CAPITOL — The New York State Public Service Commission ruled Wednesday that National Grid must stop its policy of requiring residential customers who have defaulted on bills to pay back the unpaid bills in full or $1,000, whichever is less, before reconnecting electric power.

PSC spokesman James Denn said National Grid’s policy did not take into account financial circumstances of customers who may have had legitimate hardships that prevented them from paying bills in the past, but won’t prevent them from paying in the future.

“We’re saying that having an ‘across the board’ policy on this does not comport or comply with commission policy. Maybe a [customer] has a good reason why they ran into a problem,” Denn said.

The PSC also denied a related petition submitted by the Public Utility Law Project, known as PULP, which argued that National Grid should have provided a deferred payment agreement to any applicant for residential service who has previously breached a minimum deferred payment agreement.

In denying PULP’s petition, the Commission found that its rules and regulations do not require a utility to offer an applicant for residential service a deferred payment agreement if that applicant previously had an account as a utility customer, owes arrears on that account and entered into and defaulted on a previous minimum deferred payment agreement within the last six years.

PULP Executive Director Gerald Norlander said he is glad the PSC ruled against what he called “the one grand demand” policy of National Grid, but said the PSC should have ruled in favor of PULP’s petition. He said the state Home Energy Fair Practices Act mandates that customers who owe money to their former utilities must be offered payment plans options.

“The Legislature has a mandate too and that was that people get a payment plan if they are applying for [electrical service] and they owe money from the past,” Norlander said.

The PSC did not release the language of its ruling on the matter Wednesday but indicated that it would soon be published on its Web site, www.dps.state.ny.us.

Norlander said PULP will carefully assess the ruling before deciding whether to continue to pursue the matter.

National Grid spokesman Patrick Stella said National Grid officials were pleased with the PSC’s decision not to side with PULP, but would not comment about the PSC’s ruling against the company’s existing policy for customers who owe it money.

“The New York PSC’s decision to deny PULP’s petition will help to continue to provide National Grid the flexibility it needs to address the issue of unpaid bills,” Stella stated. “The PSC’s written order has not been issued yet. We await the order to determine the best way to work with the PSC staff to implement a process that allows National Grid to balance the needs of individual customers while protecting the interests of customers who pay their bills.”

Denn said the PSC’s Office of Consumer Services is now conducting discussions with National Grid to establish guidelines for the utility’s practices for handling applications of residential service for persons who previously breached an agreement.