South River Power Partners L.P. v. Pennsylvania Public Utility Com'n

• Decision Date: 23 April 1996
• Citation: 673 A.2d 422
• Parties: Util. L. Rep. P 26,509 SOUTH RIVER POWER PARTNERS, L.P., Petitioner, v. PENNSYLVANIA PUBLIC UTILITY COMMISSION, Respondent.
• Court: Pennsylvania Commonwealth Court

Page 422

673 A.2d 422

Util. L. Rep. P 26,509

SOUTH RIVER POWER PARTNERS, L.P., Petitioner, v. PENNSYLVANIA PUBLIC UTILITY COMMISSION, Respondent.

Commonwealth Court of Pennsylvania.

Argued Oct. 13, 1995.

Decided Feb. 28, 1996.

Reargument Denied April 23, 1996.

Clifford B. Levine, for Petitioner.

Kathryn G. Sophy, Assistant Counsel, for Respondent.

Tanya J. McCloskey, Assistant Consumer Advocate, for Intervenor, Office of Consumer Advocate.

Alan P. Buchmann, for Intervenor, West Penn Power Company.

Before DOYLE and FRIEDMAN, JJ., and LORD, Senior Judge.

DOYLE, Judge.

South River Power Partners (South River) petitions for review of an interlocutory order of the Pennsylvania Public Utility Commission (PUC) which requires South River to send, at its own expense, due process notice of its proposed sale of electricity ¹ to the West Penn Power Company (West Penn) to all customers of West Penn. We are also presented with a motion by West Penn to quash portions of South River's petition for review for having failed to initially raise certain issues before the PUC.

South River is the developer of a waste coal and coal-fired facility to be located in Fayette County, Pennsylvania. Under the Federal Public Utility Regulatory Policies Act (PURPA), utilities are required to purchase electricity which is needed to meet the increased demands of its customers from qualifying cogeneration and small power production facilities (QFs), provided that the cost does not exceed the incremental cost to the utility of generating the additional electricity itself or purchasing the electricity from another source. On October 28, 1993, South River filed a complaint with the PUC in which it alleged that it is a QF under PURPA and that West Penn should be required to enter into a long term contract with South River in order to meet its long term need for additional capacity.

West Penn not only denied that it was required to purchase electricity from South River under PURPA, but also alleged that the proposed plan would result in an unreasonable increase in the rates paid by its customers. The matter was then assigned to an administrative law judge (ALJ). On January 14, 1994, South River filed a motion requesting that West Penn provide notice to its customers of the proceeding pursuant to this Court's decision in Barasch v. Pennsylvania Public Utility Commission, 119 Pa.Cmwlth. 81, 546 A.2d 1296 (1988), petition for allowance of appeal denied, 523 Pa. 652, 567 A.2d 655 (1989) [hereinafter Milesburg I ]. In Milesburg I, we held that before the PUC makes an adjudication which could possibly effect a substantial property interest of a utility's customers, such as a rate increase, those customers must be afforded notice and an opportunity to comment on the proposed action. We concluded:

[D]ue process requires that, before the PUC may issue a declaration approving the legality of the terms and conditions of a contract for a utility's purchase of power from a QF that includes payments for capacity, the utility's customers must be provided with notice and an opportunity to be heard to challenge the proposed action.

Id. at 1306.

West Penn did not dispute that notice to its customers of the pending proceeding, required under Milesburg I, must be provided. However, West Penn argued that it should not be required to provide such notice in its regular monthly billing envelopes, since it disagrees with the contents of the notice and believes that its customers will infer that West Penn endorses South River's proposal if the notice is included with its bill. Instead, West Penn contended that South River should send the notice by separate mailing and at its own expense.

South River, though, maintained that the notice is simply a legal notice which is neutral on its face and would merely inform West Penn's customers of the proceeding concerning South River's proposed sale of electricity. Therefore, South River argued, West Penn's contention that its customers would be confused by the notice so as to conclude that it endorses the project is erroneous. South River further noted that West Penn's fixed cost of mailing bills to its customers would not be increased if the notice were included, but that it would cost South River either $204,587.65 (first class mail rate) or $135,273.97 (bulk mail rate) if it were required to mail separate notices. South River argued that this mailing cost would constitute, in essence, an exorbitant and prohibitive filing fee, effectively preventing QFs like itself from exercising their rights under PURPA and thus allowing utilities to defeat proposed projects by simply alleging that they disagree with the contents of the proposed notice.

By an order dated June 12, 1995, the ALJ held that West Penn was required to include the required Milesburg I notice in its billing envelopes. As previously agreed to by South River, South River would pay eight thousand dollars for printing and other miscellaneous costs associated with producing the notice. Therefore, although West Penn was required to mail the notice, it would not incur any costs beyond the normal fixed costs connected with mailing its bills to its customers.

On June 16, 1995, West Penn requested that the PUC review the ALJ's decision. By an order dated July 21, 1995, the PUC reversed the ALJ's decision and ordered that South River absorb the costs of a separate mailing of notice to West Penn's customers. The PUC found that customers could be confused by the notice if it were included as a bill insert and that South River should bear the entire cost of mailing the notice since it initiated the proceeding.

South River appeals the decision of the PUC to our Court. ² At the outset, we must stress that the merits of South River's proposal have not been litigated before the PUC and it would be premature for this Court to express an opinion on the subject absent a fully developed record. The only issues properly before us are the narrow questions of whether portions of South River's petition for review should be quashed, and whether West Penn is required to send notice to its customers of South River's proposal in its billing envelopes.

I. West Penn's Motion to Quash.

West Penn initially argues that South River's petition for review contains issues which were not raised before the PUC and that we should therefore quash these issues as having been waived. ³ Although West Penn is correct that some of these issues were not argued below, we do not believe that quashing South River's petition for review, either in whole or in part, would be appropriate given the procedural circumstances surrounding this case.

Rule 1551(a) of the Pennsylvania Rules of Appellate Procedure provides:

(a) Review of Quasijudicial Orders. Review of quasijudicial orders shall be heard by the court on the record. No question shall be heard or considered by the court which was not raised before the government unit except:

(1) Questions involving the validity of a statute.

(2) Questions involving the jurisdiction of the government unit over the subject matter of the adjudication.

(3) Questions which the court is satisfied that the petitioner could not by the exercise of due diligence have raised before the government unit. If, upon hearing before the court, the court is satisfied that any such additional question within the scope of this paragraph should be so raised it shall remand the record to the government unit for further consideration of the additional question.

West Penn argues that since none of the issues raised by South River involve the validity of a statute or the jurisdiction of the PUC, these issues must be deemed to have been waived unless it is determined that South River was unable to raise them through the "exercise of due diligence" before the PUC.

Although West Penn's recitation of the law is correct, we are unable to agree with its conclusion that South River was fully able to raise these issues below and that these issues were thereby waived. Under Pa.R.A.P. 501, "any party who is aggrieved by an appealable order ... may appeal therefrom." Conversely, it is a well settled principle of law that a party who is not aggrieved by an order has no standing to appeal. See, e.g., Tomczak v. Workmen's Compensation Appeal Board (Pro-Aire Transport), 150 Pa.Cmwlth. 431, 615 A.2d 993 (1992); Mahanoy Area School District v. Budwash, 146 Pa.Cmwlth. 72, 604 A.2d 1156 (1992).

In the present case, the ALJ ruled in favor of South River. South River, therefore, was not an aggrieved party before the PUC and did not have the right, nor the need, to appeal the ALJ's decision. Before the PUC, South River was in the position of an appellee. Given this circumstance, it would be inappropriate to grant West Penn's motion to dismiss or quash portions of South River's petition for review since South River was not in the position to raise all of these issues prior to its appeal to our Court. Therefore, West Penn's motion to dismiss or quash portions of South River's petition for review is denied.

Under Pa.R.A.P. 1551(a)(3), we would ordinarily be required to remand the case in order for the PUC to consider those questions which were not raised below. However, having reviewed the brief submitted by South River, as appellee before the PUC, we are convinced that South River did in fact submit arguments concerning the central issues of whether requiring it to mail legal notice to West Penn's customers at its own expense violated PURPA and this Court's decision in Milesburg I. Therefore, since we find that the PUC has already fully considered the pivotal questions upon which the outcome of this case ultimately rests in making its decision, we can properly reach the merits without first remanding the case to the PUC. ⁴

II. South River's Appeal of the PUC's Order Which Would Require South River to Mail Milesburg I Notice at

Its Own Expense.

We now address the merits of South River's appeal of the...