The ruling by the Public Utilities Commission (PUC) has just been delivered from the 8/10/15 hearing DE 15-251 “Complaint by Robert Fisher against Eversource Energy” and it’s not good news.

It’s not good news for the people of New Hampshire, because it means that the rules won’t help the common citizen, and it means the rules don’t apply to the monopolies.

I’ll do a quick breakdown here. From the ruling:

It is impossible for all rules to define every term and anticipate every situation to which
they will be applied. When disputes arise over how to interpret particular rule language, the
courts direct us to examine the entire rule and its intent.

[W]e interpret disputed language of a statute or regulation in the context of the
overall statutory or regulatory scheme and not in isolation. We seek to effectuate
the overall legislative purpose and to avoid an absurd or unjust result.
Boviard v. N.H. Dep’t of Admin. Svcs., 166 N.H. 755, 759 (2014).

It therefore follows that where terms or phrases in an administrative agency rule
are not specifically defined, we may look to provisions not only within the statute,
but within other rules promulgated pursuant to the statute for guidance.
State v. Elementis Chemical, 152 N.H. 794, 803 (2005).

This is a fascinating legal foundation they’re laying for their argument, because it’s actually taking the rulings of the supreme court out of context, as in not reviewing the ruling in total but instead in isolation. The irony is palpable. If we were to expand on that first ruling, the actual text (emphasis added) is:

[W]e interpret disputed language of a statute or regulation in the context of the overall statutory or regulatory scheme and not in isolation. We seek to effectuate the overall legislative purpose and to avoid an absurd or unjust result. We can neither ignore the plain language of the legislation nor add words which the lawmakers did not see fit to include.

I have to ask why it is that the PUC saw fit to leave this out of their quote. I can only assume that they’ve removed this portion of the ruling specifically because it would expose the commission for adding words which the lawmakers did not see fit to include. Luckily for us, the Supreme Court isn’t so keen on forgetting what it said.

Perhaps the PUC would do well to learn how the Supreme Court interprets agency rules (emphasis mine):

We use the same principles of construction in interpreting administrative rules as we use with statutes. When interpreting agency rules, where possible, we ascribe the plain and ordinary meanings to the words used. We also construe rules in their entirety, rather than in segments. Further, the administrative intent of the issuing authority is important where that intent can be ascertained. While an agency’s interpretation of its regulations is to be accorded deference, our deference is not total because we still must examine the agency’s interpretation to determine if it is consistent with the language of the regulation and with the purpose which the regulation is intended to serve. Where language is ambiguous or where more than one reasonable interpretation exists, we must look beyond the rule itself to determine its meaning. In such cases, we will consider regulatory history to determine administrative intent.

Vector Mktg. Corp. v. N.H. Dep’t of Revenue Admin.,l56 N.H. 781, 783-84 (2008)

It would appear that when interpreting rules, the Supreme court uses plain and ordinary meanings of words. They say it right there. So would the PUC follow suit and use ordinary meanings? We find out that they do not. Instead, they believe the meanings of words should only be found to be specific. So specific in fact, that absolutely nobody uses this definition of “good standing:” a customer who has had twelve timely payments with no arrearages.

That certainly is a specific definition, and does not meet any plain or ordinary definition. There’s no question.

We do not agree with Mr. Fisher that the disputed phrase should be examined outside the utility context to determine its “plain meaning” or “common understanding” through references to other settings. The rule at issue expressly applies to utilities and not to the broader business community through the phrase “of the utility,”

I think it’s important to make a note here, that while the rule at issue expressly applies to utilities, it also applies to those who do business with said utilities. In other words, it needs to be understood and followed by not only the utilities but the broader business community and public.

and case law directs us to consider Eversource’s interpretation “in the context of the overall … regulatory scheme and not in isolation” by looking to “other rules … for guidance.”

This may help give the rule and words context, yes, but be careful, because applying completely unrelated items to change the definition of rules is a scary precident to set. For instance, the PUC Administrative Rules 1203.03 also state:

(a) As a condition of new residential service, a utility may require a deposit, or a written guarantee or direct debit account as provided for in (i) below, in the following circumstances:

(1) When the customer has an undisputed overdue balance, incurred within the last 3 years, on a prior account with the utility or any similar type of utility, as described in (c) below;

(2) When any utility has successfully obtained a judgment against the customer during the past 2 years for non-payment of a delinquent account for utility service;

(3) When the utility has disconnected the customer’s service within the last 3 years because the customer interfered with, or diverted, the service of the utility situated on or about the customer’s premises; or

(4) When the customer is unable to provide satisfactory evidence to the utility that he or she intends to remain at the location for which service is being requested for a period of 12 consecutive months, as described in (b) below, unless he or she provides satisfactory evidence that he or she has not been delinquent in his or her similar utility service accounts for a period of 6 months, as described in (b) below, in which case no deposit shall be required.

By what mechanism are we to consider 12 months (the arbitraty numerical phrase) should apply to any and all undefined nouns and phrases that don’t inherently have a time component to their definition?

If by this mechanism that phrases immediately above or below a rule should somehow change the meanings of words and phrases, by what mechanism are we not to consider 6 months, 2 years or 3 years as written in paragraph a?

This just highlights the absolutely arbitrary nature of the PUC’s ruling and application of the rule. Pray you never have such incompetence rule over a hearing of your own.

Regulated utilities are not equivalent to the business community at large. Utilities must accept every customer that asks for service. They do not have the discretion to reject customers with poor credit histories. Utilities must also answer to the Commission if they are lax or ineffective in collecting payments from customers. Every dollar that Eversource does not collect from one customer must be collected from other customers who do not default on their obligations. These differences between regulated utilities and other private businesses are embodied in Puc 1203.03 and support Eversource’s stricter definition of “customer in good standing of the utility.”

The poor little monopoly is just a victim to the big bad customers who just won’t pay? Is that really the angle they’re taking. Unbelievable.

The fact that Eversource apparently is having trouble protecting its assets is certainly a sob-story, and some might even believe it. But, what I find interesting is that the PUC saw fit to include this in the ruling.

Is Eversource’s business failings what determines how laws are interpreted? Would we interpret this rule differently if, say, Eversource’s business was booming? It certainly looks like a justification of their application of the rule, but it doesn’t serve as a justification for their interpretation of what was actually written in the rule. Even third graders at our NH Public Schools should be able to see through that hand-waiving.

Let’s get to the nitty-gritty logic, shall we?

First, and most telling, the deposit “shall be refunded when all bills have been paid without arrearage for 12 consecutive months.” Puc 1203.03(l)(5). This subparagraph strongly supports the interpretation that a 12-month history “without arrearage” is the rule’s intended definition of “customer in good standing of the utility,” given that is when the utility must return the deposit originally paid because the customer was not in good standing.

Does this stand to reason? Firstly, there’s the fact that they’re attributing qualifiers for other people to the customer in good standing:

  • A customer who owes a deposit must either pay or get a written guarantee from a third party that stays on file for twelve months.
  • A person who offers a guarantee is not the same person who is subject to this for twelve months.
  • Conflating the two suggests that the person offering the guarantee is also the person receiving the guarantee. Unless, of course, they’re two different people.. but then why would we apply text from one to the other? Simply because the text lives nearby in a subsequent paragraph?

But even more damning is this simple bit of logic:

This subparagraph strongly supports the interpretation that a 12-month history “without arrearage” is the rule’s intended definition of “customer in good standing of the utility,” given that is when the utility must return the deposit originally paid because the customer was not in good standing.

Let’s condense this:

  • Customer in good standing has 12-month history “without arrearage,” because:
  • That’s how long we hold the cash from a customer in cases where:
  • the customer was not in good standing
  • So therefore a customer in good standing is what the customer who is not in good standing isn’t

So let’s just see how the PUC defines a customer in bad enough standing to warrant a deposit:

  1. As a condition of existing residential service, a utility may require a deposit or a written guarantee or a direct debit account as provided for in (i) below, in the following circumstances:
    1. When the customer has received the following number of disconnect notices for nonpayment from the utility within a 12 month period:
      1. For customers billed monthly, 4 disconnect notices;
      2. For customers billed every 2 months, 3 disconnect notices; and
      3. For customers billed quarterly, 2 disconnect notices;
    2. When the customer’s service has been disconnected for non-payment of a delinquent account;
    3. When the utility has disconnected the customer’s service because the customer interfered with, or diverted, the service of the utility situated on, or delivered on or about, the customer’s premises; or
    4. When the customer has filed for bankruptcy and listed the utility as a creditor under the filing, and the filing has been accepted, in which case the deposit requirement shall be in accordance with 11 U.S.C. 366.

Uh oh, wait a second… the definition of a customer who requires a deposit is somebody who has had less than 4 arrearages in a twelve month period of time.

But wait a second, if they’re using the context of the rule to define good standing, and they’re using the customer who has received a deposit request as the de-facto standard for the delineation of good and bad standing, then by definition, the PUC and Eversource are both using not only a proprietary definition that does not exist anywhere in the real world, but they are also using a definition that doesn’t even match the rationale they give for why they’ve reached the definition in the first place.

For those of you a little lost by this admittedly convoluted but accurate break down I’ll write it in plain english:

The PUC just introduced a brand new, third, fourth, and fifth definition of good standing:

A monthly customer who has had less than four arrearages in twelve months (Or a bimonthly customer with less than three arrearages, or a quarterly customer with less than two arrearages).

How did I just get there?

12-month history “without arrearage” […] given that is when the utility must return the deposit originally paid because the customer was not in good standing.

The customer has a deposit notice, and needs a deposit on file for twelve months.

Why does the customer have a deposit notice?

“because the customer was not in good standing.”

How did they determine this?

PUC 1203.03 (e)(1)(a) states that it’s because the customer had four or more arrearages in twelve months.

But wait, does good standing mean less than four arrearages in twelve months, or does it mean having a 12-month history with no arrearages?

Why doesn’t the PUC have one definition of good standing?

How can they possibly claim to be using the common definition of this phrase, when they themselves have now defined two very different and very specific definitions?

Trouble in logic land.

Eversource’s definition is also consistent with the practice of Liberty, Southern California Gas Company, and, to a lesser degree, NHEC, as described above.

No not really. It may be consistent with the practice of SoCalGas, but not consistent with the written rules of SoCalGas:

In order to establish credit or possibly waive a deposit for your gas account, residential customers may provide a Credit Reference Letter from another utility company such as gas, electric, water, telephone or cable.

The letter must be on company letterhead and meet the following criteria:

  • Twelve months of continuous service within the past two years from the previous utility, which can include more than one address
  • The account was maintained in good standing within those 12 months with no closes for non-payment, no returned items and two or less overdue notices.

Source: http://custhelp.socalgas.com/app/answers/detail/a_id/114/~/why-am-i-being-asked-for-a-letter-of-credit

SoCalGas specifies that their company policy for waiving a deposit is a reference from another company showing that the customer had been in good standing for twelve months. It’s important to note that SoCalGas finds it necessary to stipulate that the account would have to be not only in good standing, but in good standing “within those 12 months.” This implicitly demonstrates that their definition of “good standing” has no time requirement. In order to communicate that their rules have a twelve month requirement, they had to stipulate it separately from the phrase “good standing” as the phrase itself does not carry the implication of any time requirement, let alone an arbitrary twelve months. This further proves that the common understanding of “good standing” does not have a time requirement.

It is also worth noting that SoCalGas’s requirement of an account in good standing for twelve months can include two or less overdue notices. This demonstrates a commonly understood facet of “good standing:” that the condition of being in good standing can be attained irrespective of timeliness of payments, so long as the payments are current, any fees and/or balances associated with the account are paid and current. If one is to find themselves not in good standing, they can rectify this issue by making immediate payment of all outstanding fees and bills. It was necessary for SoCalGas to restrict their deposit qualifications by stipulating no more than two overdue notices because the phrase “good standing” does not inherently imply this. The definition of “good standing” in this case neither implies a history of payments nor the timeliness of said payments. This is why SoCalGas had to stipulate both separately.

So, there we have it folks, the PUC blatantly misinterpreting the law and creating injustice.

To conclude the ruling (emphasis mine):

We thus find Eversource’s interpretation of “customer in good standing of the utility” to be reasonable

Just remember folks, it’s Eversource who gets to interpret and define the rules. Not the PUC.

This will be appealed to the Supreme Court. I will update everybody as news rolls in.