Duquesne Light Co. v. Pennsylvania Public Utility Com'n

• Decision Date: 22 July 1998
• Citation: 715 A.2d 540
• Parties: DUQUESNE LIGHT COMPANY, Petitioner, v. PENNSYLVANIA PUBLIC UTILITY COMMISSION, Respondent. TOWNSHIP OF FINDLAY, Petitioner, v. PENNSYLVANIA PUBLIC UTILITY COMMISSION, Respondent. WEST PENN POWER COMPANY, Petitioner, v. PENNSYLVANIA PUBLIC UTILITY COMMISSION, Respondent.
• Court: Pennsylvania Commonwealth Court

Page 540

715 A.2d 540

DUQUESNE LIGHT COMPANY, Petitioner, v. PENNSYLVANIA PUBLIC UTILITY COMMISSION, Respondent.

TOWNSHIP OF FINDLAY, Petitioner, v. PENNSYLVANIA PUBLIC UTILITY COMMISSION, Respondent.

WEST PENN POWER COMPANY, Petitioner, v. PENNSYLVANIA PUBLIC UTILITY COMMISSION, Respondent.

Commonwealth Court of Pennsylvania.

Argued March 12, 1997.

Decided July 22, 1998.

Daniel P. Delaney, Harrisburg, and Larry R. Crayne, Pittsburgh, for petitioner, Duquesne Light Co.

Patricia Krise Burket, Harrisburg, for respondent.

Before COLINS, President Judge, and McGINLEY, PELLEGRINI, FRIEDMAN, KELLEY, FLAHERTY and LEADBETTER, JJ.

LEADBETTER, Judge.

These are consolidated appeals taken from a final order of the Pennsylvania Public Utility Commission. The order dismissed a complaint filed by the Township of Findlay without a formal hearing. By the complaint, the Township sought a means to obtain lower cost electric service in the Township. We remand.

In 1993, the Township of Findlay (Township) filed a formal complaint on its behalf and on behalf of its residents against Duquesne Light Company (Duquesne) and West Penn Power Company (West Penn) with the Pennsylvania Public Utility Commission (Commission). Duquesne provides electric service within the Township; neighboring communities are served by West Penn. By its complaint, the Township sought an order from the Commission directing Duquesne and West Penn to show cause why 1) West Penn should not be required to offer service to the residents of the Township; or 2) Duquesne should not be required to establish tariffs setting reasonable rates to "wheel" ¹ power to end users in the Township; or 3) Duquesne should not be required to offer for sale to the residents of the Township electricity at the same price which Duquesne proposed to sell electricity to certain companies within General Public Utilities (GPU). The Township complained that Duquesne receives a rate for electric service that is more than twice the amount paid by residents of adjoining communities served by West Penn and that Duquesne offers reduced rates to select customers. On December 29, 1993, the Office of Consumer Advocate (OCA) ² filed a notice of intervention. ³ On January 10, 1994, Duquesne and West Penn individually answered the complaint and moved to dismiss. Duquesne asserted several grounds for dismissal, including lack of representational standing, lack of Commission authority to mandate "retail wheeling" ⁴ under the Public Utility Code (Code), 66 Pa.C.S. §§ 101--3316, and public policy. West Penn argued that the Township had no right to demand service from West Penn absent a Commission order altering the existing service territories. After hearing arguments on the motions to dismiss, an administrative law judge (ALJ) certified material questions to the Commission pertaining to whether the Code (as it existed prior to the December, 1996 amendments) conferred upon the Commission authority to mandate retail wheeling.

By order entered August 31, 1994, the Commission recognized that substantial pressure existed in the Commonwealth and nationwide to permit increased competition among electric utilities as a means of lowering rates. The Commission identified the Township's complaint seeking competition in retail sales as the first of its kind before the Commission, with others expected to follow. It was precisely in this context that the Commission initiated its Investigation Into Electric Power Competition (Investigation ) ⁵ on May 10, 1994. The Commission concluded that it was unwise to attempt to resolve retail wheeling issues on a case-by-case basis due to the complex technical, policy and legal issues involved. Accordingly, the Commission "suspended and/or severed" the retail wheeling issues from the complaint pending a final determination in the Investigation. The Commission further directed the development of the record in this proceeding on the remaining issues, namely: whether the Township has standing to bring the complaint on behalf of its residents, or only on its own behalf as an electric customer of Duquesne; whether there should be changes in the certificated service territories of Duquesne and West Penn for the provision of service within the Township by West Penn; and whether Duquesne could provide service at lower rates, similar to the discounts given to certain customers who threaten to leave Duquesne's system. The Commission observed: "[I]t is reasonable, appropriate and in the public interest to direct the presiding ALJ to proceed with the evidentiary hearings to develop a clear, coherent and complete record culminating in the issuance of an Initial Decision." Opinion and Order, August 31, 1994, at 12.

On February 2, 1995, the second prehearing conference was held. At this hearing, the Township clarified that it was not seeking an order that would remove the Township from Duquesne's service territory, rather it was seeking an order that would expand West Penn's service territory such that Duquesne and West Penn would have overlapping certificated service territories within the Township. The Township also withdrew its request concerning rates proposed for GPU companies in favor of receiving the discounts Duquesne gives to certain customers who threaten to leave the system. Following this prehearing conference, the Township submitted a joinder signed by 232 individuals having either an ownership or leasehold interest in the Township and using electricity supplied by Duquesne.

By initial decision issued September 21, 1995, without having held a hearing, the ALJ concluded that the Township had the necessary standing to prosecute the complaint against Duquesne in its own name and on behalf of its citizens, residents and taxpayers. However, the ALJ dismissed the complaint for lack of jurisdiction to order West Penn to extend its service beyond the boundaries of its certificated service territory so as to provide public electric service within the Township. The ALJ noted that West Penn had not made an application to service the new area. Duquesne and the Township filed exceptions to the initial decision. One of the exceptions raised by the Township was that the complaint was dismissed without entry of an order clarifying the status of the "severed and/or suspended" retail wheeling issues raised by the complaint. ⁶

On September 4, 1996, in a split decision, the Commission addressed the complaint in its entirety, including the retail wheeling issues. ⁷ The Commission determined that the interests of administrative efficiency required the Township to be granted representational standing to prosecute the complaint and that the Commission possessed substantial implied authority to reach the merits of the complaint. Nevertheless, the Commission concluded that "substantial public policy considerations ... counsel against using Commission authority which would produce the result of introducing competition in the municipality of Findlay...." Opinion and Order, September 4, 1996, at 18. Thus, the Commission entered an order which states in pertinent part:

IT IS ORDERED;

1. That the Formal Complaint of Findlay Township, be, and is, hereby, DISMISSED,....

2. That the Initial Decision of the presiding ALJ concerning his recommendation with respect to jurisdiction of this Commission to entertain the instant Formal Complaint of Findlay Township is reversed....

3. That the Initial Decision of the presiding ALJ concerning his grant of standing to Findlay Township to prosecute this action in a representative capacity is, hereby, affirmed....

Order, September 4, 1996. The Township, Duquesne and West Penn petitioned this Court to review the Commission's order. Petitioners also filed notices of intervention in each other's appeals. This Court sua sponte ordered consolidation of the three petitions. Various motions challenging each petition for review are pending before this Court. ⁸

Subsequent to entry of the order appealed from, on December 3, 1996, the General Assembly amended the Code by adding the "Electricity Generation Customer Choice and Competition Act" ⁹ (Act), establishing standards and procedures to restructure the electric utility industry in an effort to control the cost of generating electricity in Pennsylvania. The Act provides that electric generation will no longer be a regulated monopoly service in Pennsylvania as of January 1, 2001. 66 Pa.C.S. § 2806(a). Transition to competitive markets will be accomplished through phased implementation scheduled to begin by January 1, 1999. Id. at § 2806(b). At present, the Commission is authorized to approve proposals for Retail Access Pilot Programs. Id. at § 2806(g). Retail Access Pilot Programs are experimental customer choice programs proposed by electric utilities, approved by the Commission, and designed to determine whether all customer classes of an electric utility can benefit from competitive markets. Id.

The Township's complaint was filed pursuant to Section 701 of the Code, which provides in pertinent part:

The commission, or any person, corporation, or municipal corporation having an interest in the subject matter, or any public utility concerned, may complain in writing, setting forth any act or thing done or omitted to be done by any public utility in violation, or claimed violation, of any law which the commission has jurisdiction to administer, or of any regulation or order of the commission.

66 Pa.C.S. § 701.

The basic theory of the Township's complaint is that Duquesne has made management decisions concerning investment in nuclear generating stations which have caused inefficient generation of electricity which, in turn, has resulted in foisting unreasonable rates for electric service upon a captive customer group. Complaint, para. 9--11. In contrast, according to the complaint, West Penn provides "fair and reasonable pricing." Complaint, para. 12. The Township places great emphasis on the rate differential...