'' is defined at 66 Pa.C.S. §§ 1526(a)(5) and 1527(b).
*  If unit(s) are or can be individually metered with little or no cost and no major revisions to the distribution facilities, tenant(s) can subscribe to service in their name.
10-day notice to be given to affected tenants prior to day of termination. This notice is required by regulation in 52 Pa. Code § 56.126. It is not required by law in Title 66. The PUC has proposed changes to Chapter 56 that remove the landlord ratepayer termination and discontinuance procedures from the regulations. If they are removed this notice will no longer be required. *  If possible, the notice is to be conspicuously posted in common areas of property and hand delivered to the address of each affected tenant.
*  All information required in the 30/day notice must be included in the 10/day notice.
*  All of the tenants options are also applicable during the 10 days leading up to termination.
30-day notice of termination to tenants for failure to pay subsequent monthly bills (after paying the initial 30 day bill for continuation of service) *  The 30/day notice of termination is to be hand-delivered to each affected tenant. If no name is obtained, the notice is to be hand-delivered to each unit by unit number.
*  The notice is to include the amount due, which includes the arrearage due by the tenants, a statement regarding the rights of the tenants to file a complaint and the phone numbers and addresses for the utility and PUC.
*  The utility is under no obligation to continue to supply service if the tenants do not pay the arrears on their agreement for continued service.
*  The utility is again permitted to require ''reasonable identification'' as a condition for accepting payment from a tenant(s). See 66 Pa.C.S. § 1527(b).

Other considerations and summary of some important aspects of the law and regulation when handling landlord ratepayer termination and/or discontinuance to tenants.

*  The Pennsylvania Commonwealth Court has held that tenants with a medical condition must be treated in accordance with the medical certification provisions in 52 Pa. Code, Chapter 56.

*  It is important to remember that a utility is permitted to require ''reasonable identification'' from someone alleging to be a tenant prior to their being an obligation on the part of the utility to honor the rights of the tenant.

*  Utilities are not under an obligation to continue providing service when a tenant(s) has entered an agreement to pay the bill in the landlord's name and does not make the monthly payments. When a tenant defaults on a payment arrangement, the utility is permitted to start termination at the 30/day point. If the tenant(s) come forward again, the company can require payment of the arrears owed by the tenant(s) on their agreement to pay the monthly bills.

*  A utility is not obligated to accept a check from the landlord ratepayer to stop termination action if the landlord ratepayer has issued a check in the last year that was returned for insufficient funds or due to stopped payment. See 52 Pa. Code § 56.94(1).

*  If a landlord ratepayer is two or more months in arrears with monthly payments, the affected utility has the right to petition the court of common pleas of the county where the property with delinquency is located to have a receiver appointed to collect rent payments for the purpose of paying the arrears and current bills. See 66 Pa.C.S. § 1533 for the complete details of this provision of the law.

*  In addition to the procedures set forth in the statutes and regulations outlined above, a utility can utilize other means to collect unpaid amounts from landlords. As noted above, the utilities can file a petition to appoint a receiver under the provisions of 66 Pa.C.S. § 1533. A utility can also initiate a civil action against a landlord for damages in the amount of the unpaid utility bills. In appropriate circumstances, a utility can initiate criminal proceedings against landlords who do not pay their bills.

*  If a landlord ratepayer presents a check for payment of a bill that is returned for insufficient funds, the utility may prosecute the landlord criminally under 18 Pa.C.S. § 4105. In certain cases, the landlord's failure to pay may be so egregious that it constitutes theft of services under 18 Pa.C.S. § 3926. If the landlord ratepayer is convicted of either of these offenses, the utility may request that the court order restitution in the amount of the unpaid utility bill as part of any sentence imposed.

[Pa.B. Doc. No. 98-617. Filed for public inspection April 17, 1998, 9:00 a.m.]


1The statute defines a tenant as a person who is ''. . .contractually obligated to make rental payments to the landlord ratepayer pursuant to a rental agreement . . ..'' 66 Pa.C.S. § 1521. Met Ed does not allege whether Ms. Kilhullen fits the statutory definition of a tenant.

2Section 1530 of the statute states that ''[a]ny waiver of a tenant's rights under this chapter shall be void and unenforceable.'' While this section was probably intended to apply to leases, there is nothing in the section which limits its application to leases, and it could well be argued that such language expressly restricts the Commission's waiver authority under § 56.222 of our regulations.

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