PUC - HMS Legal

Unfair Trade Practice Claims Involving Utility Billing: PUC has Primary but Not Exclusive Jurisdiction

Kevin McKeon on January 17, 2012

Utility customers who challenge billing practices under the Unfair Trade Practices and Consumer Protection Law (UTPCPL) must bring their challenge first to the Public Utility Commission (PUC), but may pursue their claim in civil court under the UTPCPL if the PUC concludes that the utility violated its tariff, the Commonwealth Court has ruled.

In Pettko v. Pennsylvania American Water Company, ___ A.3d ___ (Pa. Cmwlth. 2012) (No. 1061C.D. 2011 filed January 13, 2012) (Brobson, J.), plaintiffs filed a class action challenging Pennsylvania American Water Company’s distribution system improvement charge (DSIC) and state tax adjustment surcharge (STAS) billing procedures, together with the company’s alleged system of rounding individual charges up rather than down. The trial court sustained the company’s preliminary objection, ruling that the PUC has primary jurisdiction over a utility’s method of calculating tariffed charges, and that, because the remedy in a successful challenge would be refunds which the PUC may order, the PUC had exclusive jurisdiction as well. The Commonwealth Court affirmed the trial court’s decision as to primary jurisdiction, but held further that in the event the PUC were to conclude that the utility violated its tariff in rendering bills, plaintiffs would be able to pursue a UTPCPL claim in the trial court, not to be duplicative of any refunds ordered by the PUC, for additional damages including exemplary and treble damages, as provide for in the UTPCPL.

The plaintiffs in the case alleged that, although the PUC authorized periodic increases in DSIC and STAS charges, to be effective at the beginning of a particular calendar month, the company implemented those increases at the beginning of billing cycles that predated the effective date of the increase, and failed to pro-rate the charges for the billing cycle in which the increase began. In addition, the plaintiffs alleged that the company rounded up every individual charge to the nearest cent, even though “accepted rules of arithmetic would dictate rounding down,” and that, although “individually small, the practice of rounding up to the next cent” when aggregated across individual customer bills and across bills rendered to all customers, “represents a considerable amount of money.”

The court affirmed the trial court’s transfer of the case to the PUC, rather than dismissal of the case without prejudice, because the PUC had primary jurisdiction over the general question of the propriety of the company’s billing practices. In the event the PUC finds that the company violated its tariff, however, the plaintiffs may resume their suit under the UTPCPL in the court of common pleas. As the court reasoned: “[W]hile we agree that the PUC has primary jurisdiction over the general question of whether PAWC’s billing practices comport with the tariff, the refund action does not eliminate Pettko’s right to seek relief under the UTPCPL, because the PUC has no power to award relief, if it is appropriate for that claim.” (Slip up at 20)

A copy of the decision is attached here. pettko v pa american water.pdf

PUC Approves Withdrawal of Laser Northeast Gathering Co.’s Application for Public Utility Status

Thomas Sniscak on November 11, 2011

The Pennsylvania Public Utility Commission (“PUC”) granted Laser Northeast Gathering Co.’s (“Laser”) petition to withdrawal its application to become a public utility.

By a 3-2 vote adopting a motion by PUC Vice Chairman John F. Coleman Jr., the PUC approved Laser’s petition to withdraw its application and denied the request of certain parties to rescind its prior Orders in the case. PUC Commissioner Pamela A. Witmer and Commissioner James H. Cawley dissented not as to granting withdrawal but as to the issue of whether the prior Orders should be rescinded.

On Jan. 19, 2010, Laser filed for a certificate of public convenience to begin to offer gathering and transporting or conveying service by pipeline to the public in several townships in Susquehanna County.

In June 2011, after a series of public input and evidentiary hearings, the PUC issued an Order in which it determined that Laser’s proposed service was a “public utility” service but remanded the proceeding for a determination, among other things, as to whether Laser’s proposed service was “necessary or proper for the service, accommodation, convenience, or safety of the public” under Section 1103(a) of the Public Utility Code, 66 Pa. C.S. § 1103(a). On Aug. 25, 2011, the Commission provided clarification to the June 2011 Order by further defining the parameters of the determination that Laser’s proposed service meets the definition of a “public utility.”

Laser filed to withdraw its application on Sept. 8, 2011 citing to the fact that its business plans had changed and it no longer intends to provide service to the public. The motion and upcoming order based upon the motion are significant because, as the motion recognizes, it tells the industry the rules of the road for being or not being a public utility pipeline. Laser opposed the pipelines who wanted the June and August Orders rescinded for this very reason.

Laser was represented in the matter by Hawke Mckeon & Sniscak’s Tom Sniscak and Bill Lehman.

PA PUC Enters Written Decision In Hms’laser Marcellus Pipeline Application Case

Thomas Sniscak on June 17, 2011

On June 4, 2011, the PUC reduced its majority motion to a written order and has remanded the case to an Administrative Law Judge for a ruling on whether the service and terms of the partial settlement are in the public interest. The Order essentially follows Commissioner Wayne E. Gardner’s Motion, which was joined by Chairman Robert F. Powelson and Vice-Chairman John F. Coleman, Jr. at the May 19, 2011 public meeting. It accepted the position of Laser and other parties, such as the PUC’s Office of Trial Staff, that the service proposed by Laser will be public utility service because it will be open to any member of the public requiring service to the extent of capacity.

Notably, the Order states that “not all gathering and transportation service providers will be considered public utilities and subject to the Commission’s jurisdiction.” Specifically, in resolving public utility status questions, the Commission will consider whether “service is provided to a defined, privileged and limited group when the provider [pipeline] reserves its right to select its customers by contractual arrangement so that on one outside of the group is privileged to demand service.”

The Order also clarifies the law regarding the imposition of voluntary versus involuntary conditions to a certificate of public convenience. In doing so, the majority found that the settlement conditions do not result in an expansion of PUC jurisdiction.

Finally, the Order leaves the door open for light-handed regulation of service and rates akin to present natural gas transportation service under the PUC’s regulations. Under that, a maximum approved tariff rate is filed and approved but the utility and customer more commonly negotiate a tailored contract rate and individualized service terms.

HMS’ Thomas J. Sniscak and William E. Lehman represent Laser in this proceeding.

PUC en banc Hearing: A Resounding Success

Judith Cassel on June 17, 2011

The PA PUC’s recent public hearing to explore the future of the competitive electricity markets in Pennsylvania was no less than a resounding success according to Chairman Robert Powelson of the Commission.

On June 9, 2011, four panels of witnesses provided testimony before all five Commissioners sitting en banc. The witnesses included Former Secretary of the Department of Environmental Protection, John Hanger; Chairman of the Texas Public Utilities Commission, Barry Smitherman; the Chief Executive Officers of all Pennsylvania’s electric distribution companies; and a number of representatives of electric generation suppliers operating in the Commonwealth. As expected, the witnesses representing “consumer” interests testified that the existing market structure and performance are well within acceptable limits. As part of his concluding remarks, however, Chairman Powelson responded to those contentions, stating that “the status quo is not an option.” Also notable was that the CEOs of each of Pennsylvania’s electric distribution companies agreed (some more than others) with Chairman Powelson’s suggestion that the best use of the talents of the EDCs is to be “infrastructure companies,” rather than default suppliers, assuming the opportunity for an orderly transition out of the default service business.

There were a number of other constructive proposals for near term changes that could be made to the electricity markets to make robust competition more likely, short of requiring the electric utilities to exit the merchant function, though most would require legislative change. John Hanger, himself a former PUC commissioner, had a number of excellent suggestions, including requiring new customers to affirmatively choose a supplier out of a list of suppliers that may include default service as an option. This same requirement would apply to customers who move within a service territory or who are disconnected for whatever reason.

Comments have been filed by well over twenty (20) parties not including those that testified, which shows a tremendous amount of interest in the development of competition in Pennsylvania’s electricity markets on a going forward basis. The Commission expects to hold at least one more en banc hearing, possibly two, to thoroughly vet all of the ideas before reaching any final decisions.

PUC Launches Investigation of Pennsylvania’s Retail Electricity Market

Todd Stewart on April 28, 2011

In a 4 to 1 vote, the Pennsylvania Public Utility Commission “officially launch[ed] the investigation of the competitiveness of the retail electric market with the goal of making recommendations for improvements to ensure a properly functioning and workably competitive retail electric market.”

On the Joint Motion of Chairman Powelson and Vice Chairman Coleman, the Commission launched a two-phase investigation that will first assess the current status of the retail market and explore what changes need to be made to allow customers to see the benefits of competition. This first phase will include an en banc hearing currently scheduled for June 8, 2011. The second phase of the investigation will be an examination of how best to resolve the issues raised and implement prudent changes. The second phase also will include an en banc hearing to be scheduled later.

As an initial step, the Commission has asked interested parties to address a list of eleven questions by June 3, 2011. The inquiries include:

• The present status of competition by class and service territory for alternative suppliers;

• Whether the present market design in Pennsylvania presents barriers to a fully workable competitive retail market and do those barriers vary by customer class to the extent they exist;

• What economic and managerial costs are associated with fulfilling the default service role by EDCs;

• Whether there are unintended consequences associated with EDCs providing default service; and,

• Whether the parties believe that default service should continue its present form or be fulfilled by another entity.

These and the other questions make it clear that the Commission is considering all issues and options to be “on the table,” including whether the Commission should advocate requiring electric distribution companies to exit the merchant function. Such a move would require legislative action, but it would appear at least that the Commission is prepared to seek legislative authority if there are facts to support such a policy shift. It is likely that the entire process could take at least nine months to a year.

PUC Stalls Met-Ed/Penelec Customer Education Plan

Todd Stewart on April 4, 2011

The Pennsylvania Public Utility Commission unexpectedly voted to delay implementation of the electricity shopping Customer Education Program for Metropolitan Edison Company and Pennsylvania Electric Company. The Commission was addressing an audit of the plans, which cost about $900,000 each, when it suspended implementation pending further comment from participants. The Commission appears to be concerned that, due to lack of electric generation supplier participation in those territories, customer education about competitive alternatives may be premature.

The March 31 Commission vote was prompted by Commissioner Cawley’s motion, which noted that there are only two or three electric generation suppliers serving each of the Met-Ed and Penelec service territories, and questioned whether it is appropriate to “roll-out” retail choice education until the market further matures. The Education Programs at issue were agreed-to as part of the settlement of the Companies’ latest default service cases. The settlement requires Met-Ed and Penelec to notify residential and small commercial customers of participating EGS offers by mail.

The Commission has asked stakeholders to address a number of questions, including:

(1) whether the Customer Education Program should be delayed until a certain number of EGSs have entered the market, and, if so, what the threshold number should be;

(2) whether the Education Program should move forward for either residential or small commercial customers separately or for both at the same time; and

(3) whether there are EGSs that intend to enter these service territories in the near future and whether a delayed and more concentrated campaign might be more effective at a later date.

The Commission suspended the implementation of the Education Program until it has received these answers and has an opportunity to review them.

Pennsylvania Passes 1,000,000 Customer Mark in Competitive Electricity Market

Todd Stewart on April 1, 2011

It’s official – Pennsylvania has passed the 1 million customer mark in electricity shopping. According to the latest weekly update on the Pa. Power Switch website (www.PaPowerSwitch.com), the total number of customers switching to an electric generation supplier as of March 23, 2011, was 1,001,062.

Leading the way with the highest percentage of customers shopping is
tiny Pike County Power & Light, with 73% of its customers shopping. Among the larger companies, PPL is out in front at 37.5%, which equates to 526,000 customers – 449,403 of whom are residential customers. In a not too distant second place among larger companies is Duquesne, with 24.5% of its customers shopping. This equates to 126,000 residential customers. PECO has 16%, or 199,800 residential customers shopping, but given that its customers have been shopping for only a few months, that number is likely to grow substantially. In all, for the majority of the Commonwealth, the numbers are quite impressive and evidence the strong support of the competitive electricity industry by the Pennsylvania Public Utility Commission and Pennsylvania’s electric distribution companies. These figures also are strong evidence for the notion that when it comes to competition in the electric and gas business, if you build a competitive market, the marketers will come.

The same momentum is not present in the natural gas markets, where switching has languished at about 200,000 total customers statewide. The PUC has undertaken a number of regulatory initiatives that should help improve these numbers when the changes finally come on line.

PUC “Opts Out” of Municipal Aggregation

Todd Stewart on March 21, 2011

The PUC has ruled unanimously that opt-out municipal aggregation programs violate the Commission’s regulations regarding the standards for changing a customer’s electricity generation supplier.

Opt-out municipal aggregation would permit a municipality and an electric generation supplier (“EGS”) to agree that the EGS would provide service to all customers within the boundaries of the municipality unless those customers affirmatively choose to not participate. Without looking to whether municipalities are granted the authority to make such agreements or pass the ordinances necessary to implement them, the Commission ruled that EGSs and the electric distribution companies (“EDC”) that actually implement the switch transaction remain subject to Commission oversight and cannot enter into such agreements absent Commission approval.

The Commission has approved opt-out aggregation in the past, but only in the most extreme circumstances and emergency situations; in none of those cases did the Commission adopt a policy or general rule endorsing such arrangements. To the contrary, the Commission has stated that it has a general dislike of such programs and found that its regulations point to an opposite result: “Commission regulations express a strong preference for individual choice in regard to electric generation supply.” Chairman Powelson expressed concern that an EDC would attempt municipal aggregation prior to receiving Commission approval, and had this to say about the future of municipal aggregation in Pennsylvania:

I note that the Commission has historically been generally supportive of the concept . . . however, my views are maturing. At a minimum, I am becoming less convinced that municipal aggregation is a benefit to a well-functioning and fully competitive retail electricity market and increasingly concerned that such programs may actually hinder competition. . . . [W]idespread enactment of municipal aggregation will prevent suppliers from making offers, thereby stifling innovation and competition and deterring the development of a robust retail market.

Chairman Powelson closed his remarks by recommending the legislature table all efforts to implement municipal aggregation while the Commission investigates statewide retail electricity markets.