COMMONWEALTH OF MASSACHUSETTS
DEPARTMENT OF PUBLIC UTILITIES
SUFFOLK, SS.
V&M MANAGEMENT COMPANY, INC., Complainant/Petitioner
v.
THE BOSTON EDISON COMPANY,THE BOSTON
GAS COMPANY, Respondents
PETITIONER'S MOTION TO AMEND COMPLAINT
The Complainant/Petitioner, V & M Management Co., Inc. (hereinafter V & M), moves the Department of Public Utilities (hereinafter D.P.U.), pursuant to 220 CMR S 1.04(3), to amend V & M's February 18, 1992 filed complaint in order to register its challenge to two D.P.U. Adjudicatory Decisions:
1) D.P.U. No. 18851 (November 30, 1977),
Massachusetts Electric Co. v. Robert Milford Associates.
and
2) D.P.U. No. 18895 (Jan. 10, 1978), Merrimack
Management Co. v. Massachusetts Electric Company.
1. Both adjudications permit the utilities to charge interest on interest, by allowing interest to be assessed upon the entire unpaid balance, which includes any unpaid usage as well as interest charges.
2. In No. 18851, the Department's decision notes that the utility is allowed, under para. 13 of its Terms and Conditions, to charge *simple interest" for late (past 25 days due) payments. The most the D.P.U. says is that it
will not ask the company to allocate payments between principal and interest; at p. 6.
3. In No. 18895, the D.P.U. acknowledges that the company's charging of interest on unpaid arrearages and unpaid interest charges constitutes *compound interest," even though the Company's Terms and Condition No. 13 only allows for "simple interest" at li% per month. Yet, the D.P.U. merely accepts the Company's "reading" of its Terms, and decided not to change its (D.P.U.'s) reading of Condition No. 13.
4. In neither No. 18851, nor No. 18895, nor No. 18248--challenged in the original complaint--does the D.P.U. address the serious policy or legal justifications for allowing utilities to transform simple interest into compound interest, and to authorize the practice of charging interest-on-interest, or pyramiding interest.
5. As important as it is for utilities to be able to promptly collect its bills from commercial users, and to charge a late fee for usage charges not paid within 25 days, the same rationales do not apply to the practice of rolling the unpaid interest charges into the total unpaid balance, and charging interest on that total as well.
6. The Boston Gas Company and the Boston Edison Company are in the utility, not banking, business and the D.P.U.'s current interest-on-interest authorization needs to be reexamined and revised.
7. It is V & M Management Co., Inc.'s position that the utilities' billing practice of charging interest-on-interest, or the pyramiding of late charges, constitutes overcharging and are unfair practices violative of G.L. c. 93A, S 9, Commonwealth v. De Cotis, 366 Mass. 234, 242-243 (1974), and G.L. c. 93A, S 11, Soence v. Boston Edison. 390 Mass. 604, 616 (1983), see also Southbridoe Water Supply Co. v. P.P.P.. 368 Mass. 300, 310 (1975) (overcharged customer may recover, but D.P.U. cannot order refund of collected overcharges, where D.P.U. order entered against utility without notice or opportunity to be heard), and Lowell Gas Co. v. Attorney General. 377 Mass. 37 (1979) (utility companies liable for common law fraud and unfair and deceptive practices under G.L. c. 93A for allocating short-term debt interest expense to inventory costs).
8. The fact that Boston Edison Co. and Boston Gas Co. charge interest on its overdue commercial accounts under the authority of D.P.U. Adjudicatory Orders does not exempt the utilities from the claim that their business practices of lumping together unpaid electrical or gas service charges and unpaid late or interest charges is susceptible to a c. 93A attack, Shubach v. Household Fin. Corp.. 375 Mass. 133, 137-138 (1978) (rejecting argument that an act or practice authorized by a statute--filing collection cases in locations inconvenient to the debtors--cannot be an unfair or deceptive practice); see also Lowell v. Gas Co. v. Attorney General, supra. at 52, n.24. The purpose of
charging interest on unpaid commercial usage accounts is the same as that of charging or assessing interest generally--to compensate the damaged creditor for the wrongful deprivation of and delay in the receipt and use of money belonging or owing to the creditor, to make the creditor whole--not to provide the creditor with a windfall,1 especially in these recessionary, debt-ridden times.
9. V & M Management Co., Inc. further informs the Department that its Motion For Relief from Boston Edison's November 17, 1989 (Default) Judgment of $173,544.33 entered in the Boston Municipal Court, containing the offensive and objectionable interest-on-interest, as noted in para. 7, and fn. 3, of its February 18, 1992 filed Complaint, was denied on February 28, 1992 on what was argued and appeared to be a timeliness issue, and not on the merits of the issues raised therein.
10. V & M Management Co., Inc. further wishes to add a challenge to Boston Edison's March 17, 1992 Notice of Termination of Service to V & M, a copy of which is attached as Each. "A", particularly during the pendency of this, as yet unresolved, February 18, 1992 filed complaint. In this Complaint, V & M Management Co., Inc. asserts that it has overpaid, or that Boston Edison has failed to account for
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1. See Boston Edison Co. v. Boston, supra, at 773, n.3;
Plasko v. Orser. 373 Mass. 40, 43 (1977); Porter v. Clerk of the Superior Court. 368 Mass. 116, 118 (1975); Broadhurst v, Director of the Division of Employment Security. 373 Mass. 720, 727 (1977); Bernier v. Boston Edison Co.. 380 Mass. 372, 388 (1980); Sterilite Corp. v. Continental Casualty Co.. 397 Mass. 837, 841 (1986).
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$41,803 in payments made by V 6 M to Boston Edison, between January 1990 and January 1992. V & M Management Co., Inc. asserts Its willingness to pay the current, Boston Edison charges, as V & H Management has done since October 31, 1991, during the pendency of this complaint, with the hope that an in-progress refinancing will permit V & M Management Co., Inc. to resolve, pay-off or substantially pay-down Boston Edison's Judgment.
11. On March 20, 1992, counsel for V & M Management Co., Inc. asked senior counsel for Boston Edison if, in light of the March 17th Notice, and that V & M Management Co., Inc. had been staying current in paying, monthly, the current usage charges, if Boston Edison would be willing to forgo further posting of, notifications to tenants, and threatened service terminations to V & M's buildings and accounts if V & M continued to pay current usage during the pendency of this administrative complaint and/or during the time V & M pursues refinancing to see whether an overall resolution of the parties* outstanding dispute over arrearages, payments and interests could be achieved.
12. In a follow-up conversation of even date, Boston Edison's senior counsel indicated that Boston Edison would be willing to be flexible and forgo posting, tenant notifications, and service termination of all of V & M's accounts for the time being while V 6 M paid current electrical usage and while the parties engaged in discussions to resolve their differences.
13. In light of Boston Edison's willingness to forgo further posting, tenant notifications, or service terminations under these conditions, no departmental action is being requested or required, except this public confirmation of this understanding.
WHEREFORE, V & M Management respectfully requests the amendment of its complaint to reflect these additional challenges and information.
V & M MANAGEMENT CO., INC. By its attorney,
Arthur H. Goldsmith BBO #199702 29 Forest Avenue West Newton, MA 02165 (617) 527-2640
March 24, 1992
CERTIFICATE OF SERVICE
I, Arthur H. Goldsmith, Attorney for Complainant V & M Management Co., Inc., hereby certify that I have served, this 24th day of March, 1992, by first class mail, a copy of the within Motion to Amend Complaint, upon Claudine Langlois, Consumer Affairs Division, Department of Public Utilities, 12th Floor, 100 Cambridge Street, Boston, MA 02108; Jeffrey N. Stevens, Senior Counsel, Boston Edison Company, 800 Boylston Street, Boston, MA 02199; and Thomas O'Meil, Legal Department, The Boston Gas Company, One Beacon Street, Boston, MA 02108.
Arthur H. Goldsmith
_______________________________________________
ROBERT F. MUNRO
Certified Public ACCOUNTANT
June 9. 1993
Mr. A. Mourad
V & M Management Inc.
Dear Mr. Mourad,
I have audited the tinancial statenmuLa of V & M Manageniftnt Inc. nnd the Westminster/Willard Place Auartments for the years ending December 31, 1988, 1989, 1990, 1991 and 1992.
In the process of auditing theae finnncial statementR, I have examined the utility bills of the boston F^dison Co. as pertains to tli6 above mentionftd apartments. My examination reveals the following facts as pertains to these bills.
1. A high number of bills were estimated.
2. Interest was charged and compounded on
most bills.
3. Payments made to Boston Edison by V & M Management Inc. in some cases wore not credited to the accounts for up to 30 daya after receipt by Boston Edison. Interest appf-ary to be. charyfcd and compoundf-d on balances even though Boston Edison had the payment. Monthly invoices do not show the date credited.
4. Due to the manner in which Boston Edison applies payments, some payments could not be verified as to whether they had been applied or not applied.
5. Many estimates were tvo or three times higher than actual read usage resulting in interest being charged and compounded on fictitious amounts.
6. in my opinion, the only way LU determine the true current balance owed to Boston Edison, is to go back to 1982 and recalculate the monthly usage and re-apply the payments as of the date received by Boston Edison and only compute interest and sal&& taxes where'allowed and come to an actual balance if in fact there is one.
INDEX
1. Affidavit of Robert F. Munro,
Certified Public Accountant
2. Affidavit of Energy Consultant lan Goodman
3. Resume of Energy Consultant lan Goodman
4. Article, "Landlord cries foul over late fees".
The Boston Herald
5. Article, " Developer sues for late fee
changes", the Boston Herald
6. Opinion, "Utility's charges are unfair". The
South End News
7. Petitioner's Motion to Amend Complaint
8. Boston Edison Company's Motion for the
Appointment of Receiver
9. V & M's Motion to Compel Boston Edison to
Produce Billing Histories
10.Letter of Badger, Dolan. Parker & Cohen to
U.S. District Court for the District of
Massachusetts, seeking hearing on Motion for
Receivership.
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