HMS Legal Blog

RULE 2222: A Good Start in the FERC’s Efforts to Bring Renewables into Wholesale Markets


The purpose of this article is to unpack one of the most recent FERC Orders on alternative energy and discuss the new market opportunities, if any, that it will open to an industry struggling to find a path for broader customer engagement on renewables and demand reduction products.  The Federal Energy Regulatory Commission (“FERC”) latest order has changed the rules for who can participate in the wholesale power markets.  This latest FERC move will allow renewable energy producers as small as homeowners with a roof covered in solar panels or an electric vehicle in the garage, to participate in wholesale markets through aggregation with other smaller scale resources, despite being located on the distribution system. Under prior rules, most of these resources were too small to participate in the wholesale markets.  However, with its Order No. 2222, issued September 18, 2020, FERC changed the opportunities for these smaller users by permitting distributed energy resources (“DER”) to participate as part of an aggregation in wholesale markets operated by Regional Transmission Organizations (“RTO”) and Independent System Operators (“ISO”).  Despite, efforts to alter Order 2222 by Order 2222-A on March 18, 2021, and Order 2222-B on June 17, 2021, Order 2222 remains largely unchanged. 

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Net Metering is Back in Pennsylvania

            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.

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Supplier Consolidated Billing Revisited

     Back in 2018 I wrote an article explaining all the reasons why supplier consolidated billing (“SBC”) was a good idea.[1]  Then, this morning, I saw an article in Energy Choice Matters, and it provided yet another reason why SBC should be the law.[2]  In the ECM story, the recently announced strategic initiatives of FirstEnergy Corp. (“FE”) were discussed, including an initiative to expand its offerings of products and services other than commodity to its captive electric distribution customers.   The FE press release extolled that these are “products and services that customers want” including energy efficient lighting, smart home products, maintenance, warranty, and home services.  These are all products and services that electric generation suppliers (“EGS”) and natural gas suppliers (“NGS”) provide to their customers and similarly wish to bill along with the commodity charges on a single bill.  The discussion makes it clear that FE believes that the billing relationship with customers is a key means of providing value to customers in the form of desirable products and services conveniently billed along with energy while providing incremental income opportunities for the provider of that commodity.  The article reveals another data point and strengthens the argument for SBC on grounds that not allowing it demonstrates discrimination and lack of fairness.

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Crystal Ball .21

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.

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Hawke McKeon & Sniscak LPP is ready and able to assist you in these uncertain times

The global Coronavirus pandemic poses novel challenges to the ability of individuals, professionals, organizations, and businesses to find a path forward during this crisis. At HMS we anticipated Governor Wolf’s call for employees to work remotely and our lawyers have been doing so since March 16 and will continue to do so under the Governor’s most recent pronouncement. In so doing we remain fully able to bring the wide-ranging resources of our firm to bear on your need for advice and representations.  We have long-standing experience with government and administrative agencies and courts of law, and we can and will continue to put that experience to work for you.

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Revamp of Telemarketer Act Cuts into Robo Calls but Falls Short of Needed Changes


On October 4, 2019, Governor Wolf signed into law Act 73 of 2019, and with it provided some much-needed updates to Pennsylvania’s Telemarketer Registration Act. 73 P.S. 2241, et seq. The changes were more surgical than sweeping and focused on a few key elements.  First, the revisions added a definition of a “business telephone subscriber” and then added business telephone numbers to all of the prohibitions and requirements of the Act.  The short answer here is that whatever requirements once applied only to residential and wireless customers, now also apply to businesses.  The second focus was to add a stand-alone definition of “robocall” and to impose requirements for robocalls.  The changes also include removing the 5-year lifespan of Do Not Call registrations – once you register, you are on the list until you deregister or abandon the line.  Finally, the new law prohibits making telemarketing calls on Legal Holidays.

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Which Pennsylvania utility will be the first to test the waters of alternative Ratemaking?

            After a long, complex path, Pennsylvania has finally arrived as an alternative ratemaking state.  But who will be the first utility to avail itself of the options now available? Both the Wolf administration (“Administration”) and the Public Utility Commission (“Commission”) seem eager to have a test subject, I mean a willing participant, to propose an alternative ratemaking design.  . But there are specific steps a utility must take in order to comply with, and obtain approval from, the Commission.

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Community Solar - Inching Its Way to Pennsylvania

            There have been at least two bills recently introduced in the Pennsylvania General Assembly[1] introducing a new model for expanding the deployment of solar energy production in the Keystone State.  Community Solar is not a technology but rather a business model that allows “community solar organizations” (community-based organizations or for-profit entities), to develop “Community solar facilities” (solar installations no larger than 3 MW under most circumstances) that have “subscribers”  (individuals or businesses who pay a subscription fee to receive a specified percentage of the solar output).  The subscription is transferable and provides a credit on the local electric utility bill for their subscribed portion of the output.  Legislation is required because this arrangement is not contemplated by the current renewables law, the Alternative Energy Portfolio Standards Act (“AEPS Act”), 73 P.S. §§ 1648.1, et seq., or the Electricity Generation Customer Choice and Competition Act (“Choice Act”), 66 Pa. C.S. §§ 2801, et seq.,- creating new obligations for both electric distribution companies (“EDC”) and the Public Utility Commission (“PUC”).

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How to Become a Licensed Motor Carrier in Pennsylvania

Looking to become a motor carrier in Pennsylvania? The process is complex because you will need to comply with the regulations of the Pennsylvania Public Utility Commission (“Commission”). Whether you want to transport passengers or property, your business will have to comply with regulations addressing such topics as insurance and vehicle maintenance to name a few.

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The Legal Intelligencer Names Whitney Snyder of Hawke McKeon & Sniscak as a 2019 Lawyer on the Fast Track

 

Harrisburg, PA – April 12, 2019  – We are honored to announce that Whitney Snyder, partner at Hawke, McKeon & Sniscak LLP (HMS), has been named by The Legal Intelligencer as a Lawyer on the Fast Track. The list is part of The Legal Intelligencer’s annual Professional Excellence Awards and highlights “the great work and achievements across the full breadth of the Pennsylvania legal community.”

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Attacking A Mechanic’s Lien – The Basics

The mechanic’s lien (“lien”) is a statutory mechanism that enables contractors, and sometimes subcontractors (“claimants”), who are providing services or supplies to improve a property to place a lien on that property to secure payment for their work. This is a powerful tool common to construction contractors and subcontractors, but likely is a foreign concept to most other people. The basic purpose of the lien is to provide contractors with security for the services or materials they provide – the mechanic’s lien can only be used to secure services or materials actually provided, it is not intended to be a shortcut to sue for a breach of contract or any other civil matter. But, consequences of the lien can be severe, including a sale of the property to pay off the lien. But fear not, the mere filing of a lien does not permit a claimant to sell your property as the lien must be reduced to a judgment which occurs only once a lawsuit is filed and only if the court finds for the claimant.

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Why the Skeptics are Wrong about Supplier Consolidated Billing

            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.

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“Good Deed” or Producer Licensing Violation?

 

Even experienced agents can make mistakes that jeopardize their license

Ben Adams knows what he’s doing as an independent insurance agent.[1] 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.

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Is the PUC Preparing to Address Utility Rates in Light of the Recent Tax Cut?

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. 

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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.

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Kevin McKeon Discusses Medical Marijuana Appeals at PBI Program

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.

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Legislation “Pipeline”

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. 

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DOH Denied My Medical Marijuana Permit Application. Now what?

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). 

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HIKO Energy v. PUC:  Divided Commonwealth Court Upholds $1.8 Million Civil Penalty


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. 

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Christopher Knight of HMS Discusses Insurance Regulatory Issues at PAMIC’s Market Regulation Seminar


FOR IMMEDIATE RELEASE

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