Hommrich v. Commonwealth
| Decision Date | 28 July 2017 |
| Docket Number | No. 674 M.D. 2016,674 M.D. 2016 |
| Parties | David N. Hommrich, Petitioner v. Commonwealth of Pennsylvania, Pennsylvania Public Utilities Commission, Respondent |
| Court | Pennsylvania Commonwealth Court |
BEFORE: HONORABLE ROBERT SIMPSON, Judge HONORABLE MICHAEL H. WOJCIK, Judge HONORABLE DAN PELLEGRINI, Senior Judge
OPINION NOT REPORTED
Before this Court in our original jurisdiction are the preliminary objections of the Commonwealth of Pennsylvania, Public Utility Commission (PUC) to the "Amended Petition for Review in the Nature of a Complaint for Declaratory and Injunctive Relief" (Amended Petition) filed by David N. Hommrich (Hommrich).1
Hommrich, proceeding pro se, filed the Amended Petition challenging certain PUC regulations pertaining to net metering, adopted on November 19, 2016, as unauthorized under the Alternative Energy Portfolio Standards Act (AEPSAct).2 Hommrich seeks declaratory relief under the Declaratory Judgments Act (DJA).3 Specifically, Hommrich requests a declaration that: (I) the challenged regulatory provisions are unenforceable under the AEPS Act; (II) the regulations cannot be retroactively applied to projects that were eligible or approved for net metering prior to promulgation of the regulations; and (III) Hommrich's proposed solar projects qualify for customer-generator status under the AEPS Act and are eligible for net metering.4
In support, Hommrich alleged the following, in relevant part. Hommrich is a resident of Pennsylvania and President of Sunrise Energy, LLC (Sunrise Energy), a solar power development company located in Pittsburgh, Pennsylvania. Hommrich seeks to develop alternative renewable energy assets, specifically photovoltaic power (solar) facilities, for his own use and for the benefit of himself and his heirs. The planned projects are separate and distinct from any assets owned by Sunrise Energy. Sunrise Energy will not be involved in the construction or operation of the projects. Sunrise Energy does not own a financial interest in the proposed projects. Amended Petition, ¶¶22, 26.
Hommrich intends to build the proposed facilities over the next three years. Hommrich will personally build and operate the planned solar facilities.The timeline for construction is one facility per year between 2017 and 2019 for a total of three new facilities. Each system will have a nameplate capacity of 3,000 kilowatts in size. The solar facilities will be on working sheep farms. Some of the power will be used onsite to offset multiple loads including a barn with lights and electrical outlets, an electric water pump to water the livestock, an electric fence to deter predators, and the electricity required by the renewable energy system to operate. Amended Petition, ¶¶23, 25, 27.
Pre-construction activities for the 2017 project include, but are not limited to the procurement of an option to lease property for the project, solar system design, and configuration of the barn and fencing. The proposed projects are within the service territory of Pennsylvania's electric distribution companies (EDCs). Hommrich does not seek to build his facilities in any service territory where net metering is not available pursuant to the AEPS Act. After 2019, Federal Investment Tax Credits (tax credits) begin to expire and future projects will not be economically feasible for him. Amended Petition, ¶¶23-25, 27.
Hommrich plans to fund his projects through a combination of long-term debt and tax-equity investments. The tax credits only become available after a project is "live" and is producing electricity. If a construction project is not live when projected, it creates serious tax repercussions for the investor. Amended Petition, ¶¶68, 70, 72, 76.
The General Assembly authorized the PUC to develop "technical and net metering interconnection rules" under Section 5 of the AEPS Act, 73 P.S. §1648.5. Thereafter, the PUC promulgated regulations, which are the subject of this litigation. Amended Petition, ¶¶5-7.
Hommrich claims that the PUC exceeded its statutory authority and contravened Sunrise Energy, LLC v. FirstEnergy Corp., 148 A.3d 894 (Pa. Cmwlth. 2016), appeal denied, ___ A.3d ___ (Pa. 2017), in which this Court held that the PUC has only narrow statutory authorization to impose "technical and net metering interconnection rules." According to Hommrich, the PUC does not have authority to decide eligibility for net metering, which is established in the AEPS Act. Under the AEPS Act, the General Assembly authorized "customer-generators"5 to "net meter"6 and defined both terms.
Hommrich asserts that his proposed projects qualify for net metering under the AEPS Act, but could be disapproved under the PUC's regulations. Amended Petition, ¶¶27-28. Specifically, Hommrich challenges Sections 75.1 (),7 75.12 (definition of virtual meteraggregation),8 75.13(a)(1) and 75.13(a)(5),9 75.16,10 and 75.1711 of Title 52 of the Pennsylvania Code. The PUC revised the definition of customer-generator toincorporate the term "retail electric customer" and added a definition for "utility" to make it clear that the definition applies to retail electric customers and not electric utilities, such as EDCs and so-called "merchant generators" that are in the business of providing electric services. The term "merchant generator" does not appear in the AEPS Act or regulations. The PUC does not define the term, but seeks to prevent "merchant generators" from net metering because of concerns regarding alleged ratepayer harm. The PUC created a secondary review for all renewable energy systems that are greater than 500 kilowatts in size. Amended Petition, ¶¶36, 37, 46, 49.
Hommrich alleges that the PUC's imposition of new regulatory definitions and a review process creates uncertainty and insecurity with respect to Hommrich's qualifications under the AEPS Act and jeopardize his ability to secure financing for or otherwise proceed with his proposed solar projects. The regulatory threat to net metering rights prevents investors and lenders from even participating in the due diligence phase, which can take three months to complete, and is an expenditure of significant time and resources on behalf of an investor. If a project does not appear to be viable, the investor will not waste its time or resources. So long as the threat of the PUC enforcement of its new regulations looms, Hommrich cannot obtain funding for his personal projects. Hommrich must secure financing before ordering building materials to construct the facilities. Given the anticipated expiration of the tax credits, the time window for building his projects is both well-defined and closing. The tax credits will be phased out after 2019, which means that Hommrich only has three years to capture the full benefit of them. Once the tax credits diminish, so too will the tax equity investment opportunities. If a given year's project is not completed within that calendar year, Hommrich will be unable to make up for the lost construction opportunity in subsequent years. The threat of a protracted appeal process makes the remedy afforded through the administrative approval process inadequate. Amended Petition, ¶¶62-67, 76-79, 81-89. On these grounds, Hommrich seeks declaratory relief to settle and afford relief from uncertainty and insecurity with respect to his status as a customer-generator and his ability to net meter under the AEPS Act.
In response, the PUC filed preliminary objections. First, the PUC asserts that Hommrich's counts are legally insufficient with respect to hischallenge to the PUC's regulations pursuant to Pa. R.C.P. No. 1028(a)(4) because the regulations have no direct and immediate effect on him. Next, the PUC objects because Hommrich fails to join the EDC as a necessary party pursuant to Pa. R.C.P. No. 1028(a)(5). The PUC also asserts that this Court lacks jurisdiction under Pa. R.C.P. No. 1028(a)(1) because Hommrich failed to exhaust available administrative remedies. In addition, the PUC contends the Amended Petition does not conform to law or rule of court pursuant to Pa. R.C.P. No. 1028(a)(2) because his pleadings are factually and legally insufficient to justify pre-enforcement review of the PUC's regulations. In addition, the PUC objects on the basis that Hommrich lacks capacity to sue the PUC under Pa. R.C.P. No. 1028(a)(5) because he has not established how he has been personally aggrieved by the regulations. Finally, the PUC seeks dismissal on the ground that Hommrich's Amended Petition seeks an impermissible advisory opinion. The PUC directed each objection to all three counts of Hommrich's Amended Petition.12
The PUC and Hommrich filed briefs in support of their positions. In addition, Pennsylvania Independent Oil and Gas Association (Amicus) filed an amicus curiae brief in opposition to the PUC's preliminary objections. This Court has directed expedited consideration of the matter. Commonwealth Court Orders, 2/14/17 and 3/23/17.
PO No. 1 - Rule 1028(a)(4) - Legal Insufficiency of Pleading - Demurrer
First, the PUC contends that Hommrich's Amended Petition is legally insufficient because the challenged regulations have no direct and immediate effect on him. The PUC maintains that Hommrich's challenge is purely speculative. According to the PUC, Hommrich does not allege any facts that demonstrate an actual case or controversy because he does not provide details regarding the location of his alleged projects, identify the EDCs or investors, or allege a direct or indirect consequence of the PUC's regulations.
"In ruling on preliminary objections, the courts must accept as true all well-pled facts that are material and all inferences reasonably deducible from the facts." Pennsylvania Independent Oil & Gas Association v. Department of Environmental Protection, 135 A.3d 1118, 1123 (Pa. Cmwlth. 2015) (PIOGA), affirmed, ___ A.3d ___ (Pa. 2017) (quoting Guarrasi v. Scott, 25 A.3d...
To continue reading
Request your trial