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MORE PENALTIES LOOM FOR NATIONAL FUEL

National Fuel Gas Co. could be hit with additional penalties beyond the nearly $19 million it now faces for not turning on the gas for a 58-year-old Buffalo woman who froze to death in her unheated apartment last winter.

The state Public Service Commission also wants National Fuel to review its records of the past six years and contact and pay penalties to customers improperly denied service under certain conditions.

Customers who did not receive service promptly after their applications were accepted are among those who may receive payments from the utility. And those who did not receive service within five business days because of National Fuel's apparent policy against entering into deferred-payment agreements with delinquent customers who have judgments against them also could receive payments, the commission said.

The Public Service Commission has given the utility a month to explain why payments should not be made to these people. The company provides natural gas to about 460,000 residential customers in Western New York.

"It's safe to say it would be a big undertaking," National Fuel spokeswoman Julie Coppola Cox said of such a review. "Our response will show why we don't think it's necessary to undertake the review they described."

National Fuel's response also will include an explanation to the Public Service Commission why it should not be hit with penalties that could reach nearly $19 million stemming from Velma Fordham's death in her unheated apartment last winter.

National Fuel appears to have "directly contributed" to Fordham's death and violated state law by refusing her repeated pleas to turn on the gas, a state agency said.

"It appears the company may have violated certain provisions of the public service law . . . and that these violations directly contributed to the death of this customer," the commission said in a report filed last week.

National Fuel maintains it tried to turn on Fordham's service, but it has declined to respond in detail to the commission's allegations that the company may have violated the consumer-protection law.

"We obviously will respond in great detail within the time frame allowed," Cox said of the commission's request for an explanation. "And that response is something we're working on and will be working on for a good number of days up until the deadline.

An advocacy group called the commission's report unprecedented.

But such incidents are so rare in New York State in the past two decades that there's no track record to look at to predict whether the commission will follow through with the penalties, said Gerald A. Norlander, executive director of the Public Utility Law Project, an Albany-based advocacy group for low-income residents.

"In all my years, I've never been aware of a penalty like this," Norlander said. "It is a strong measure, and it should be.

"This is a strong message being sent by the Public Service Commission, and the commission should be commended for looking into this."

There's no way of knowing how many people, if any, might qualify for a payment from National Fuel or for how much.

In its report last week, the commission said state law "obligates utilities to make reasonable efforts to contact customers to negotiate in good faith a deferred-payment agreement and outlines the eligibility requirements" for being offered one.

Generally, only customers who have broken an agreement or those who have the financial resources to pay the bill are ineligible for a deferred-payment agreement. Neither of these conditions appears to have applied in Fordham's case, the commission said.

At one point last year, National Fuel denied Fordham gas service because of an outstanding $2,100 judgment for an unpaid bill, the commission said. Even after Fordham tried to begin resolving her debt after receiving a voucher for $710 in government aid under the Home Energy Assistance Program, she was told the utility would not turn on the gas.

National Fuel's apparent policy not to enter into such payment agreements with delinquent customers facing judgments directly conflicts with state rules, the commission said.

What's more, once someone shows up with a HEAP check, or even a promise to pay from the county, the utility must turn on gas service, Norlander said.

"There's no mention in the order the company gave any notice to (Fordham) of customer rights," Norlander said.

After Fordham was denied service, "that customer should have gotten notice that she could contact the Public Service Commission hotline and a notice of her rights to negotiate a deferred-payment plan," he added.

Any penalties stemming from Fordham's case would be paid to the state's general fund, said commission spokesman David Flanagan.

National Fuel's shareholders -- not ratepayers -- would pay any penalty, Flanagan said.

"The shareholders would pay," he said. "They can't seek to recover those costs from ratepayers."

Here are the potential penalties National Fuel faces because of Fordham's death:

$1.4 million for continuing to deny gas service to Fordham from Nov. 29, 2000, until Dec. 14, 2000, when National Fuel tried to turn on her service.

$8.7 million for failing to start gas service for her for the 87 days beyond the prescribed time period provided for in state law.

$8.4 million for failing for 84 days -- from Nov. 29, 2000, to Feb. 20, 2001 -- to make any reasonable efforts to contact her to offer her a deferred-payment agreement.

At least $250,000 for enforcing an internal policy of denying service to customers with an outstanding judgment when the customer is otherwise eligible for Home Energy Assistance Program payments or other assistance or is otherwise able to make payment on current bills.

What kind of impact would these penalties have on National Fuel?

It's a broad-based energy company that posted $1.4 billion in operating revenues and earned more than $218 million in operating income last year.

"I think it's serious money," Norlander said. "The commission is proposing a stiff penalty."

The Public Service Commission staff will analyze National Fuel's response and then forward it to the commission, Flanagan said.

"It would be up to the commission to determine if penalty action is warranted," Flanagan said. "If they determine it is warranted, we would go to court and initiate a civil proceeding to recover those penalties."

The commission spokesman said he did not know what the timetable will be. National Fuel's response is due just days before the commission's Oct. 24 session. The commission's next meeting is Nov. 28.

"Our staff will move pretty expeditiously to get this to the commission," Flanagan said.

e-mail: plakamp@buffnews.com

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