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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,[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.

Before the Court, on interlocutory appeal, were FirstEnergy’s and West Penn Power’s (collectively “WPP”) preliminary objections (and an amicus curiae brief on behalf of the Commission) asserting that the Commission, not the Court of Common Pleas, has exclusive jurisdiction to hear Sunrise Energy’s contract dispute, or at the very least had primary jurisdiction to rule on whether Sunrise was a “customer-generator” under AEPS. The dispute arose after Sunrise, a solar developer, and WPP agreed to an Electronic Services Agreement (“ESA”) whereby WPP purchased electricity generated by Sunrise at a specified price.

However, shortly after the ESA was signed by the parties in 2014, the Commission proposed an amendment to its regulations that would “require customer-generators to maintain ‘an independent retail load.’”[3]  In short, the Commission attempted to develop regulations setting forth the qualifications to participate in net metering.  Although these proposed amendments have twice been rejected by the Independent Regulatory Review Commission and they have not yet been published, the Commission still appears poised to enact these amendments as evidenced by its filing of an amicus brief in this case.

As a result of the Commission’s proposed amendments, WPP terminated the ESA citing that Sunrise was not a “customer-generator” but was actually an Electric Generation Supplier and therefore would be paid at a rate different than what the parties had agreed upon. In turn, Sunrise initiated the underlying complaint.

WPP presented the Court with two unpersuasive theories as to why the Commission, not the Court of Common Pleas, was the proper venue to resolve Sunrise’s claims: 1) the Commission has “exclusive jurisdiction” to determine the meaning of “customer-generator” under AEPS, or alternatively, 2) the Commission has primary jurisdiction over the statutory issue of the meaning of “customer-generator.”

In responding to WPP’s first theory for Commission jurisdiction, the Court affirmed the trial court’s finding that Sunrise’s claim was a question of statutory construction and such an exercise is a matter for the courts. The Court also discussed, at some length, the law for when agencies or the courts have jurisdiction under legislative acts and concluded that an agency has exclusive jurisdiction over a matter “where the legislature has given it the power to adjudicate on a particular subject matter”[4] and when that remedy is “adequate and complete.”[5]  In the instant case, the Court simply found that there was no “statutory remedy provided in [AEPS] for resolving disputes arising thereunder.”[6] And because agency jurisdiction is determined by a delegation in a given statute, lack of such delegation in AEPS is a bar to the Commission having jurisdiction over the meaning of “customer-generator.”

WPP’s second theory was that the Commission had primary jurisdiction to resolve the question of whether Sunrise qualified as a “customer-generator” and if the Commission determined Sunrise did qualify, then the Court of Common Pleas would retain jurisdiction to resolve the contract and quasi-contract claims.[7] The Commission in its amicus brief also argued that it should be permitted to determine the meaning of “customer-generator” under AEPS because, if the courts are left to construe the statute, “it will lead to different results … and thereby balkanize the electric service industry.”[8]  Both WPP and the Commission pointed to Morrow v. Bell Telephone Company of Pennsylvania[9] in support of their positions. The Court rejected WPP and the Commission’s arguments because in Morrow, unlike the instant case, the subject at issue was a utility’s rates or tariff, to which the legislature expressly conferred jurisdiction to the Commission. And, despite WPP’s argument that its Net Energy Metering Rider is at issue as it is part of the ESA and WPP’s retail electric Tariff No. 39, the court sharply dismissed the argument, noting that tariffs state “what the utility will collect for its service”[10] but the net metering tariff states “what the utility will pay for electricity.”[11]

The Court went on to dismiss the policy arguments espoused by the Commission in support of its position for jurisdiction, stating that such concerns are appropriately addressed to the legislature and not the courts. Essentially, the Court ruled that without a statutory remedy included in AEPS, Commission jurisdiction cannot be found; and, only the legislature is equipped to add such a remedy, which is why the Commission’s concerns should be taken to the General Assembly.

In the dissent joined by Judge Covey, Judge Jubelirer criticized the majority for evaluating AEPS in a “vacuum” instead of in pari materia with the Public Utility Code and other applicable legislative acts. In support of its argument, the dissent pointed to Elkin v. Bell Telephone Company[12] which required “judicial abstention in cases where protection of the integrity of a regulatory scheme dictates preliminary resort to the agency which administers the scheme.”[13] In short, the dissent opined that, because the legislature granted the Commission with “the power to carry out the responsibilities delineated within [the AEPS] Act” and to “monitor the performance of all aspects of the act,” the Commission had at the very least primary jurisdiction over Sunrise’s claim.

Although the Commonwealth Court ruling does not put an end to the Sunrise Energy litigation and likely does not spell the end for the issues addressed in this interlocutory appeal – remanded to the trial court to continue with litigation – as of now, the Commission is left waiting to see what its role will be in administering AEPS in the future.

[1] Slip Op., No. 1282 C.D. 2015 (Oct. 14, 2016)(“Opinion”).

[2] Act of November 30, 2004, P.L. 1672, 73 P.S. §§1648.1 – 1648.8.

[3] Opinion, 4.

[4] Id. at 13.

[5] Id. at 12.

[6] Id. at 16.

[7] Id. at 16–20.

[8] Id. at 16.

[9] 479 A.2d 548 (Pa.Super. 1984). (sustaining preliminary objections and dismissing a civil action where the plaintiff sought damages for being overcharged for utility services because the claim necessarily implicated the utility’s rates, a subject in which jurisdiction was expressly conferred to the Commission).

[10] Opinion, at 19.

[11] Id.

[12] 420 A.2d 371 (Pa. 1980).

[13] Dissent, at 3.

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