IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Blue Pilot Energy, LLC, : Petitioner :

: v. : No. 1054 C.D. 2019
: Argued: May 13, 2020 Pennsylvania Public Utility : Commission, : Respondent :

BEFORE: HONORABLE MARY HANNAH LEAVITT, President Judge

HONORABLE RENÉE COHN JUBELIRER, Judge HONORABLE P. KEVIN BROBSON, Judge HONORABLE PATRICIA A. McCULLOUGH, Judge HONORABLE ANNE E. COVEY, Judge HONORABLE ELLEN CEISLER, Judge HONORABLE J. ANDREW CROMPTON, Judge

OPINION BY JUDGE BROBSON FILED: October 27, 2020

Blue Pilot Energy, LLC (B lue Pilot ), an e lectric g eneration s upplier (EGS), 1 has invoked this Court’s appellate jurisdiction, aski ng that we reverse the July 19, 2018 and July 11, 2019 Orders of the Pennsylvania Public Utility Commission (PUC)

. B lue Pilot contends that the PUC exceeded its statutory

1 Under the Electricity Generation Customer Choice and Competition Act (Competition Act), 66 Pa. C.S. §§ 2801

- 2815, an EGS may sell electricity directly to customers and use the transmission and distribution facilities of an electric distribution company (E DC) to deliver the electricity to the customer. While EDCs are regulated public utilities, EGSs are generally not considered public utilities. See HIKO Energy, LLC v. Pa. Pub. Util. Comm’n , 163 A.3d 1079, 1082 n.1 (Pa. Cmwlth. 2017) (en banc), aff’d , 209 A.3d 246 (Pa. 2019) ( HIKO I ). The y are expressly excluded from the definition of “public utility” in the Public Utility Code “except for limited purposes as described in section s 2809 (relating to requirements for electric generation suppliers) and 2810 (relating to revenue neutral reconciliation ). ” 66 Pa. C.S. § 102 (definition of “public utility” ).2

authority by engaging in contract interpretation and granting across

- the

- board refund
relief to all Blue Pilot custo mers. Blue Pilot also challenges the $1,066,900 civil penalty that the PUC imposed as unconstitutionally excessive in violation of the
Excessive Fines Clause s of the Pennsylvania Constitution and the Eighth
Amendment to the United States Constitution. 2 Upon review, and f or the reasons set forth below, we conclude that the PUC acted within its jurisdiction in adjudicating the matter before it. We reject Blue Pilot ’s constitutional challenge to the civil penalty in this case. We find merit, however, to B lue Pilot ’s challenge to the refund remedy fashioned by the PUC and , therefore, reverse that aspect of the PUC’s Orders.
I. BACKGROUND 3
The PUC licensed Blue Pilot as an EGS in Pennsylvania on June 10, 2011 , to supply electric ity to consumers within the service territories of all EDCs operating in Pennsylvania. Blue Pilot began its advertising and marketing efforts directed toward Pennsylvania retail c ustomers in 2012

. Blue Pilot offer ed only variable rate plans. Generally, these plans included a n enticing fixed introductory rate that

convert ed to a variable rate at the conclusion of the in troductory period, typically
60 to 90 days. The variable rate could change on a month

- to

- month bas is. Blue
Pilot ceased marketing activity in Pennsylvania in March 2014. The PUC suspended
Blue Pilot ’s license on March 14, 2016.

2 Article I, Section 13 of the Pennsylvania Constitution provides: “ Excessive bail shall not be required, nor excessive fines imposed , nor cruel punishment s inflicted. ” (Emphasis added.) Similarly, the Eighth Amendment, made applicable to the states by the Fourteenth Amendment to the United States Constitution, provides: “ Excessive bail shall not be required, nor excessive fines imposed , nor cruel and unu sual punishments inflicted. ” (Emphasis added.)

3 Unless otherwise noted, relevant factual background is derived from the July 7, 2016 Initial Decision (Initial Decision) of the Administrative Law Judges (ALJs) in this matter. The Initial Decision include s factual findings, none of which Blue Pilot disputes on appeal.3

This matter relates to the sharp increase in the price/cost of electricity that
Blue Pilot and other EGSs charged retail Pen nsylvania customers under variable pricing arrangements during a period of sustained cold weather in early 2014 referred to as the “Polar Vortex of 2014.” 4 Blue Pilot’s disclosure statement to its customers purported to link its variable rate determinati ons to wholesale electric prices within the PJM Interconnection LLC (PJM) service area 5 :

You have a variable rate plan with a starting price set at RATE cents per kWh. This initial rate will be effective for at least the first ninety (90) days of service. Thereafter, your price may vary on a month

- to

- month basis. This price includes Transmission Charges, but excludes applicable state and local Sales Taxes and the Distr ibution Charges from your local EDC. At any time after ninety (90) days of service, but not more frequently than monthly, Blue Pilot may increase or decrease your rate based on several factors, including changes in wholesale energy market prices in the PJ

M Markets. Your variable rate will be based upon PJM wholesale market conditions

. Please log on to www.bluepilotenergy.com or call Customer Service at 877

- 513

- 0246 for additional information and updates. (Reproduced Record (R.R.) at 21a (emphasis added). ) The Polar Vortex of 2014 caused higher

- than

- normal wholesale electricity prices in a large portion of PJM’s service area, including Pennsylvania. As noted above, retail variable rates also sharply increased during this time. The sharp increase in retail prices under variable rate arrangements prompted many consumer s to file complaints with the Pennsylvania Office of Attorney General (OAG) and the Pennsylvania Office of

4 See HIKO I , 163 A.3d at 1083

- 84

. 5 As we noted in HIKO I : “ PJM

. . . is a regional transmission organization that coordinates the movement of wholesale electricity in 13 states (including Pennsylvania) and the District of Columbia. ” Id. at 1083 n.3.4

Cons umer Advocate (OCA), alleging that Blue Pilot and other EGSs w er e overcharging their customers

. T he OAG and the OCA jointly commenced proceedings before the PUC against Blue Pilot by filing a F ormal C omplaint on June 20, 2014. 6 The F ormal
C omplaint, in five separate counts, contended that (1) Blue Pilot failed to pro vide accurate pricing information to its customers, (2) Blue Pilot ’s pricing did not conform to its disclosure statement, (3) Blue Pilot made misleading and deceptive promises of savings to its customers, (4) Blue Pilot lacked good faith in handling customer complaints, and (5) Blue Pilot violated the Telemarketer Registration Act. 7 Generally speaking, the Formal Complaint targeted alleg ed improper conduct by
Blue Pilot in its marketing practices, its handling of consumer complaints, and its
adherence to the terms of its disclosure statement to its c ustomers

. After the parties developed a record through administrative proceedings
before t he ALJs, the ALJs issued their Initial Decision on July 7, 2016, concluding
that Blue Pilot failed to comply with several PUC regulations . With resp ect to the first count, the ALJ s concluded that Blue Pilot failed to comply with 52 Pa.
Code §§ 54.5(c) ( 3 )( i)

- (ii) (re quiring that disclosure statement s for variable pricing include “[c]onditions of variability” and “[l]imits on price variability”), 54.43(1) (requiring EGS s to use “plain language and common terms in communications with

consumers ” ), 54.43(f) (ho lding EGSs responsible for fraudulent, deceptive, and other unlawful marketing practices), and 111.12(d)(2) (prohibiting false or

6 52 Pa. Code § 5.21(a) (“A person complaining of an act done or omitted to be done by a person subject to the jurisdiction of the [PUC], in violation, or claimed violation of a statute which the [PUC] has jurisdiction to administer, or of a regulation or o rder of the [PUC], may file a formal complaint with the [PUC].”).

7 Act of December 4, 1996, P.L. 911, as amended , 73 P.S. §§ 2241

- 2249.5

misleading representations of rates or savings). With respect to the second count of the Formal Complaint, the ALJs concluded that Blue Pilot “charged its customer [ s ] prices that did not conform to its disclosure statement in violation of 52 Pa. Code §§ 54.4(a) and 54.5(a).” 8 ( R.R. at 160a .) The ALJs also concluded that the violations of the foregoing regulations supported the charges set forth in the third count of the Formal Complaint. With respect to the alleged mis handling of consumer complaints during the
Polar Vortex of 2014 , the fourth count of the Formal Complaint, the ALJs
determined that Blue Pilot failed to act with good faith, honesty, and fair dealing, as required by 52 Pa. Code § 56.1(a) and the terms of Blue Pilot ’s license. T he ALJs
further concluded that Blue Pilot failed to adhere to the dispute resolution procedures set forth in the PUC’s regulat ions, made applicable to Blue Pilot under the terms of its license, specifically 52 Pa. Code § § 56. 141( 1 ) ( requiring adherence to dispute resolution procedures in regulation); 56 .151 (requiring, inter alia , investigation of customer complaints a nd report t o customer within 30 days), and 56 .152 (setting forth required contents of report to customer). Finally, on the fifth count, the ALJs
concluded that Blue Pilot violated the Telemarketer Registration Act by failing to provide customers with a written contr act and failin g to obtain customer signatures agreeing to enrollment

. (R.R. at 161 a

- 62a.) In terms of remedy, the ALJs , inter alia , assessed a civil penalty against Blue
Pilot of $2,554,000. T he ALJs further ordered Blue Pilot to deposit $2,508,449 into a “refund pool,” $100,000 of which would be used to compensate a third

- party

8 Section 54.4(a) provides: “EGS prices billed must reflect the marketed prices and the agreed upon prices in the disc losure statement.” 52 Pa. Code § 54.4(a). Conversely, Section 54.5(a) provides: “The agreed upon prices in the disclosure statement must reflect the marketed prices and the billed prices.” Id. § 54.5(a).6

administrator (TPA) chosen by the OAG and the OCA. The ALJ s directed the TPA to use the refund p ool “to provide at least 2,516 consumers refunds of al l charges
tha t were over and above the Price to Compare of their respective [EDCs’] service territories for amounts charged from December 2013 through March 2014.” 9 ( R.R. at 163a .) The ALJs ordered the TPA to use “best efforts to distribute the funds
fr om the refund pool within 180 days” of receipt from Blue Pilot and to provide monthly reports to the OCA, the OAG, Blue Pilot , and designated PUC staff. ( Id. ) Any undistributed funds were to be forwarded to the Pennsylvania Treasury as unclaimed property . The ALJs also permanently revoked Blue Pilot ’s license. The parties filed exceptions to the Initial Decision. In its July 19, 2018 Opinion and Order (Merits Order), the PUC largely overruled the exceptions. Relevantly, the PUC sustained Blue Pilot ’s c hallenge only to the amount of the civil penalty and, instead, assessed a reduced civil penalty of $1,066,900. Blue Pilot filed a Petition for Reconsideration, which the PUC denied in its July 11, 2019 Opinion and Order (Reconsideration Order). In this a ppeal, Blue Pilot does not challenge the PUC’s evaluation of the evidence, its fact finding, or its legal conclusions. Instead,
Blue Pilot purports only to challenge the relief imposed by the PUC, specifically the creation of the “refund pool” and the amo unt of the civil penalty. 10

9 The Price to C ompare, or PTC , is the amount, o r rate, that an EDC charges a retail customer who has not selected an EGS for electric generation supply

— a/k/a default service. See 52 Pa. Code § 54.182.

10 “Appellate review of a PUC order is limited to determining whether a constitutional violation, an e rror of law, or a violation of PUC procedure has occurred and whether necessary findings of fact are supported by substantial evidence.” Popowsky v. Pa. Pub. Util. Comm’n
, 910 A.2d 38, 48 ( Pa. 2006). To the extent any of the statutes or regulations that bear on the issues raised on appeal are ambiguous, we will afford the appropriate level of deference to the PUC’s interpretation. See Crown Castle NG E. LLC v. Pa. Pub. Util. Comm’n , 234 A.3d 665, 674

- 80 (Pa. 2020)

.7 II. DISCUSSION
A. Power/Authority of PUC The first two issues on appeal relate to the power and/or authority of the PUC. First, Blue Pilot contends that the PUC acted beyond it s authority when it determined
that Blue Pilot had failed to adhere to the terms of its disclosure statement. According to Blue Pilot, the PUC essentially determined that Blue Pilot breached its
contracts with its customers. Citing the Pennsylvania Superi or Court decision in Allport Water Authority v. Winburne Water Company , 393 A.2d 673 (Pa. Super. 1978) (en banc) , Blue Pilot contends that the PUC lacks jurisdiction to rule on private party contract disputes. Rather, the courts are the proper avenue to

r esolve private party contract disputes. 11 In response, the PUC contends it a ppropriately adjudicat ed the charge in th e Formal Complaint that Blue Pilot violated PUC regulations in failing to charge its
customers consistent with the terms of its disclosure statement. The PUC points specifically to its resolution of Count II, wherein the PUC, adopting the fact finding and reasoning of the ALJs, concluded that Blue Pilot violated 52 Pa. Code §§ 54.4(a) and 54.5(a), in billing customers prices that failed to c onform with the terms of the disclosure statement. Specifically, although the disclosure statement provided that the variable rate “will be based upon PJM wholesale market conditions,” the PUC found, based on credited testimony, that Blue Pilot’s prices r an counter to the PJM wholesale recorded prices. In the PUC’s assessment, this was a clear violation of the PUC’s regulations governing EGSs. See 66 Pa. C.S. § 2809(b) (providing that applicant for EGS license must be “willing an d able to . . . conform t o the . . . lawful

11 The issue of subject matter jurisdiction is a question of law subject to our plenary review. Mazur v. Trinity Area Sch. Dist.
, 961 A.2d 96, 101 (Pa. 2008).8

orders and regulations of the [PUC] . . . , including the [PUC’s] regulations regarding standards and billing practices”). The OAG and the OCA make similar arguments. In reply, Blue Pilot presses its contention that the PUC inappropriat ely engaged in contract interpretation, noting that the disclosure statement is a contract between an EGS and its customer. Blue Pilot acknowledges the PUC regulations that require EGS pr i ces to reflect the agreed upon prices set forth in the disclosure

s tatement. It contends, however, that the PUC’s authority to enforce those regulations ends where the violation can be discerned without interpreting language in the statement. As an example, Blue Pilot concedes that where a disclosure statement provides a firm rate of 10 cents per kWh, the PUC could determine whether the EGS violated the disclosure statement by simply comparing the quoted price to the charged price. In that case, Blue Pilot posits, the PUC would not be interpreting the language of a cont ract. Here, by contrast, Blue Pilot’s disclosure statement did not disclose a specific variable rate. Accordingly, a “simple comparison” was not possible. The PUC had to consider, instead, expert testimony
to determine whether Blue Pilot violated the te rms of the disclosure statement. This, according to Blue Pilot, crossed the line into contract interpretation and the jurisdictions of the courts. With respect to the PUC’s authority, this Court has acknowledged: “The legislature imbues the [PUC] with au thority in enabling statutes. The statutory grant of power must be clear. If a statute’s text does not provide the [PUC] with specific authority, a strong and necessary implication from such text may, nonetheless , provide s uc h authority.” ARIPPA v. Pa. Pub. Util. Comm’n
, 966 A.2d 1204, 1211 (Pa. Cmwlth. 2009) (en banc) (citations omitted)

. ARIPPA involved a dispute over the ownership of alternative energy credits based on power purchase agreements9

between EGSs and EDCs in effect prior to the passage of the Alternative Energy Portfolio Standards Act (AEPS). 12 Two EDCs filed for declaratory relief from the PUC, asking that the PUC declare that those credits belong to the EDCs. The PUC ultimately ruled in favor of the EDCs and granted the requested declaratory relief.
ARIPPA , a nonprofit entity representing EGSs, appealed to this Court, raising, inter alia , the subject matter jurisdiction of the PUC to determine the ownership question, which ARIPPA viewed as a private contractual dispute. Acknowledging the directive and authority that the General Assembly conveyed to the PUC to establish and implement the alternative energy credit program, we concluded that the AEPS conferred broad power on the PUC “to regulate in the area
of alternative en ergy credits.” ARIPPA , 966 A.2d at 1211. In addition, we noted how “[t]he nature of alternative energy credits is distinct from items normally bargained for in a private contract.” Id. at 1212. We explained:

The credits are a recent creation of the leg islature, and as indicated above, the [PUC] must at least provide the “process for qualifying alternative energy systems and determining the manner credits can be created, accounted for, transferred and retired.” Section 3(e)(2)(i) of AEPS, 73 P.S. § 1648 .3(e)(2)(i). Finally, although alternative energy credits may be bought and sold, their precise nature as a property right has not been developed and settled in the law. Considering the unique nature of alternative energy credits and the provision in AEP S for the [PUC’s] extensive oversight of them, we believe

. . . that resolving this dispute is not a matter of ordinary contract interpretation, but rather a process that implicates the

12 Act of November 30, 2004, P.L. 1672, as amended , 73 P.S. §§ 1648.1

- .8. The AEPS required, in ter alia , “that a certain portion of the electricity that is sold to customers be generated from alternative energy sources.” ARIPPA , 966 A.2d at 1207. To monitor compliance with the mandate, the PUC created an alternative energy credit program, through which credits could be purchased or traded by EDCs and EGSs.10 particular expertise of the [PUC]

. Accordingly, we hold that the [PUC] had jurisdiction over this action.

Id. Applying our holding and rationale in ARIPPA here, we first note that the Competition Act requires all EGSs wishing to do business in the Commonwealth to be licensed by the PUC. 66 Pa. C.S. § 2809 (a) . The Competition Act further requires all licensed EGSs to abide by the PUC’s regulations. Id. § 2809(b). Blue
Pilot does no t challenge the validity of the PUC’s regulations that require EGSs to
bill in accordance with the terms of t heir disclosure statements. 52 Pa. Code §§ 54.4(a) , 54.5(a) . The PUC possesses the statutory authority to enforce its regulations. 66 Pa. C.S. § 502. Like alternative energy credits, then, electric generation service “is distinct from items normally ba rgained for in a private
contract.” ARIPPA , 966 A.2d at 1212. The ability of customers to shop for electric generation service is a result of legislative action, the Competition Act, which created a regulated marketplace under which EGSs may offer their services to consumers provided they follow certain rules. Whether an EGS breaks the rules of that marketplace by violating a regulation of the PUC “is not a mat t er of ordinary contract interpretation.” Id. Enforcement of those rules falls squarely withi n the jurisdiction of the PUC. See HIKO I , 163 A.3d at 1100 (reaching same conclusion). Our sister court’s decision in Allport Water Authority , which predates
ARIP P A by three de cades, is not to the contrary. In that case, a local water authority
and its customers initiated an action in common pleas court for breach of contract, complaining that the water utility from which they purchased their water supply failed to provide “adequate service” to meet customer demands. The utility filed preliminary object ions, arguing that jurisdiction over the adequacy of service11

belong ed in the PUC and not the court of common pleas. The common pleas court overruled the jurisdiction objection. On appeal, the utility argued that the complaint’s challenge, though sounding in contract, was in essence a challenge to the adequacy of the water service the utility provided to the local authority and its customers, a question within the jurisdiction
of the PUC. See Allport Water Auth. , 393 A.2d at 675

- 76. 13 The Superior Court agreed : It is apparent to us that [the utility’s] contractually adopted

obligation to “render reasonably adequate service” merely echoes its legally imposed obligation as set fort h by the Public Utility Law. A basic question still remains: What exactly is reasonably adequate water service under the circumstances? Although [the local authority and its customers] would have us hold otherwise, the instant case does not simply involv e a breach of contract. Rather, [the] complaint raises questions which, as established by a long line of Pennsylvania appellate decisions, should be decided in the first instance by the PUC. Id. at 676. Finding that the dispute belonged in the PUC and no t the common pleas court, the Superior Court reversed.

13 At the time, Section 401 of the Public Utility Law provided, in relevant part: Every public utility shall furnish and maintain adequate, efficient, safe, and reasonable service and facilities, and shall make all such repairs, changes, alterations, substitutions, extensions, and improvements in or to such service and facilities as shall be necessary or proper for the accommodation, convenience, and safety of its patrons . . . and the public. Such service also shall be reasonably continuous and without unreasonable interruptions or delay. Such service and facilities shall be in conformity with the regulations and orders of the commission. Act of May 28, 1937, P.L. 1053, as amended , fo rmerly 66 P.S. § 1171, repealed by the Act of July 1, 1978, P.L. 598. Today, this mandate is found in Section 1501 of the Public Utility Code, 66 Pa. C.S. § 1501.12

As was the case in Allport Water Authority , and for the reasons explained above, this case does not simply involve a breach of contract. While the PUC has no obvious authority to vindicate private con tractual rights in this area, it has unquestionable authority to ensure that Blue Pilot meets its obligation to comply with PUC regulations. That the two may be interrelated does not diminish the PUC’s jurisdiction to enforce its own regulations through t he formal complaint procedures in its regulations. Next, we examine Blue Pilot’s claim that the PUC exceeded its authority by creating a customer refund pool, to be administered by a TPA chosen by the OAG
and the OCA. The PUC, adopting the AL Js’ factual f indings, concluded that Blue
P ilot averaged approximately 2,516 customers during the period December 2013 through March 2014. The PUC further concluded that during this same period of time, Blue P ilot “overbilled” its customers 7,861 times. The PUC further determined that every instance where a customer was billed a rate in excess of the PTC was an event of “overbilling.” 14 Although the PUC calculated the total overpayment amount during the period in question at approximately $2,459,517, it directed that Blue Pilot refund its customers a lesser amount requested by the OAG/OCA,

14 Perhaps the PUC chose the PTC as the base price against which to measure overbilling becau se it either could not calculate, due to the deficiencies in Blue P ilot ’s disclosure statement, what Blue P ilot ’s customers should have paid Blue P ilot during the Polar Vortex of 2014 or it assumed that all customers would have chosen default service had t hey not contracted with Blue P ilot . Either way, there is nothing in the Public Utility Code that requires an EGS to charge its customers a rate less than or equal to the PTC. To the contrary, the PUC has opposed placing such an artificial cap on EGS pric es. In Coalition for Affordable Utility Services and Energy Efficiency in Pennsylvania v. Pennsylvania Public Utility Comm i ssio n , 120 A.3d 1087 (Pa. Cmwlth. 2015) (en banc) ( CAUSE

- Pa. ), an EDC asked the PUC to impose a price ceiling on EGSs as part of the EDC’s Customer Assistance Program (CAP), which would have required any EGS wishing to provide energy to a CAP customer to charge a rate at or below the EDC’s PTC. The PUC rejected th e condition, concluding, inter alia , that such a cap was anti

- competitive and unwarranted. We upheld the PUC’s position on appeal. CAUSE

- Pa. , 120 A.3d at 1106

- 07.13

$2,408,499. It tacked on a $100,000 fee for a TPA, to be chosen by the OAG/OCA, who would administer the refund pool.
As to i ts authority in this regard, the PUC, in its Merits Order, explained the
basis for its refund award :

Upon review, we conclude that we have the authority to order across

- the

- boa rd relief to all affected customers pursuant to our plenary authority under Sec tion 501 of t he [Public Utility] Code, 66 Pa. C.S. § 501. [The PUC] has, on numerous occasions, stated that it may require EGSs to provide refunds to retail customers in appropriate circumstances. The se circumstances include, inter alia , when an EGS has billed customers in violation of the [PUC’s] Ch apter 54 marketing and billing R egulations. ( R.R. at 263a (citation omitted)

. ) The PUC cites prior administrative decisions of the agency in support, but no judicial precedent on the authority question. On appeal, Blue P ilot c ontends , as it did below, that the PUC lacks legislative authority to order Blue P ilot to issue refunds to its customers. Blue P ilot contends that the Public Utility Code contains only one provision that authorizes the PUC to direct a refund. Section 1312 of the Public Utility Code, titled “Refunds,” provides, in relevant part: If, in any proceeding involvin g rates, the [PUC] shall

determine that any rate received by a public utility was unjust or unreasonable, or was in violation of any regulation or order of the [PUC] , or was in excess of the applicable rate contained in an existing and effective tariff of such public utility, the [PUC] shall have the power and authority to make an order requiring the public utility to refund the amount of any excess paid by any patron, in consequence of such unlawful collection . . . . Any order of the [PUC] awarding a ref und shall be made for and on behalf of all patrons subject to the same rate of the public utility. 66 Pa. C.S. § 1312 (a)

. By its express terms, this section only applies to public utilities, such as EDCs, and not EGSs. Blue Pilot further contends that as the PUC14

lacks the authority to regulate the prices that EGSs charge their customers, it lack s the authority to direct refunds. In addition, Blue P ilot directs the Court to Section 3301 of the Public Utility Code, 66 Pa. C.S. § 3301, which expressly provides that the PUC may impose a $1,000 civil penalty payable to the Commonwealth where a regulated entity, such as an EGS, violates the PUC’s regulations. 15 The provision does not authorize other monetary relief

— i.e. , damages or refunds. In addition to imposing a civil penalty,
Blue P ilot notes that the General Assembly authorized the PUC to suspend or revoke an EGS’s license in certain circumstances . 66 Pa. C.S. § 2809(c). But, again, there are no express provisions in the Public Utility C ode that would authorize the PUC to order an EGS to pay damages to customers in the form of refunds. Given the foregoing, Blue P ilot contends that the General Assembly could have amended the

15 Section 3301(a) of the Public Utility Code provides:

If any public utility, or any other person or corporation subject to this part, shall violate any of the provisions of this part, or shall do any matter or thing herein prohibited; or shall fail, omit, neglect, or refuse to perform any duty enjoined upon it by this part; or shall fail, omit , neglect or refuse to obey, observe, and comply with any regulation or final direction, requirement, determination or order made by the [PUC], or any order of the [PUC] prescribing temporary rates in any rate proceeding, or to comply with any final judgme nt, order or decree made by any court, such public utility, person or corporation for such violation, omission, failure, neglect, or refusal, shall forfeit and pay to the Commonwealth a sum not exceeding $1,000, to be recovered by an action of assumpsit in stituted in the name of the Commonwealth. In construing and enforcing the provisions of this section, the violation, omission, failure, neglect, or refusal of any officer, agent, or employee acting for, or employed by, any such public utility, person or c orporation shall, in every case be deemed to be the violation, omission, failure, neglect, or refusal of such public utility, person or corporation. 66 Pa. C.S. § 3301(a).15

Public Utility Code to expand the refund authority given to the PUC to include EGSs or it could have included such authority in the Competition Act itself. The General Assembly, however, did neither , evidencing a lack of intent to grant s uch authority
to the PUC in these circumstances.
Blue P ilot also argues against a ny claim that the Public Utility Code imbues the PUC with the implicit authority to direct refunds to customers. Blue P ilot counters the PUC’s claim that it has the authority to direct refunds in this matter under its “plenary authority” to regulate publi c utilities and enforce the Public Utility
Code found in Section 501 of the Public Utility Code

. 16 Blue P ilot first contends
that EGSs do not fall within Section 501 because the y are not public utilities. Even

16 Section 501 of the Public Utility Code provides:

(a) Enforcement of provisions of part.

-- In addition to any powers expressly enumerated in this part, the [PUC] shall have full power and authority, and it shall be its duty to enforce, execute and carry out, by its regulations, orders, or otherwise, all and singular, the provisions of th is part, and the full intent thereof; and shall have the power to rescind or modify any such regulations or orders. The express enumeration of the powers of the [PUC] in this part shall not exclude any power which the [PUC] would otherwise have under any of the provisions of this part. (b) Administrative authority and regulations.

-- The [PUC] shall have general administrative power and authority to supervise and regulate all public utilities doing business within this Commonwealth. The [PUC] may make such regulations, not inconsistent with law, as may be necessary or proper in the exercise of its powers or for the performance of its duties. (c) Compliance.

-- Every public utility, its officers, agents, and employees, and every other person or corporation su bject to the provisions of this part, affected by or subject to any regulations or orders of the [PUC] or of any court, made, issued, or entered under the provisions of this part, shall observe, obey, and comply with such regulations or orders, and the ter ms and conditions thereof. 66 Pa. C.S. § 501.16

if it was applicable to EGSs, however, Blue P ilot maintains that the PUC would still need to justify, by a strong and necessary implication from the words of the statute, the need for refund authority. Looking to Section 2809(e) of the Competition Act, 66 Pa. C.S. § 2809(e), 17 which the PUC cited i n its Merits Order, Blue P ilot observes that the section provides for the regulation of electric service by EGSs, not rates. Therefore, no refund authority could arise by necessary implication from that provision. In response, the PUC tacitly concedes that there is no express authority in the Public Utility Code generally, or the Competition Act specifically, that authorizes the PUC to order the refund remedy in this case. Moreover, the PUC expressly
concedes that it lacks “the authority to order across

- the

- board relief to all affected customers pursuant to its plenary authority under Section 501 of the [Public Utility] Code.” (PUC Br. at 38.) The PUC, however, relies on prior administrative decisions for the prop osition that it has required, and thus can require, EGSs to provide refunds to retail customers under particular circumstances

— e.g. , “when an EGS has billed
customers in violation of the [PUC’s] Chapter 54 marketing and billing [r] egulations. ” ( Id. at 3 9

. ) Specifically, the PUC relies heavily on its

17 Section 2809(e) of the Competition Act provides:
The [PUC] may forbear from applying requirements of this part which it determines are unnecessary due to competition among electric generation suppliers. In regulating the service of electric generation suppliers, the [PUC] shall impose requirements necessary to ensure that the present quality of service provided by electric utilities does not deteriorate, including assuring that adequate reserve margins of electric supply are maintained and assuring that 52 Pa. Code Ch. 56 (relating to standards and billing practices for residential utility service) are maintained. 66 Pa. C.S. § 2809(e).17

December 18, 2014 Opinion and Order in Commonwealth v. IDT Energy, Inc. , ( Pa. PUC , Docket No. C

- 2014

- 2427657 , filed December 18, 2014) ( IDT Opinion ). The IDT Opinion, inter alia , addresses specifically the que stion of whether the PUC has the authority under Section 1312 of the Public Utility Code to order
EGSs to issue refunds

— a/k/a “billing adjustments ”

— to customers. The PUC definitively concluded that it lacked the authority to order EGSs to provide refunds

to customers under that section because “EGSs are not ‘public utilities’ under the [Public Utility] Code except for . . . limited purposes” not applicable to the matter. IDT Opinion at 16

. The PUC noted, however, that nothing in the Public Utility Code precludes an EGS from agreeing to issue refunds as part of a settlement of a PUC proceeding. The PUC also noted that it had additional express authority to require
a refund where a customer ’s supply has been switched to an EGS without the customer’s complaint

— i.e. , “slamming.” 18
No twithstanding the foregoing, the PUC claimed “plenary authority under
Section 501 . . . to direct an EGS to issue a credit or refund for an over bill.” IDT Opinion at 17. The PUC explained:

Under Section 501 [of the Public Utility Code] and related case law, the [PUC] has broad authority to enforce the

18 52 Pa. Code § 57.177(b) provides: When the customer’s dispute has been filed within the first two billing periods since the customer should reasonably have known of a change of the EGS and the dispute investigation establishes that the change occurred without the customer’s consent, the cu stomer is not responsible for EGS bills rendered during that period. If the customer has made payments during this period, the company responsible for initiating the change of supplier shall issue a complete refund within 30 days of the close of the dispu te. The refund or credit provision applies only to the generation charges. (Emphasis added.)18 provisions of the [Public Utility] Code, including the [Competition Act] , and is vested with broad powers to prote ct the rights of the public. These powers have been interpreted broadly to include both the express powers conferred by the [Public Utility] Code and those implied powers necessarily implicit in the [Public Utility] Code

. Directing a billing adjustment f or an EGS over bill of supply charges is within the [PUC’s] Section 501 powers to carry out the consumer protections in the

. . . Competition Act that are applicable to competitive electricity generation supply service. These consumer protections include the Section 2809(b) requirement that EGSs comply with the [PUC’s] Regulations, including the Chapter 54 billing and disclosure regulations. Having the authority to order EGS credits and/or refunds carries out these statutorily[ ]

prescribed consumer protec tions by ensuring that electric generation supply bills are adjusted accordingly when an EGS, for example, fails to bill a customer in accordance with its disclosure statement, in violation of the [PUC’s] Chapter 54 Regulations and, in turn, [Public Utilit y] Code Section 2809(b). Thus, having the authority to order EGS billing adjustments, including refunds, under the appropriate circumstances, helps ensure that EGSs comply with the [PUC’s] Regulations and bill customers in accordance with their disclosure statement

— a fundamental consumer protection under the

. . . Competition Act. Based on the foregoing, ordering EGS billing adjustments for an over bill of supply charges is fully consisten t with the policy objectives of the

. . . Competition Act as well. Under Section 2802(9) of the [Public Utility] Code , 66 Pa. C.S. § 2802(9), electric service, including electric supply, is to be available to customers on reasonable terms and conditions. The ability to order an EGS to provide a refund to a customer that has been ov er charged in violation of its [d]isclosure [s] tatement that has been required pursuant to the [Public Utility] Code and/or the [PUC’s] Regulations furthers this policy objectiv e by ensuring that customers receive accurate bills and hence, receive service under reasonable terms and conditions.19

Id. at 17

- 18 (emphasis added) (footnotes omitted) (citations omitted). The OAG and
the OCA similarly rely on the IDT Opinion to support the PUC’s claimed authority
to order refunds in this matter. All parties agree that there is no express grant in the Public Utility Code generally and the Competition Act specifically of authority to the PUC to order

across

- the

- board refund relief to all of Blue Pilot’s customers as a remedy for Blue Pilot’s adjudicated violation of the PUC’s regulations relating to EGS disclosure statements. The only way, then, the PUC can exercise this authority is if the authority is grounded in “ a strong and ne cessary implication from ” the statutory text.
ARIPPA , 966 A.2d at 1211. Stated another way, “the power of administrative agencies includes such powers as are implied necessarily .” Dep’t of Envtl. Res. v. Butler Cty. Mushroom Farm , 454 A.2d 1, 6 (Pa. 198 2) (emphasis added). This relaxation of the general rule requiring express legislative delegation grew out of a recognition that legislatures cannot foresee every problem incidental to an agency’s effort to implement a statutory scheme. Office of Open Records v. Center Twp. , 95 A.3d 354, 369 (Pa. Cmwlth. 2014) (en banc) ( Center Twp. ); Sewer Auth. of Scranton v. Pa. Infrastructure Inv. Auth. , 81 A.3d 1031, 1039 (Pa. Cmwlth. 2013). The requisite necessity must derive from the agency’s express statut ory duties and responsibilities and bear directly on the agency’s ability to carry out those duties and responsibilities. See Dep’t of Transp. v. Beam , 788 A.2d 357, 360 (Pa. 2002) (“[T] he rule requiring express legislative delegation is tempered by the r ecognition that an administrative agency is invested with the implied authority necessary to the effectuation of its express mandates. ”)

. For example, in Center T ownship , we considered the question of whether the Office of Open Records (OOR) possessed the statutory authority to conduct in20

camera review to determine whether an asserted privilege attached to disputed documents. The local agency that asserted the privilege argued that there is no provision in the Right

- to

- Know Law (RTKL) 19 that explicitly gra nts to the OOR or
i t s appeals officers the authority to conduct in camera review. We agreed.
We nonetheless concluded that such authority arises by necessary implicati on, because the RTKL expressly authorizes OOR appeals officers to conduct hearings,
rul e on procedural matters, and issue final determinations, even in cases involving allegedly privileged documents. Center Twp. , 95 A.3d at 36 8

- 70;
Section 1102(a), (b) of the RTKL, 65 P.S. § 67.1102(a), (b). In terms of the necessity of in camera review, w e opined:

The propriety of in camera review is well

- accepted and it is oftentimes necessary for a fact

- finder to utilize this tool in order to determine whether a claimed privilege is applicable. And, in some instances, in camera review may be the only way that an appeals officer can assess, in a meaningful fashion, whether an agency has met its burden of proving that a document is privileged by a preponderance of the evidence. Indeed, in this case, the [t] ownship refused to provide even a privilege log when requested to do so by the OOR. Center Twp. , 95 A.3d at 370 (emphasis added) . In short, we held that the authority
to conduct in camera review derived by necessity from the appeals officer’s duty to adjudicate issues of privilege. By contrast , in Aetna Casualty and Surety Company v. Insurance Department , 638 A.2d 194 (Pa. 1994), the Pennsylva nia Insurance Department (Department) claimed broad power, as part of its statutory authority to issue market conduct reports, to order an insurance company to cease and desist from activities that, though not prohibited by Pennsylvania law, the Department determines as part of its

19 Act of February 14, 2008, P.L. 6, 65 P.S. §§ 67.101

- .3104.21

market conduct examination to be adverse to the interests of policyholders. While this Court agreed with the Department’s position on its implicit authority, the Pennsylvania Supreme Court reversed :

The

. . . Department argues that it would be anomalous to construe [the market conduct statute] so that the Insurance Commissioner could not order an insurance company to cease and desist from practices found to be inequitable because the overall purpose of the [statute] is to assure protection of policyholders through the examination process. This argument incorrectly presumes that the examination and reporting process contemplated in [the statute] is inadequate to protect policyholders. The carefully crafted legislative scheme brings four powerful forces to bear on the insurance industry in the conduct of its business affairs: (1) the scrutiny of the Insurance Commissioner; (2) the admi nistrative hearing process; (3) the availability of the report for public inspection; a nd (4) the potential for newspaper publication of the report. We reject the notion that insurance companies will be unresponsive to these fo rces. Aetna , 638 A.2d at 201 (emphasis added). There is no dispute that Section 501 (a) of the Public Utility Code g rants general authority to the PUC “to enforce, execute and carry out, by its regulations, orders, or otherwise, all and singular, the provisions” of the Public Utility Code “and the full intent thereof.” Moreover, Section 501(b) of the Public Utility Cod e vests within the PUC the “general administrative power and authority to supervise and regulate all public utilities doing business within this Commonwealth , ” and for purposes of Sections 2809 and 2810 of the Competition Act, EGSs are public
utilities. S ection 2809(b) of the Competition Act requires EGSs to comply with the PUC’s regulations. Section 2809(e) of the Competition Act commands the PUC “to impose requirements [on EGSs] necessary to ensure that the present quality of service provided by electri c utilities does not deteriorate.” None of these sections,22

however, expressly empower the PUC to order an EGS, which is found to be in violation of PUC regulations, to fund a refund pool for customers as a penalty for
that violation. The PUC, the OAG, and the OCA argue that such authority must be found from the above express statutory provisions. We are unpersuaded. Absent from any
of their briefs in t his matter is any argument that such refund authority is necessary to carry out the PUC’s statutory duti es under the Public Utility Code. Looking at the IDT Opinion, on which the PUC principally relies, we see only the PUC’s view that a refund remedy “ carries out

. . . statutorily[ ] prescribed consumer protections ,” “helps” to ensure compliance with the PUC ’s regulations, and is “consistent with” and “furthers” the policy objectives of the Public Utility Code. IDT Opinion

at 17

- 18. All of this may very well be true, but it does not establish the requisite necessity to relax the general rule that limits an agency’s authority to only that which is expressly conferred by the General Assembly. Critically, in making this argument, the PUC, the OAG, and the OCA offer no reason upon which we could conclude that the violation and penalty provisions
found within Cha pter 33 of the Public Utility Code and the license suspension and revocation authority found in the PUC regulations 20 are inadequate to protect the public and ensure EGS compliance with the PUC’s regulations. In this case, the
PUC reli ed on its express au thority in Section 3301 to assess a civil penalty of over $1 million on account of Blue Pilot’s violation of the PUC’s regulations governing
EGSs. Neither the PUC, the OAG, no r the OCA explains how the power to levy such a civil penalty , alone or in conce rt with the authority to suspend or revoke a license, is inadequate to protect consumers or curb misconduct by EGSs. In addition

20 See 52 Pa. Code § 54.42.23

to the authority to assess a civil penalty and to suspend or revoke an EGS license,
Section 3302 of the Public Utility Code , 66 Pa. C.S. § 3302, imposes criminal penalties on EGSs that “knowingly fail, omit, neglect or refuse to obey, observe, and comply with any regulation” of the PUC. Chapter 33 of the Public Utility Code also speaks directly to the issue of damages to c onsumers in addition to civil penalties assessed by the PUC under
Section 3301: (a) General rule.

-- If any person or corporation shall

do or cause to be done any act, matter, or thing prohibited or declared to be unlawful by this part, or shall refuse, neglect, or omit to do any act, matter, or thing enjoined or required to be done by this part, such per son or corporation shall be liable to the person or corporation injured thereby in the full amount of damages sustained in consequence thereof

. The liability of public utilities, contract carriers by motor vehicles, and brokers for negligence, as heretofo re established by statute or by common law, shall not be held or construed to be altered or repealed by any of the provisions of this part. (b) Rights of Commonwealth unaffected.

-- The recovery in this section authorized shall in no manner affect a recover y by the Commonwealth of the penalty prescribed in section 3301 (relating to civil penalties for violations) for such violations of this part. 66 Pa. C.S. § 3309 ( e mphasis added)

. This section preserves a private right of action to pursue damages in the a ppropriate court of law, perhaps even premised upon a PUC administrative determination that a public utility or EGS acted contrary to PUC regulations

. 21 Again, neither the PUC, the OAG, n or the OCA claims that this express provision, and the related civil remedies available to consumers, whether at

21 See, e.g. , Pettko v. Pa. Am. Water Co. , 39 A.3d 473 (Pa. Cmwlth. 2012) ( holding that while PUC has primary jurisdiction to determine whether public utility violated statutes and regulations and to afford relief authorized by statute, common pleas court also has jurisdiction to grant relief PUC lacks power to award).24

common law or by statute, 22 are inadequate to make consumers whole and discourage misconduct by EGSs, such that we must imply refund authority by necessity. Section 1312 of the Public Utility Code also counsels against implying refund authority in this case. The PUC, the OAG, and the OCA concede, as they must, that
Section 1312 of the Public Utility Code expressly grants the PUC the authority to direct the type of refund relief the PUC imposed in this case, but only with respect to public utilities and their patrons. The y concede that this section does not apply to EGSs. Yet, they ask this Court to imply by necessity the very authority to order that
which the PUC cannot order under the express refund authority conferred by the General Assembly. This is the exact opposite of implying a uthority necessary to carry out the General Assembly’s intent. To do what the PUC, the OAG, and the OCA ask in this case would require us to confer on the PUC authority that the General Assembly withheld

. 23 Doing so would run counter to our duty under
Se ction 1921(a) of the Statutory Construction Act of 1972, 1 Pa. C.S. § 1921(a), to ascertain and give effect to the intent of the General Assembly. In this regard, we are admonished to listen attentively to both what a statute says and what it does not

say

. S ee Kmonk

- Sullivan v. State Farm Mut. Auto

. Ins. Co. , 788 A.2d 955, 962 (Pa. 2001). Here, we would have to be deaf to both in order to affirm the portion of the PUC’s Orders establishing a refund pool for Blue Pilot’s customer s

.

22 See, e.g

. , Unfair Trade Practices and Consumer Protection Law, Act of December 17, 1968, P.L. 1224, as amended , 73 P.S. §§ 201

- 1 to

- 9.3

.

23 The General Assembly enacted the Competition Act in 1996, amending Title 66 of the Pennsylvania Co nsolidated Statutes to inc lude Chapter 28

— the Competition Act. Section 1312 of the Public Utility Code predates the Competition Act by almost two decades. Although the General Assembly chose to amend the definition of “public utility” in Section 102 of the Public Utility Code to account for the passage of the Competition Act, it did not amend Section 1312 of the Public Utility Code.25

F or all of these reason s, we conclude that the PUC acted within its jurisdiction in adjudicating the Formal Complaint’s allegations that Blue Pilot violated applicable PUC regulations governing Blue Pilot’s pricing and disclosure statement. Nonetheless, we will reverse the port ion of the PUC ’s O rders that establish a refund pool for Blue Pilot’s customer s , as the PUC lacks the requisite express authority or necessary implied authority to grant that relief. 24
B

. Amount of Civil Penalty Although the PUC sustained Blue Pilot’s exce ssive fines challenge to the ALJs’ recommended civil penalty, Blue Pilot argues on appeal that the reduced $1,066,900 civil penalty that the PUC imposed in this case is still unconstitutionally excessive. Specifically, Blue Pilot argues that the civil pen alty in this case is grossly disproportionate to the civil penalties paid by other EGSs that engaged in similar pricing misconduct during the Polar Vortex of 2014. Blue Pilot directs us to three
such instances: (1) a $25,000 civil penalty paid by Energy Services Providers, Inc., d/b/a Pennsylvania Gas & Electric (PG&E); (2) a $25,000 civil penalty paid by IDT Energy, Inc. (IDT); and (3) a $125,000 civil penalty paid by Respond Power LLC (Respond Power). Blue Pilot c ontends that the civil penalty violated Blue Pilot’s due process rights, in that it is disproportionate to the offense and unreasonable. Blue Pilot also alleges that the PUC “failed to adequately address” Blue Pilot’s procedural due process challenge to t he alleged failure by the OAG and the OCA to disclose the evidence or rationale for the civil penalty at the hearing, waiting, instead, to propose an amount during post

- hearing briefing.

24 In light of this decision, we do no t address Blue Pilot’s contention that the PUC exceeded its authority by treating the Formal Complaint as a class action lawsuit on behalf of all of Blue Pilot’s customers.26

Blue Pilot also argues that, in assessing the civil penalty in this c ase, the PUC failed to consider Blue Pilot’s ability to pay , noting that Blue Pilot has not been actively involved in the Pennsylvania retail market since 2014 . Finally, Blue Pilot

argues that the civil penalty is linked to the PUC’s decision to afford

ac ross

- the

- board refund relief as a matter of contract damages to all of Blue Pilot’s

customers. The PUC responds that in assessing the appropriate civil penalty in this
matter, it considered the ten factors set forth in its s tatement of policy, 52 Pa.
Code § 69.1201 , and drawn from a prior PUC Order in Rosi v. Bell
Atlantic

- Pennsylvania, Inc. , ( Pa. PUC, Docket No. C

- 00992409 , filed
March 16, 200 0 ) ( Rosi Factors) :

(1) Whether the conduct at issue was of a serious nature. When conduct of a seri ous nature is involved, such
as willful fraud or misrepresentation, the conduct may warrant a higher penalty. When the conduct is less egregious, such as administrative filing or technical errors, it may warrant a lower penalty. ( 2) Whether the resulting consequences of the conduct at issue were of a serious nature. When consequences of a serious nature are involved, such as personal injury or property damage, the consequences may warrant a higher penalty. (3) Whether the conduct at issue was deemed inte ntional or negligent. This factor may only be considered in evaluating litigated cases. When conduct has been deemed intentional, the conduct may result in a higher penalty. (4) Whether the regulated entity made efforts to modify internal practices and procedures to address the conduct at issue and prevent similar conduct in the future. These modifications may include activities such as training and improving company techniques and supervision. The amount of time it took the utility to correct the cond uct once it was discovered and the27 involvement of top

- level management in correcting the conduct may be considered. (5) The number of customers affected and the duration of the violation. (6) The compliance history of the regulated entity which committed the violation. An isolated incident from an otherwise compliant utility may result in a lower penalty, whereas frequent, recurrent violations by a utility may result in a higher penalty. (7) Whether the regulated entity cooperated with the [PUC’s] investigation. Facts establishing bad faith, active concealment of violations, or attempts to interfere with [PUC] investigations may result in a higher penalty. (8) The amount of the civil penalty or fine necessary to deter future violations. The size of the utility may be considered to determine an appropriate penalty amount. (9) Past [PUC] decisions in similar situations. (10) Other relevant factors. In considering prior PUC decisions in similar cases, the ninth Rosi factor, the PUC
determined that Blue Pilot’s situation was most analogous to the HIKO decisions

— where the PUC imposed a civil penalty of ju st over $1.8 million against an EG S , HIKO, for misconduct similar to that of Blue Pilot

. 25 The PUC disputes Blue Pilot’s comparisons to the civil pe nalties imposed on
PG&E , IDT , and Respond Power. The PUC notes, correctly, that Blue Pilot offers

25 The PUC notes that this Court in HIKO I and the Pennsylvania Supreme Court in HIKO Energy, LLC v. Pennsylvania Public Utility Comm issio n , 209 A.3d 246 (Pa. 2019) ( HIKO II ), upheld the amount of the civil penalty against the EGS in that case. While true, neither this Court nor the Pennsylvania Supreme Court addressed the question raised here by Blue Pilot, that being whether the approximately $1.8 million civil penalty was unconstitutionally excessive. Instead, both courts concluded that the EGS had failed to preserve that question for appellate review. HIKO II , 209 A.3d at 263; HIKO I , 163 A.3d at 1094. Thus, while the civil penalty imposed in this case is consistent with the amount imposed on the EGS in the HIKO decisions, those decisions do not resolve the question of whether the amount, in either case, is unconstitutionally excessi ve.28

no analysis o r argument with respect to the particular proceedings involving these
three EGS s , such that the Court can or should consider them more analogous to Blue Pilot’s situation than that of HIKO. The PUC further notes that
, other than a straight comparison of amounts, Blue Pilot does not articulate a reason why it should pay a penalty similar in scale to that paid by PG&E, IDT, and Respond Power. The PUC, by contrast, contends that the circumstances in this case are most analogous to the
HIKO decisions. HIKO and Blue Pilot were the only EGSs against whom Polar
Vo r tex 2014

- related complaints led to a litigated

— rather than settled

— outcome. The PUC main tains that it applied the ten factors consistent with its imposition of the civil penalty against HIKO, taking into account the egregiousness of Blue Pilot’s conduct, and based on the number of overcharges on residential and small business
customers. Fina lly, the PUC emphasizes that the amount of the civil penalty “per
violation”

— $125 per residential customer and $150 per small business customer

— which the PUC measures as every instance of “overbilling,” is significantly lower than the maximum $1,000 per vi olation civil penalty authorized by the statute and below the amount of the civil penalty it imposed on HIKO. In terms of ability to pay, the PUC contends that the size of the company and its ability to pay are factors but not drivers in the PUC’s assessme nt of an appropriate civil penalty, relying on this Court’s decision in HIKO I

. Indeed, the PUC contends
that it was not required to consider Blue Pilot’s ability to pay, as the Rosi Factors only provide that “[t]he size of the utility may be considered to determine an appropriate penalty amount. ” 52 Pa. Code § 69.1201(8) ( e mphasis added)

. The OAG and the OCA offer similar responses. With respect to Blue Pilot’s procedural due process challenge, the OAG and the OCA note that the PUC’s regulations provide advance notice to licensed EGSs that their failure to “comply29

with the applicable requirements of the [Public Utility Code] and [PUC] regulations
and order s ” could subject them to license suspensio n and revocation and fines.
52 Pa. Co de § 54.42(a). The Formal Complaint put Blue Pilot on notice of the claimed violations and specifically requested imposition of civil penalties. Blue Pilot received all due process attendant to the hearing before the ALJs, including the right to call and cross

- examine witnesses. Blue Pilot, however, chose not to offer any witness testimony in defense. This Court will “not reduce a fine imposed by the PUC if the PUC has not violated constitutional rights, committed errors of law or failed to support its
f indings of fact by substantial evidence. ” HIKO I , 163 A.3d at 1095. Blue Pilot alleges that the civil penalty im posed in this case is an unconstitutional excessive
fine. To be unconstitutional, the fine must be grossly disproportionate to the gravity
of the offense. Commonwealth v. Eisenberg , 98 A.3d 1268, 1281 (Pa. 2014). This requires a threshold comparison of the amount of the fine to the gravity of the
offense. Id. For purposes of analyzing proportionality under the United States
Constitution , co urts should also consider the magnitude of the fine in compariso n to the treatment of similarly situated offenders in the same and other jurisdictions.
Id. at 1282 (citing Solem v. Helm , 463 U.S. 277, 292 (1983) )

. Here, Blue Pilot contends that the nearly $1.1 million fine imposed in this case is disproportionate to “the fines paid by other EGSs engaged in similar variable pricing activities during the Polar Vortex of 2014.” (Blue Pilot Br. at 27

. ) Blue Pilot, however, offers no meaningful analysis of the PUC orders imposing the civil penalties on PG&E, IDT, and Respond Power, particularly the nature of the violations in those cases and the circumstances under which the civil penalties were impose d . A conclusory statement that these EGSs engaged in similar activities30

during a similar time period is simply inadequate to carry the day on an excessive fines constitutional challenge. So too is a simple mathematical comparison of the
fine amounts in each case. Moreover, Blue Pilot does not address the threshold proportionality question of whether the fine imposed in this case is proportionate to the gravity of Blue Pilot’s adjudicated offenses

. As the proponent of the constitutional challenge, it was incumbent on Blue Pilot to develop, advance, and supp ort the challenge

. See Pa. R.A.P. 2119 (relating to argument section of appellate brief); In re Condemnation ex rel. Dep’t of Transp.
, 76 A.3d 101, 106 n.8 (Pa. Cmwlth. 2013) (“ A party’s failure to d evelop an issue in
the argument section of its brief co nstitutes waiver of the issue.”). Blue Pilot, however, fails to offer any analysis to support its contention that the civil penalty levied against it in this matter is either (a) grossly disproportionate to the gravity of the offenses it committed or (b) grossly disproportionate to the civil fines as sessed on similarly situated EGSs. Accordingly, we cannot conclude that the civil penalty imposed in this case is unconstit utionally excessive under either the Pennsylvania
Constitution or the United States Co nstitution. Due to the same lack of analysis, we cannot conclude that the civil penalty in this case amounts to an unconstitutional deprivation of property. In terms of Blue Pilot’s procedural due process claim, we agree, based on our
review of the record , that Blue Pilot had adequate notice in advance of the hearing, both by way of the Formal Complaint and the statutes and regulations applicable to EGSs, of the charges against it and the potential consequences of an adverse adjudication of those charges b y the PUC. The Formal Complaint requested , inter
alia , the imposition of a civil penalty

. Blue Pilot had the opportunity to present evidence to the ALJs with respect to both the charges and the requested relief.31

In short, Blue Pilot received notice and had an opportunity to be heard before the ALJs and the PUC, thereby satisfying due process. See Honey Brook Water Co. v. Pa. Pub. Util. Comm’n , 647 A.2d 653, 657 (Pa. Cmwlth. 1994) (“ The basic elements of procedural due process are ‘ notice and opportunity to be heard and to defend in

an orderly proceeding adapted to the nature of the case before a tribunal having jurisdiction of the cause. ’ ” (quoting Wiley v. Woods , 141 A.2d 844, 849

- 850 ( Pa. 1958 ) ) ).
W hile it does not appear that the PUC factored Blue Pil ot’s ability to pay when it imposed the nearly $1.1 million civil penalty in its Merits Order , the ALJs did when they recommended a much higher penalty of $2.55 million in their Initial
De cision

. T he ALJs expressly noted an absence of evidence in the reco rd that Blue Pilot was on the verge of bankruptcy, is otherwise in financial distress, or is ceasing operations in the other states in which it does business. ( R.R. at 142a .) The ALJ s referred to Blue Pilot as a “large” c ompany, “operating in multiple [s ] tates.” ( Id. ) The ALJs concluded, then, that the size of the recommended penalty would serve as a deterrent against Blue Pilot engaging in similar misconduct in the future and that it was not excessive. ( Id. ) Procedurally, the PUC issued its Merits Ord er in response to exceptions to the ALJs’ Initial Decision . The Merits Order and the Reconsideration Order are thus appropriately cabined to Blue Pilot’s and the other parties’ exceptions. Surely, if Blue Pilot lacks the ability to pay a $1.1 million civ il penalty, as it implies by raising
this issue on appeal, it lacks the ability to pay the much higher civil penalty recommended by the ALJs , alone or in combination with the recommended $2.5 million refund pool

. We have reviewed Blue Pilot’s exce ptions to the
ALJs’ Initial Decision , however, and while Blue Pilot filed exceptions directed to32

the amount of the civil penalty, it did not file an exception asserting error by the
ALJs on their application of the eighth Rosi factor, relating to the appro priate amount of a civil penalty in relationship to Blue Pilot’s size/ability to pay. It is, therefore, not surprising that the PUC did not address Blue Pilot’s size or ability to pay in its
Merits Order or Reconsideration Order

. See HIKO I , 163 A.3d at 1093

- 94 (finding waiver where petitioner failed to raise issue in exceptions to ALJ determination).
It certainly was not reversible error.
I II. CONCLUSION For the reasons set forth above, the PUC acted within its jurisdiction in adjudicating issues surrou nding Blue Pilot’s lack of compliance wit h PUC regulations governing EGSs in the Commonwealth, particularly with respect to the question of consistency between pricing and disclosure statements to customers and
the contents of those disclosure statements. Blue Pilot has not persuaded us in this appeal that the nearly $1.1 million civil penalty that the PUC imposed in this matter is unconstitutionally excessive or that the assessment of the penalty violated Blue Pilot’s procedural or substantive due process rights. As Blue Pilot did not timely raise any issue concerning its ability to pay the civil penalty in this case, we do not address that issue on appeal. Finally, the PUC lacks the authority, either expressly or by necessary implication, to order the c reation of a refund pool for all affected
customers of Blue Pilot . We will, accordingly, affirm in part and reverse in part the PUC’s Merits Order and Reconsideration Order.

P. KEVIN BROBSON, JudgeIN THE COMMONWEALTH COURT OF PENNSYLVANIA

Blue Pilot Energy, LLC, : Petitioner :

: v. : No. 1054 C.D. 2019
: Pennsylvania Public Utility : Commission, : Respondent :

O R D E R

AND NOW, thi s 27 th day of October , 20 20 , th e July 19, 2018 and July 11, 2 019 Orders of the Pennsylvania Public Utility Commission are
AFFIRMED in part and REVERSE D in part consistent with the accompanying opinion.

P. KEVIN BROBSON, Judge