The Pennsylvania Public Utility Commission opened a docket this year to examine whether it should encourage or require supplier consolidated billing (“SCB”). 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.
HMS Legal Blog
Even experienced agents can make mistakes that jeopardize their license
Ben Adams knows what he’s doing as an independent insurance agent. He should. He’s been licensed for nearly 40 years, selling P & C and Life & Annuity products from the “Main St.” family-owned insurance agency his dad founded in a small town in eastern Pennsylvania. Ben and his brother have successfully operated the agency since dad retired years ago. They are well-respected in their community and in the industry. They have a nice, profitable book with good retention and respectable loss ratios. Naturally, Ben never had any licensing violations or trouble with regulators. And in his way of thinking, if a customer is unhappy, he will make it right. That’s the way their dad did business, so going above and beyond in customer service comes naturally to the Adams brothers. This time, though, that’s the thinking that ended up getting Ben in trouble.
Most US taxpayers are by now conscious of the passage of President Trump’s signature tax legislation which dramatically reduces the corporate tax rate from 35% to 21%. What many folks may not know is that the rates they pay to their local utility include recovery for the income tax expense of those utilities. This raises the question that some states, notably Kentucky and Oklahoma, have already begun to address: “How do regulators make sure that utility rates promptly reflect the substantial reduction in tax liability?” In Oklahoma, the Attorney General has called upon the Oklahoma Corporation Commission to address the tax savings issue which he estimates to total $100 million statewide. The Kentucky Public Service Commission already has ordered utilities to track their savings due to the tax change and to timely pass these savings on to customers. Montana and Michigan are taking similar actions.
Transparency Bill Would Shine Light on Tens Of Millions in Fees Paid for Pa Insurance Department’s Outside Consultants
This month, the Pennsylvania legislature is considering measures to shine a bright light on the untold millions of dollars the Pennsylvania Insurance Department (“Department”) is charging Pennsylvania-based insurance companies to pay for the Department’s outside consultants. Under a bill that has passed the House and is awaiting action by the Senate, the Department would be required to disclose how much insurance companies are paying for the Department’s consultants to conduct examinations of the companies. The consultant fees absorbed by the Pennsylvania-based companies are believed to be in excess of tens of millions of dollars each year, but the exact amount remains a mystery because they are paid directly to the consultants and not accounted for in the Insurance Department’s budget or elsewhere. Industry trade groups have been calling for transparency about these exponentially increasing costs, arguing that there is already no cap on them, and without even knowing how much is being charged to the companies for these contracted regulatory functions, there cannot be complete accountability for the costs and efficiencies of the Department’s work. These undisclosed expenses are ultimately passed down to consumers and, to the extent they contribute to a more expensive regulatory system than in other states, may have the effect of making Pennsylvania insurance companies less competitive than their out-of-state neighbors.
On October 18, 2017, Kevin McKeon, partner at Hawke McKeon & Sniscak, LLP and co-founder of Pennsylvania Appellate Advocate, joined the Pennsylvania Bar Institute for its CLE program, “Next Steps for Medical Marijuana in PA: Evolving Issues in a Growing Industry”. Mr. McKeon discussed the status of Pennsylvania’s medical marijuana program and related appeals pending before the Pennsylvania Department of Health, Office of Open Records, and Commonwealth Court.
There are three bills before the Pennsylvania General Assembly that could impact basic services that many Pennsylvanians take for granted. All three involve jurisdiction over pipes that run underground in the Commonwealth. The first two bills before the Pennsylvania General Assembly concern whether the Pennsylvania Public Utility Commission (“PUC”) or the municipalities/authorities will ultimately get to set rates and reasonable service standards for water and sewer service provided by municipalities. The third bill before the General Assembly came into the spotlight on October 10, 2017 when Rep. Barrar filed a resolution, strongly urging the PUC to deny Laurel Pipeline’s Application to reverse the flow of its Philadelphia-to-Pittsburgh pipeline from the current westerly flow to easterly.
At 1 PM today, the Pennsylvania Department of Health plans to announce the recipients of the first twelve permits to grow and process medical marijuana. A live stream of the event is available at http://pacast.com/players/live_doh.asp. Most applicants will be denied permits, because the odds are steep – only about one applicant in fifteen will be successful (except in Southeastern PA where only about one applicant in thirty will be successful).
In HIKO Energy, LLC v. Pennsylvania PUC, No. 5 C.D. 2016, slip op. (June 8, 2017), a divided Commonwealth Court affirmed the Public Utility Commission’s (PUC) civil penalty of approximately $1.84 million against HIKO Energy, LLC (HIKO), an electric generation supplier (EGS) which, during the polar vortex effects of the winter of 2014, intentionally charged 5,700 customers a rate that exceeded their “guaranteed” introductory rate on nearly 15,000 invoices at the express direction of its management and chief executive officer (CEO). The PUC’s policy for evaluating litigated and settled proceedings involving violations of the Public Utility Code (Code), which exposes companies who are unwilling or unable to negotiate a settlement to greater penalties, resulted in a penalty far greater than those imposed on EGSs that settled complaints stemming from the 2014 polar vortex. The Court’s decision endorses both the PUC policy and its result, and underscores the importance of retaining counsel with the experience to negotiate early settlements in complaints alleging serious Code violations.
Thomas Sniscak of Hawke, McKeon & Sniscak LLP Speaks before a Packed Audience about Marcellus Shale at the Keystone Energy Forum
FOR IMMEDIATE RELEASE:
January 12, 2017
Thomas J. Sniscak participated as a speaker at the Keystone Energy Forum on January 12, 2017. He spoke on the many critical issues facing the Marcellus shale industry from both the federal and state levels. In his presentation Attorney Sniscak addressed the eminent domain and public right-of-way issues related to the siting of pipelines within the Marcellus Shale areas of Pennsylvania.
Today the Department of the Interior (Department), announced that it has finalized regulations that it has been working on since 2009, which aim to “protect streams, fish, wildlife, and related environmental values from the adverse impacts of surface coal mining operations and provide mine operators with a regulatory framework to avoid water pollution and the long-term costs associated with water treatment” by overhauling 30-year-old regulations. Highlights include:
The Colonial Pipeline explosion that occurred on Monday, October 31, 2016, was catastrophic, killing one worker and shooting flames 100 feet high. The explosion, which was caused during an effort to fix a line breach also injured four additional workers, and crippled gasoline supplies to the northeast. This explosion on the Colonial Pipeline and the resulting severing of gasoline supply to the northeast caused the Environmental Protection Agency (EPA) to issue a waiver of the federal RFG (reformulated gasoline) requirements as promulgated under the Clean Air Act (CAA).
Commonwealth Court Denies PA PUC Authority to Rule on the Meaning of “Customer-Generator” under AEPS
In Sunrise Energy v. FirstEnergy Corp. and West Penn Power Company, 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 (“AEPS”) because the General Assembly failed to delegate such authority to the Commission.
On September 28, 2016, the Pennsylvania Supreme Court (Court) ruled on a Commonwealth Court remand decision of the Robinson Township 2013 Court decision, where the Court held key provisions of Act 13 (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.
On August 1, 2016, The Pennsylvania Department of Environmental Protection (DEP) released its 2015 Oil and Gas Annual Report (Report). In additional to natural gas production details, the Report provides information on natural gas data trends in Pennsylvania and details on DEP inspections. 2015 was a difficult year for the natural gas industry as it faced record inventory levels, declining prices, and decreases in newly drilled wells. DEP confirms Pennsylvania was not immune to the national downturn in natural gas drilling with only 1,070 newly drilled wells in 2015 – more than a 50% decrease from the 2,163 new wells drilled in 2014.
On June 30, 2016, at its most recent public meeting, the Pennsylvania Public Utility Commission (“Commission”) set a precedent important to Pennsylvania Uber (operating in Pennsylvania under its subsidiary Raiser-PA) and Lyft users alike by granting Yellow Cab Company of Pittsburgh, Inc. (“Yellow Cab”), a temporary extension of one year of operating authority to provide Transportation Network Service (“TNC”) in Pennsylvania. Although Yellow Cab may no longer be a household name like Uber and Lyft, the service that it provides is identical. In fact, Yellow Cab was the first Transportation Network Service (“TNC”) or app-based transportation provider that was granted temporary authority to operate in Pennsylvania. But under the Commission’s regulations, TNC authority is considered “experimental” and therefore is temporary and only valid for two years. Yellow Cab was granted authority to operate beginning in July 2014 and without the Commission’s June 30th Order, it would have been required to cease operating on July 1, 2016.
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, it was aware that its action would at most place a speed bump in the PUC’s path, but it disapproved the regulations anyway.