Interstate Gas Supply, Inc. v. Pub. Util. Comm'n

298 A.3d 1181

INTERSTATE GAS SUPPLY, INC. d/b/a IGS Energy, NRG Energy, Inc. and Shipley Choice LLC d/b/a Shipley Energy, Petitioners

v.PUBLIC UTILITY COMMISSION, Respondent

No. 472 C.D. 2022

Commonwealth Court of Pennsylvania.

Argued February 8, 2023

Decided April 28, 2023

Publication Ordered July 12, 2023

Todd S. Stewart, Harrisburg, for Petitioners.

Devin T. Ryan, Harrisburg, for Intervenors Metropolitan Edison Company, Pennsylvania Electric Company, Pennsylvania Power Company, and West Penn Power Company.

Tiffany L. Tran, Assistant Counsel, Harrisburg, for Respondent.

BEFORE: HONORABLE RENÉE COHN JUBELIRER, President Judge, HONORABLE PATRICIA A. McCULLOUGH, Judge, HONORABLE ANNE E. COVEY, Judge, HONORABLE MICHAEL H. WOJCIK, Judge, HONORABLE ELLEN CEISLER, Judge, HONORABLE LORI A. DUMAS, Judge, HONORABLE STACY WALLACE, Judge

OPINION BY JUDGE CEISLER

Petitioners Interstate Gas Supply, Inc. d/b/a IGS Energy, NRG Energy, Inc. and Shipley Choice LLC d/b/a Shipley Energy (collectively Petitioners), each of which are electric generation suppliers,¹ petition for review of Respondent Public Utility Commission's (Commission) August 26, 2021 opinion and order (First Order).² Through the First Order, the Commission ruled that certain electric distribution companies’ (electric distribution companies or EDCs)³ policy of providing what is known as "on-bill billing" for their own non-commodity goods and services, while not providing the same for non-commodity goods and services offered by Petitioners, was not unreasonably discriminatory and, thus, did not violate the Public Utility Code, 66 Pa. C.S. §§ 101 - 3316, or the Electricity Generation Customer Choice and Competition Act (Competition Act), 66 Pa. C.S. §§ 2801 - 2815. By doing so, the Commission granted exceptions that had been filed by the EDCs regarding a Commission Administrative Law Judge's (ALJ) initial decision, in which the ALJ had determined that the EDCs handling of on-bill billing was, in fact, unreasonably discriminatory and did therefore violate the Public Utility Code. In addition, Petitioners petition for review of the Commission's April 14, 2022 opinion and order (Second Order), through which the Commission denied Petitioners’ Joint Petition for Reconsideration and/or for Reopening of the Record of the Proceeding. After thorough review, we affirm the Commission, in full, as to both the First Order and the Second Order.

I. Background

As explained by the Commission:

[This] case concerns a billing practice known in the utility industry as "on-bill billing," whereby a company includes non-commodity goods and services on its monthly utility bills to its customers.^[4] In the present case, the EDCs offer their own non-commodity goods and services via "on-bill billing" to their customers. [Petitioners] are free to do the same via their own direct billing of customers. Here, however, [Petitioners] sought to require the EDCs, which are required by statute to provide customer billing for electric service provided by [Petitioners], to also provide the [Petitioners] with the same "on-bill billing" services for non-commodity (other than electric) for [Petitioners’] customers as the EDCs were providing its own customers.

....

On October 25, 2019, [Petitioners] filed a Formal Complaint (Complaint) ... alleging that the EDCs’ conduct of providing a billing service, known in the industry as "on-bill billing," for non-commodity products and services that it provides for the benefit of their own electric distribution customers, while refusing to provide "on-bill billing" for the [electric generation suppliers] serving customers on its systems, violates [certain portions of] the Public Utility Code [and the Competition Act], ... as well as [ Pennsylvania Public Utility Commission v. Columbia Gas of Pennsylvania, Inc. , Docket No. R-2018-2647577, 2020 WL 509874 (filed Jan. 16, 2020) ( Columbia ),] a Commission Opinion and Order in a recent case involving [a] similar issue in the natural gas industry.[ ] For relief, [Petitioners] requested that the Commission sustain the Complaint and require that if the [EDCs] provide billing services for any provider of non-commodity services on its utility bills, that it provide the same service to similarly situated providers of those services on a non-discriminatory basis, or be prohibited from providing such billing service at all. See Complaint at 1-2.

On November 14, 2019, the EDCs filed an Answer and New Matter to the Complaint averring that they offer non-commodity products and services to their customers but have not authorized [electric generation suppliers] to bill for non-commodity products and services on the EDCs[’] monthly electric service bills. In their New Matter, which was accompanied by a Notice to Plead, the EDCs argued that their tariffs prohibit the relief requested in the Complaint. The EDCs further argued that these tariffs were recently approved as part of their default service plans (DSPs) in 2018 and [Petitioners] were served copies of those documents. The EDCs also addressed other issues raised by [Petitioners] in their Complaint and requested that the Complaint be dismissed with prejudice.

On December 4, 2019, [Petitioners] filed a reply to the EDCs’ New Matter. In their answer, [Petitioners] denied the EDCs’ claim to the extent they contended it was not appropriate or otherwise permissible to file a complaint regarding the legality of a service or tariff of a public utility. Additionally, [Petitioners] denied, inter alia , the EDCs’ averment regarding their participation in the EDCs’ DSPs proceedings in 2018 and its impact on the Complaint. [Petitioners] requested that their Complaint be sustained, and their requested relief be granted.

....

In the Initial Decision, issued on November 18, 2020, the ALJ sustained the Complaint finding that the [EDCs] do not provide [Petitioners with] rates, terms of access and conditions that are comparable to the [EDCs’] own use of the system. The ALJ found that the EDCs have, therefore, made an unreasonable preference or advantage, and established or maintained an unreasonable difference as to service[,] in violation of the [Public Utility] Code.

....

Exceptions to the Initial Decision were filed by the EDCs and the [Office of Consumer Advocate (OCA)] on December 8, 2020.[ ] Replies to the Exceptions were filed by [Petitioners] on December 18, 2020.

First Order at 2-5 (footnotes omitted).

On August 26, 2021, the Commission issued its First Order, through which it granted the EDCs’ exceptions and reversed the ALJ's Initial Decision. Id. at 29. In doing so, the Commission concluded that the EDCs’ handling of on-bill billing in this situation comported with the Public Utility Code's relevant requirements and did not violate the Competition Act. Id. at 25-28. Furthermore, the Commission ruled that Columbia was distinguishable, as, unlike in this matter, "[t]he material fact in [that situation] was that Columbia treated other third parties differently than [a number of its] third-party former affiliates[,]" and because the Public Utility Code applies broader competition-related duties upon natural gas utilities like Columbia. Id. at 22-25.⁵

Thereafter, Petitioners sought reconsideration of the Commission's First Order, and the reopening of the record, on the basis that they had recently discovered new evidence that the EDCs did, in fact, provide on-bill billing to HomeServe USA (HomeServe), a third party. This, in Petitioners’ view, made the situation one that was analogous to the scenario present in Columbia , in that third parties were being treated in a disparate manner, with some being provided with on-bill billing for their non-commodity goods and services, while others were not.

The Commission initially granted the reconsideration request in September 2021, in order to review its substance, but ultimately denied it on the merits through its Second Order on April 14, 2022. In doing so, the Commission determined that

the relationship with HomeServe is not one which demonstrates that the EDCs provide "on-bill billing" to non-affiliated third parties. Rather, the EDCs contracted with HomeServe to serve as the program administrator for certain of the EDCs’ own non-commodity products and services. See EDCs Answer at 9-11.

As explained by the EDCs, the EDCs contracted with HomeServe to provide certain of the EDCs’ own non-commodity products and services, such as electrical line and water heater protection plans, which the EDCs noted was thoroughly explained in the EDCs’ DSP V proceeding. See , id . We find that the EDCs do not, as alleged by [Petitioners], allow HomeServe to bill for its own non-commodity products and services on the EDCs’ bills.

Second Order at 17-18 (emphasis in original).

This Petition for Review followed shortly thereafter.

II. Discussion

Petitioners offer several arguments for our consideration, which we summarize as follows.⁶ First, the Commission erroneously interpreted Section 1502 of the Public Utility Code, 66 Pa. C.S. § 1502, as permitting EDCs to provide a service to itself, in this case on-bill billing for non-commodity goods and services, while also refusing to offer that same service to third parties. In addition, the Commission's interpretation of Section 1502 arbitrarily departs from the reasoning it articulated in Columbia regarding unreasonable discrimination in the context of on-bill billing. Petitioners’ Br. at 19-22. Second, the Commission committed an error of law by interpreting Section 2804(6) of the Competition Act, 66 Pa. C.S. § 2804(6), as only barring EDCs from discriminating against electric generation suppliers regarding electrical transmission and distribution-related services and facilities, rather than regarding all types of services and facilities. Id. at 22-24. Finally, the Commission erroneously and arbitrarily denied Petitioners’ Petition for Reconsideration regarding the First Order, by both improperly disregarding the evidence presented by P...