HMS Legal Blog

In Cicero v. Pennsylvania Public Utility Commission,  ___ A.3d ___, (Pa. Cmwlth., No. 910 C.D. 2022, filed July 31, 2023) (“Cicero”), the court reversed the Pennsylvania Public Utility Commission’s (PUC) approval of Aqua Pennsylvania Wastewater Inc.’s acquisition of East Whiteland Township’s wastewater system assets.  The court found Aqua had not proven that the acquisition would provide affirmative public benefits and confirmed that proving net benefits outweigh detriments of a transaction remains the standard for approving fair market value (FMV) acquisitions of municipal assets.  Cicero, slip op. at 21 (“[I]n every Section 1329 case, it must be shown that the affirmative public benefits that arise from and are specific to a transaction outweigh the harms of the transaction, such that approval of the transaction will ‘affirmatively promote the service, accommodation, convenience, or safety of the public in some substantial way.’”).

            The Supreme Court today affirmed the Commonwealth Court’s invalidation of Pennsylvania Public Utility Commission (“PUC” or “Commission”) regulations that had the effect of blocking alternative energy project developments of 5 MW or less that propose to use net metering.  The PUC’s regulation had defined a developer of a net metering project as a “utility”; because the legislature in the PUC-administered Alternative Energy Portfolio Standards Act (“AEPS”), 73 P.S. §§1648.1, et seq. prohibited a “utility” from participating in net metering, the PUC’s regulation made it impossible for an alternative energy project developer from availing itself of net metering, essentially rendering such projects uneconomic. The Independent Regulatory Review Commission (“IRRC”) had voted to disapprove this attempt by the PUC to block developers from using net metering in their projects,[1] but the PUC submitted the regulations for legislative approval anyway, and because the general assembly was not in session, the IRRC process allowed the regulations to become law.

A new year is upon us; and while that may facially seem like a good thing, the continued uncertainty has people anxious.  I feel challenged to consider what issues, concerns, and hot topics are likely to rise the surface in the next twelve months.  With the pandemic still at the top of the news queue most of the time, and with many people still working from home, if they are working at all, picking the possible hot-button issues is no easy task. The trick, if there is one, is to narrow down the range of probable outcomes – in this case, to things that were begun and not finished.  What follows are my predictions for those industries regulated by public utility commissions – and the Pennsylvania Public Utility Commission (“PaPUC”) in particular.

            The Pennsylvania Public Utility Commission opened a docket[1] this year to examine whether it should encourage or require supplier consolidated billing (“SCB”)[2].  SCB is when competitive energy suppliers, rather than the utility, bill the customer for all the services associated with their energy supply, including the utility’s distribution charges – sort of the opposite of how it happens today.  The reason I suggest that SCB is “sort of” the opposite of how things are done at present, is that when utilities bill and collect for suppliers now, they normally do so under a program called “purchase of receivables” or (“POR”) where the utility bills and collects from the customer and pays the supplier – regardless of whether the customer pays the utility.  The supplier pays a fee for this benefit equal to the utility’s bad debt percentage, which is known as the “POR discount”. For example, if a utility can’t collect 4% of what it charges to customers as a group, suppliers only get 96 cents on the dollar for the product they sell, even if the utility collects a larger percentage of charges to the supplier’s customers, which is often the case.  However, under the proposed SCB, the supplier would be required to remit 100% of charges back to the utility and manage the entire risk of uncollectible debts on its own.

            In Sunrise Energy v. FirstEnergy Corp. and West Penn Power Company,[1] the Pennsylvania Commonwealth Court affirmed the lower court’s ruling, in a 5-2 decision, that the Pennsylvania Public Utility Commission does not have primary, let alone exclusive, authority to adjudicate claims arising under the Alternative Energy Portfolio Standards Act[2] (“AEPS”) because the General Assembly failed to delegate such authority to the Commission.

On September 28, 2016, the Pennsylvania Supreme Court (Court) ruled[1] on a Commonwealth Court remand decision[2] of the Robinson Township 2013 Court decision,[3] where the Court held key provisions of Act 13[4] (the statute implementing major changes in Pennsylvania’s oil and gas laws and the ability of local government to regulate this industry) were unconstitutional (HMS Blog).  In the 2016 Robinson Township decision, the Court:  (1) upheld the Commonwealth Court’s holding that provisions related to Public Utility Commission (PUC) review of local ordinances are unseverable from unconstitutional provisions and thus unenforceable, and (2) held four additional provisions of Act 13, including the grant of eminent domain, unconstitutional. 

Last week, the Public Utility Commission (PUC) sustained the $11 million fine it imposed against ride-sharing service Uber, voting 4-1 to deny reconsideration of its May 2016 order imposing this penalty against Uber for its unprecedented number of violations of PUC regulations, including operating without PUC authority via a certificate of public convenience.  

            On August 11, 2016, The PUC acting pursuant to Act 85 of 2016, which requires the PUC to promulgate new regulations in response to changes in the industry, requested public comment on ride sharing companies such as Uber and Lyft.  Uber and Lyft have spurred and created controversy  in both the Public Utility Commission (PUC)  and Commonwealth Courts.  The PUC requested comments include “specific suggestions for any proposal, including suggested regulatory language, with appropriate citations to current regulations that address the particular comment.  Additionally, comments must provide the underlying rationale to support any suggested temporary regulations.”  Comments are due 30 days from publication in the Pennsylvania Bulletin, which is published each Saturday.  The rulemaking is docketed at L-2016-2556432.

When Pennsylvania’s Independent Regulatory Review Commission (“IRRC”) voted unanimously at its June 30, 2016 meeting to disapprove for a second time the Pennsylvania Public Utility Commission’s (“PUC”) recent efforts to modify its regulations implementing the Alternative Energy Portfolio Standards(“AEPS”) Act,[1] it was aware that its action would at most place a speed bump in the PUC’s path, but it disapproved the regulations anyway. 

Almost one year to the day from its 2014 rate increase filing, Columbia Gas of Pennsylvania is back before the Pennsylvania Public Utility Commission seeking an additional $46 million in revenue.

As the PA PUC embarks on its investigation of the natural gas markets, what evidence can we discern about how the agency sees competitive energy markets and how those markets should evolve?