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 (Blue Pilot), an electric generation supplier (EGS),1

has invoked this Court’s appellate jurisdiction, asking that we reverse the 

July 19, 2018 and July 11, 2019 Orders of the Pennsylvania Public Utility 

Commission (PUC). Blue 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 (EDC) 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). They are 

expressly excluded from the definition of “public utility” in the Public Utility Code “except for 

limited purposes as described in sections 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 customers. Blue Pilot also challenges the $1,066,900 civil 

penalty that the PUC imposed as unconstitutionally excessive in violation of the 

Excessive Fines Clauses of the Pennsylvania Constitution and the Eighth 

Amendment to the United States Constitution.2 Upon review, and for 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 Blue Pilot’s challenge to 

the refund remedy fashioned by the PUC and, therefore, reverse that aspect of the 

PUC’s Orders.

I. BACKGROUND3

The PUC licensed Blue Pilot as an EGS in Pennsylvania on June 10, 2011, to 

supply electricity to consumers within the service territories of all EDCs operating 

in Pennsylvania. Blue Pilot began its advertising and marketing efforts directed 

toward Pennsylvania retail customers in 2012. Blue Pilot offered only variable rate 

plans. Generally, these plans included an enticing fixed introductory rate that 

converted to a variable rate at the conclusion of the introductory period, typically 

60 to 90 days. The variable rate could change on a month-to-month basis. 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 punishments 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 unusual 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 includes 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 Pennsylvania 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 determinations to wholesale electric 

prices within the PJM Interconnection LLC (PJM) service area5:

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 Distribution 

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 PJM 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 consumers 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

Consumer Advocate (OCA), alleging that Blue Pilot and other EGSs were

overcharging their customers.

The OAG and the OCA jointly commenced proceedings before the PUC 

against Blue Pilot by filing a Formal Complaint on June 20, 2014.6 The Formal 

Complaint, in five separate counts, contended that (1) Blue Pilot failed to provide 

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 alleged 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 customers.

After the parties developed a record through administrative proceedings 

before the ALJs, the ALJs issued their Initial Decision on July 7, 2016, concluding 

that Blue Pilot failed to comply with several PUC regulations. With respect to the 

first count, the ALJs concluded that Blue Pilot failed to comply with 52 Pa. 

Code §§ 54.5(c)(3)(i)-(ii) (requiring that disclosure statements for variable pricing 

include “[c]onditions of variability” and “[l]imits on price variability”), 54.43(1)

(requiring EGSs to use “plain language and common terms in communications with 

consumers”), 54.43(f) (holding 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 order 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 mishandling 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. The ALJs 

further concluded that Blue Pilot failed to adhere to the dispute resolution procedures 

set forth in the PUC’s regulations, 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 and report to 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 contract and failing to obtain customer signatures

agreeing to enrollment. (R.R. at 161a-62a.)

In terms of remedy, the ALJs, inter alia, assessed a civil penalty against Blue 

Pilot of $2,554,000. The 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 disclosure 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 ALJs directed the TPA 

to use the refund pool “to provide at least 2,516 consumers refunds of all charges 

that 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 

from 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 challenge 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 appeal, 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 amount of the civil penalty.10

9 The Price to Compare, or PTC, is the amount, or 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 error 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 its 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 Superior 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 

resolve private party contract disputes.11

In response, the PUC contends it appropriately adjudicated the charge in the

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 conform 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 ran 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 and able to . . . conform to 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 inappropriately 

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 prices to reflect the agreed upon prices set forth in the disclosure 

statement. 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 contract. 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 terms 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 authority 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 such 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 agreements 
9

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 energy 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 legislature, 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 AEPS 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, inter 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 not challenge the validity of the PUC’s regulations that require EGSs to 

bill in accordance with the terms of their 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 bargained 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 matter of ordinary 

contract interpretation.” Id. Enforcement of those rules falls squarely within 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 

ARIPPA by three decades, 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 objections, arguing that jurisdiction over the adequacy of service 
11

belonged 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 forth 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 involve 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 not 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, formerly 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 contractual 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 the 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 ALJs’ factual findings, concluded that Blue 

Pilot 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 Pilot “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 

because it either could not calculate, due to the deficiencies in Blue Pilot’s disclosure statement, 

what Blue Pilot’s customers should have paid Blue Pilot during the Polar Vortex of 2014 or it 

assumed that all customers would have chosen default service had they not contracted with Blue 

Pilot. 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 prices. In Coalition for Affordable Utility Services and Energy 

Efficiency in Pennsylvania v. Pennsylvania Public Utility Commission, 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 the 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 its 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-board relief to all affected 

customers pursuant to our plenary authority under 

Section 501 of the [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. These circumstances include, 

inter alia, when an EGS has billed customers in violation 

of the [PUC’s] Chapter 54 marketing and billing 

Regulations.

(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 Pilot contends, as it did below, that the PUC lacks legislative 

authority to order Blue Pilot to issue refunds to its customers. Blue Pilot 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 involving 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 refund 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 PUC 
14

lacks the authority to regulate the prices that EGSs charge their customers, it lacks

the authority to direct refunds.

In addition, Blue Pilot 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 Pilot 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 Code that would authorize the PUC 

to order an EGS to pay damages to customers in the form of refunds. Given the 

foregoing, Blue Pilot 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 

judgment, 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 

instituted 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 corporation 

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 such authority 

to the PUC in these circumstances.

Blue Pilot also argues against any claim that the Public Utility Code imbues 

the PUC with the implicit authority to direct refunds to customers. Blue Pilot

counters the PUC’s claim that it has the authority to direct refunds in this matter 

under its “plenary authority” to regulate public utilities and enforce the Public Utility 

Code found in Section 501 of the Public Utility Code.

16 Blue Pilot first contends 

that EGSs do not fall within Section 501 because they 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 this 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 subject 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 terms and conditions thereof.

66 Pa. C.S. § 501.
16

if it was applicable to EGSs, however, Blue Pilot 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 in its Merits Order, Blue Pilot 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 proposition 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 39.) 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 question 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

Notwithstanding 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 customer 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 dispute. 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 

protect 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 for 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 protections 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 Utility] 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 

consistent 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 over 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 objective 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 necessary 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. 1982) (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 statutory 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 recognition that an 

administrative agency is invested with the implied authority necessary to the 

effectuation of its express mandates.”).

For example, in Center Township, we considered the question of whether the 

Office of Open Records (OOR) possessed the statutory authority to conduct in 
20

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 grants to the OOR or 

its appeals officers the authority to conduct in camera review. We agreed. 

We nonetheless concluded that such authority arises by necessary implication, 

because the RTKL expressly authorizes OOR appeals officers to conduct hearings, 

rule on procedural matters, and issue final determinations, even in cases 

involving allegedly privileged documents. Center Twp., 95 A.3d at 368-70; 

Section 1102(a), (b) of the RTKL, 65 P.S. § 67.1102(a), (b). In terms of the 

necessity of in camera review, we 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 Pennsylvania 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 administrative hearing process; 

(3) the availability of the report for public inspection; and 

(4) the potential for newspaper publication of the report. 

We reject the notion that insurance companies will be 

unresponsive to these forces.

Aetna, 638 A.2d at 201 (emphasis added).

There is no dispute that Section 501(a) of the Public Utility Code grants 

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 Code 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. Section 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 electric 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 this matter is any argument that such refund authority is necessary

to carry out the PUC’s statutory duties 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 Chapter 33 of the Public Utility Code and the license suspension and 

revocation authority found in the PUC regulations20 are inadequate to protect the 

public and ensure EGS compliance with the PUC’s regulations. In this case, the 

PUC relied on its express authority 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, nor the OCA explains how the power to levy 

such a civil penalty, alone or in concert 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 consumers 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 person 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 heretofore 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 recovery 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 (emphasis added). This section preserves a private right of action 

to pursue damages in the appropriate 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, nor 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. They 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 authority 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 

Section 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. See 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 customers.

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 Consolidated Statutes to include 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

For all of these reasons, 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 portion of the PUC’s Orders that establish a refund 

pool for Blue Pilot’s customers, 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 excessive 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 penalty 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 contends 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 the 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 not 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 case, 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 

across-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 statement 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, 2000) (Rosi Factors):

(1) Whether the conduct at issue was of a serious 

nature. When conduct of a serious 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 

intentional 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 conduct once it was discovered and the 
27

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 just over $1.8 million against an EGS, 

HIKO, for misconduct similar to that of Blue Pilot.

25

The PUC disputes Blue Pilot’s comparisons to the civil penalties 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 Commission, 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 excessive.
28

no analysis or argument with respect to the particular proceedings involving these 

three EGSs, 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 

Vortex 2014-related complaints led to a litigated—rather than settled—outcome. 

The PUC maintains 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. Finally, 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 violation 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 assessment 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) (emphasis 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 “comply 
29

with the applicable requirements of the [Public Utility Code] and [PUC] regulations 

and orders” could subject them to license suspension and revocation and fines. 

52 Pa. Code § 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 

findings of fact by substantial evidence.” HIKO I, 163 A.3d at 1095. Blue Pilot 

alleges that the civil penalty imposed 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, courts should also consider the magnitude of the fine in comparison 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 

imposed. A conclusory statement that these EGSs engaged in similar activities 
30

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 support 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 develop an issue in 

the argument section of its brief constitutes 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 assessed 

on similarly situated EGSs. Accordingly, we cannot conclude that the civil penalty 

imposed in this case is unconstitutionally excessive under either the Pennsylvania 

Constitution or the United States Constitution. 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 by 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))).

While it does not appear that the PUC factored Blue Pilot’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 

Decision. The ALJs expressly noted an absence of evidence in the record 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 ALJs 

referred to Blue Pilot as a “large” company, “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 Order 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 civil 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 exceptions to the 

ALJs’ Initial Decision, however, and while Blue Pilot filed exceptions directed to 
32

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 appropriate 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.

III. CONCLUSION

For the reasons set forth above, the PUC acted within its jurisdiction in 

adjudicating issues surrounding Blue Pilot’s lack of compliance with 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 creation 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, Judge
IN 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, this 27th day of October, 2020, the July 19, 2018 and 

July 11, 2019 Orders of the Pennsylvania Public Utility Commission are 

AFFIRMED in part and REVERSED in part consistent with the accompanying 

opinion.

P. KEVIN BROBSON, Judge