Court Opinion

ID: 4387250
Source: CourtListenerOpinion
Date Created: 2019-04-15 12:02:11.540667+00
Date Added: 2024-06-11T14:23:04.873444
License: Public Domain

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        PMC PROPERTY GROUP, INC., ET AL. v.
          PUBLIC UTILITIES REGULATORY
                AUTHORITY ET AL.
                   (AC 39609)
                       Lavine, Bright and Harper, Js.

                                   Syllabus

The plaintiff companies appealed to this court from the trial court’s judgment
    affirming in part the decision of the defendant Public Utilities Regulatory
    Authority, which found that the plaintiffs had engaged in the unautho-
    rized submetering of electricity and, pursuant to that finding, imposed
    sanctions. The plaintiffs had installed a heating, ventilation, and air
    conditioning system in a multifamily apartment building owned and
    managed by the plaintiff P Co. P Co.’s electric service was measured
    through an electric company meter that supplied electricity to seven
    heating and air conditioning outdoor units and the common areas of
    the building. Two nonutility wattmeters, which were installed after P
    Co.’s electric company meter, measured the electricity used by the
    seven outdoor units and provided an input signal to a heating and air
    conditioning billing program. The plaintiffs billed each tenant for a
    portion of the heating and air conditioning compressors’ electric use
    in proportion to the thermal use of the rental space of each tenant.
    Subsequently, the Office of Consumer Counsel and the state attorney
    general filed a joint petition requesting that the authority investigate
    possible unauthorized submetering at P Co.’s apartment building. The
    statute authorizing the authority to regulate submetering ([Rev. to 2011]
    § 16-19ff, as amended by Public Acts 2011, No. 11-80, § 1) did not provide
    a definition for submetering, and, thus, in determining that the plaintiffs
    had engaged in unauthorized submetering, the authority relied on a
    definition of submetering used in one of its prior decisions. Held:
1. The plaintiffs could not prevail on their claim that because the authority
    previously had not established what constitutes electric submetering
    and, thus, its definition was not time-tested, the trial court erred in
    deferring to the authority’s definition of electric submetering; an agency
    interpretation may warrant deference, even if not time-tested, if it
    involves extremely complex and technical regulatory and policy consid-
    erations, the determination of what constitutes electric submetering is
    a complex and technical regulatory issue that calls for such specialized
    expertise and policy considerations, and because our statutes authorize
    the authority to regulate submetering and the authority’s utility commis-
    sioners also possess the required expertise needed to regulate submeter-
    ing, the trial court properly determined that, due to the technical nature
    of the definition, it was appropriate to defer to the authority’s definition
    of electric submetering.
2. The plaintiffs could not prevail on their claim that the trial court erred
    in concluding that the heating and air conditioning system fell within
    the authority’s definition of submetering, which was based on their
    claim that the definition of submetering in the authority’s previous deci-
    sion was applicable only to submetering in the context of public gas
    utilities and, thus, was not applicable to electric submetering: the author-
    ity reasonably found through its reliance on its previous decision that
    the plaintiffs had engaged in unauthorized submetering, as the definition
    of submetering relied on by the authority did not focus on the form of
    energy that the tenants received but, instead, focused on the type of
    energy billed, and although the plaintiffs claimed that the fundamental
    component of electric submetering is the furnishing of electric service
    by a nonutility such that electric service is the physical delivery through
    wires of electricity to the end user for consumption, combined with
    measuring the electric consumption with an electric submeter, the state
    regulations (§§ 16-11-100 and 16-11-238) cited by the plaintiffs in support
    of their claim do not include a definition of submetering, and the deci-
    sions of the authority cited by the plaintiffs do not condition electric
    submetering by an entity on the furnishing of electric service by such
  entity and, in fact, one of those decisions included a definition of submet-
  ering that was similar to the definition employed by the authority in its
  decision in the present case, namely, the measurement and billing of
  the consumption of a utility’s electric service to an individual end-
  use customer; accordingly, the trial court did not err in affirming the
  authority’s determination that the plaintiffs’ computation of the amount
  of electricity used by each residential unit in using the heating and air
  conditioning system, and the subsequent billing in proportion to each
  rental space’s use, constituted unauthorized submetering of electricity.
         Argued January 15—officially released April 16, 2019

                           Procedural History

   Appeal from the decision of the named defendant
finding that the plaintiffs had engaged in the unautho-
rized submetering of electricity and imposing sanctions,
brought to the Superior Court in the judicial district
of New Britain and tried to the court, Schuman, J.;
judgment sustaining in part the plaintiffs’ appeal, from
which the plaintiffs appealed to this court. Affirmed.
  Michael J. Donnelly, with whom was Paul R. McCary,
for the appellants (plaintiffs).
  Robert L. Marconi, assistant attorney general, with
whom was George Jepsen, former attorney general, for
the appellee (named defendant).
  Joseph A. Rosenthal, for the appellee (defendant
Office of Consumer Counsel).
  Vincent P. Pace, for the appellee (defendant The Con-
necticut Light and Power Company).
  Jeffrey R. Babbin, for the appellee (defendant The
United Illuminating Company).
                         Opinion

   HARPER, J. The plaintiffs, PMC Property Group, Inc.
(PMC), and Energy Management Systems, Inc. (EMS),
appeal from the trial court’s judgment affirming in part
the decision of the defendant Public Utilities Regulatory
Authority (authority),1 which found that the plaintiffs
had engaged in the unauthorized submetering2 of elec-
tricity and, pursuant to that finding, imposed sanctions.
On appeal, the plaintiffs claim that the court erred in
(1) deferring to the authority’s definition of electric
submetering where that definition was not time-tested
with respect to the heating and air conditioning system
at issue in this appeal and (2) affirming the authority’s
determination that the plaintiffs’ use of the heating and
air conditioning system constituted submetering of
electricity. We affirm the judgment of the court.
   The following facts, as found by the authority and
adopted by the trial court, and procedural history are
relevant to our resolution of this appeal. PMC owns
and is the property manager of a multifamily apartment
building located at 38 Crown Street, New Haven. The
apartment building has sixty-five residential apartments
and one commercial unit (rental space). EMS provides
billing services for PMC. In 2011, the plaintiffs reno-
vated the building and installed a heating, ventilation,
and air conditioning (HVAC) system manufactured by
Mitsubishi Electric Cooling & Heating, a division of
Mitsubishi Electric & Electronics USA, Inc. (Mitsubi-
shi).3 The HVAC system is a heat pump system with
heat recovery.
   Sensors and valves are installed in the indoor piping
of each rental space and are used with computer soft-
ware to measure the HVAC thermal use of each space.
Each rental space has a thermostat to control its heating
and cooling level, and is separately served through its
own meter from The United Illuminating Company
(electric company). PMC’s electric service is measured
through one electric company meter that supplies elec-
tricity to seven HVAC outdoor units and the common
areas of the building. Two nonutility wattmeters
installed after PMC’s electric company meter measure
the electricity used by the seven outdoor units and
provide an input signal to an HVAC billing program.
   In March, 2012, PMC, acting through EMS, began
billing each tenant for a portion of the seven HVAC
compressors’ electric use in proportion to the HVAC
thermal use of the rental space of each tenant. On
August 17, 2012, the Office of Consumer Counsel and
the state attorney general filed a joint petition
requesting that the authority investigate possible unau-
thorized submetering at PMC’s apartment building. The
authority conducted a hearing on November 19, 2012,
and rendered a decision on June 5, 2013. In its conclu-
sion, the authority ruled that PMC conducted unautho-
rized submetering at the building. The authority then
entered an order providing that PMC shall immediately
stop submetering electricity, EMS shall cease submet-
ered billing to the tenants at the building, and PMC
shall return all payments collected from each tenant
for submetering electricity.
  The plaintiffs appealed to the Superior Court, claim-
ing that the authority erred in concluding that they had
engaged in unauthorized submetering and challenging
the authority’s order of relief. In its memorandum of
decision issued August 22, 2016, the court applied a
deferential standard of review and concluded that the
authority did not act unreasonably, arbitrarily, illegally
or in abuse of its discretion in concluding that the sys-
tem at issue constituted unauthorized submetering.4
This appeal followed.
                            I
   The plaintiffs’ first claim on appeal is that the trial
court erred in deferring to the authority’s definition of
electric submetering. Specifically, the plaintiffs claim
that because the authority previously had not estab-
lished what constitutes electric submetering, its defini-
tion of such was not time-tested, and, thus, the court
should not have afforded the authority deference. In
response, the defendants claim that an agency’s inter-
pretation may warrant deference, even if not time-
tested, if it involves extremely complex and technical
regulatory and policy considerations. We agree with
the defendants.
   We begin our analysis with the applicable standard of
review. ‘‘[J]udicial review of an administrative agency’s
action is governed by the Uniform Administrative Pro-
cedure Act (UAPA), General Statutes § 4-166 et seq.,
and the scope of that review is limited. . . . When
reviewing the trial court’s decision, we seek to deter-
mine whether it comports with the [UAPA]. . . .
[R]eview of an administrative agency decision requires
a court to determine whether there is substantial evi-
dence in the administrative record to support the
agency’s findings of basic fact and whether the conclu-
sions drawn from those facts are reasonable. . . . Nei-
ther this court nor the trial court may retry the case or
substitute its own judgment for that of the administra-
tive agency on the weight of the evidence or questions
of fact. . . . Conclusions of law reached by the admin-
istrative agency must stand if . . . they resulted from
a correct application of the law to the facts found and
could reasonably and logically follow from such facts.
. . . The court’s ultimate duty is only to decide
whether, in light of the evidence, the [agency] has acted
unreasonably, arbitrarily, illegally, or in abuse of [its]
discretion.’’ (Internal quotation marks omitted.) Recycl-
ing, Inc. v. Commissioner of Energy & Environmental
Protection, 179 Conn. App. 127, 139–40, 178 A.3d
1043 (2018).
    Moreover, ‘‘[a]lthough the interpretation of statutes
is ultimately a question of law . . . it is the well estab-
lished practice of [our appellate courts] to accord great
deference to the construction given [a] statute by the
agency charged with its enforcement. . . . It is also
well established that courts should accord deference
to an agency’s formally articulated interpretation of a
statute when that interpretation is both time-tested and
reasonable.’’ (Citation omitted; internal quotation
marks omitted.) FairwindCT, Inc. v. Connecticut Sit-
ing Council, 313 Conn. 669, 678–79, 99 A.3d 1038 (2014).
Our Supreme Court has determined, however, that the
‘‘traditional deference accorded to an agency’s interpre-
tation of a statutory term is unwarranted when the
construction of a statute . . . has not previously been
subjected to judicial scrutiny [or to] . . . a governmen-
tal agency’s time-tested interpretation . . . .’’ (Internal
quotation marks omitted.) Longley v. State Employees
Retirement Commission, 284 Conn. 149, 163, 931 A.2d
890 (2007).
   Although our Supreme Court has determined that
deference is not ordinarily afforded to an agency’s statu-
tory interpretation that has not previously been time-
tested or subject to judicial scrutiny, the court also has
articulated an exception to that rule. See Wheelabrator
Lisbon, Inc. v. Dept. of Public Utility Control, 283 Conn.
672, 692, 931 A.2d 159 (2007). In Wheelabrator Lisbon,
Inc., the Department of Public Utility Control, the
authority’s predecessor, was required ‘‘to determine
whether the word ‘electricity’ as used in [General Stat-
utes] § 16-243a (c) . . . included the renewable energy
component of the electricity and whether the purchase
of such electricity at the avoided cost rate entitled the
utility [company] to credit for the purchase of renew-
able energy for purposes of [General Statutes] § 16-
245a.’’ Id., 691–92. The court stated that ‘‘[b]ecause this
is a question of statutory interpretation that previously
has not been subject to judicial scrutiny, our review
ordinarily would be plenary.’’ Id., 692. The court con-
cluded, however, that ‘‘in light of the extremely complex
and technical regulatory and policy considerations
implicated by this issue, we are not persuaded that we
may substitute our judgment for that of the department.
Rather, this is precisely the type of situation that calls
for agency expertise.’’ (Emphasis added; internal quota-
tion marks omitted.) Id. As such, the court limited its
review ‘‘to a determination of whether the department
[or agency] gave reasoned consideration to all of the
relevant factors or whether it abused its discretion.’’ Id.
  In the present case, the authority was to determine
whether the plaintiffs’ method of billing each tenant for
a share of the electricity cost to operate the HVAC
system at PMC’s apartment building constituted electric
submetering. The statute authorizing the authority to
regulate submetering is General Statutes (Rev. to 2011)
§ 16-19ff, as amended by Public Acts 2011, No. 11-80,
§ 1,5 which does not provide a definition for submeter-
ing. As such, the authority relied on a definition of
submetering used in its Decision and Order, Depart-
ment of Public Utility Control, ‘‘DPUC Investigation
into Sub-Metering Natural Gas,’’ Docket No. 06-09-01
(October 17, 2007). That decision defined a ‘‘sub-meter’’
in a natural gas context as ‘‘any type of meter or meter-
ing device that is placed either in the gas stream, on
an appliance, or control system located downstream of
the [local distribution company’s] meter, which is used
to bill individual unit owners or apartment tenants for
their usage or estimated usage of a portion of the [local
distribution company] customer’s total bill.’’ Id., p. 8.
In the present case, the authority applied this definition
in determining that the plaintiffs had engaged in unau-
thorized submetering, and the trial court concluded
that, due to the technical nature of the definition, it
was appropriate to grant deference to the authority’s
use of it.
   As the record reflects, the determination of what
constitutes submetering is a complex and technical reg-
ulatory issue that calls for specialized expertise and
policy considerations. Moreover, not only does § 16-
19ff authorize the authority to regulate submetering,
but the authority’s utility commissioners also possess
the required expertise needed to regulate submetering
in this context. See General Statutes § 16-2 (e).6 Accord-
ingly, we conclude that the trial court properly deferred
to the authority’s definition of submetering.
                             II
   The plaintiffs next claim that the trial court erred in
concluding that the HVAC system in this case fell within
the authority’s definition of submetering. Specifically,
the plaintiffs argue that the definition of submetering
in the authority’s previous decision is applicable only
to submetering in the context of public gas utilities and,
thus, is not applicable to electric submetering.
   Because we concluded in part I of this opinion that
the trial court appropriately deferred to the authority’s
definition of submetering, our review is limited ‘‘to a
determination of whether [the authority] gave reasoned
consideration to all of the relevant factors or whether
it abused its discretion’’ in concluding that the plaintiffs
had engaged in unauthorized submetering. Wheela-
brator Lisbon, Inc. v. Dept. of Public Utility Control,
supra, 283 Conn. 692.
  In analyzing whether submetering had occurred at
the apartment building, the authority first focused on
the situation at the building, including the building lay-
out, the HVAC system and billing related thereto, and
the electric service provided to tenants. The authority
then applied § 16-19ff and correctly concluded that PMC
was not authorized to submeter electricity to the build-
ing without the authority’s express approval. Finally,
the authority analyzed the activity alleged as submeter-
ing and applied the definition of submetering as laid
out in its previous decision regarding natural gas. Spe-
cifically, the authority found that ‘‘PMC indicated that
it used the measurements of the refrigerant or heating
medium to allocate one of the costs of supplying HVAC
to the [building], by measuring the electricity used by
the rooftop compressor to each tenant and billing the
proportionate cost to each apartment.’’ (Emphasis
added.) Moreover, the authority found that ‘‘in addition
to the two third-party electricity meters and a computer
program that determines the electricity used by the
seven outdoor units, there are other mechanical devices
installed in each tenant’s [rental] space that make mea-
surement of thermal use and [allocate] the electricity
costs for the seven outdoor units to each apartment in
proportion to its thermal use.’’ (Emphasis added.) The
authority concluded that PMC’s use of its ‘‘HVAC system
and the equipment’s sensing devices, its use of two
third-party wattmeters, and the allocation and billing
of the outdoors units’ [kilowatt-hour] use, constitute[d]
submetering electricity use,’’ and that this, in addition
to EMS’s billing of tenants for that use, had not been
approved by the agency.
  We agree with the trial court and conclude that the
authority reasonably found through its reliance on its
previous decision that the plaintiffs had engaged in
unauthorized submetering. As did the trial court, we
conclude that the definition of submetering relied on
by the authority ‘‘does not focus on the form of energy
that the tenants receive,’’ but, ‘‘[r]ather, it focuses on
the type of energy billed.’’
   The plaintiffs additionally argue that electric submet-
ering is defined as ‘‘the secondary furnishing of electric
service by a customer to a third party.’’ In particular,
the plaintiffs cite to §§ 16-11-1007 and 16-11-2388 of the
Regulations of Connecticut State Agencies, in addition
to the authority’s decisions referencing electric submet-
ering,9 in arguing that the fundamental component of
electric submetering is the furnishing of electric service
by a nonutility such that electric service is the physical
delivery through wires of electricity to the end user
for consumption, combined with measuring the electric
consumption with an electric submeter. We are unper-
suaded.
  As previously discussed, the trial court appropriately
deferred to the authority’s definition of submetering
and its decision applying § 16-19ff. See part I of this
opinion. In addition, not only do §§ 16-11-100 and 16-
11-238 of the Regulations of Connecticut State Agencies
not provide for a definition of submetering, but § 16-
11-238 is also only relevant to meter testing and record
keeping by submetering customers. The authority’s
decisions cited by the plaintiffs also do not condition
electric submetering by an entity on the furnishing of
electric service by such entity. Rather, Decision and
Order, Department of Public Utility Control, ‘‘Request
of Brewers Pilots Point Marine et al., for a Declaratory
Ruling Regarding Electric Service, Submetering and
Rates Applicable to Boat Docks at Marinas,’’ Docket
No. 01-08-11 (November 27, 2002) p. 3, merely states
that, subject to the authority’s approval, marinas may
submeter ‘‘provided they supply electric service at the
same quality as that provided by the local utility.’’ More-
over, the definition of submetering, as laid out in Interim
Decision and Order, Public Utilities Regulatory Author-
ity, ‘‘PURA Generic Investigation of Electric Submeter-
ing,’’ Docket No. 13-01-26 (August 6, 2014) p. 5, does
not include language conditioning submetering on the
provision of electric service but, rather, appears similar
to the definition employed by the authority in its deci-
sion in the present case: ‘‘measurement and billing of
the consumption of a utility’s electric service to an
individual end-use customer . . . .’’ The plaintiffs
acknowledge that ‘‘the system’s computer software is
used to determine the amount of refrigerant used by
each unit.’’ The plaintiffs also concede in their brief
that ‘‘[this] software . . . uses the refrigerant meter
results to allocate the cost of the electricity used by
the outdoor compressor units across all the connected
indoor units. The system, thus, meters the electricity
used by the HVAC compressors and bills this usage to
the sixty-five residential apartments . . . in proportion
to each tenant’s HVAC thermal use.’’ Finally, it is undis-
puted that the plaintiffs did not obtain the authority’s
approval prior to engaging in submetering.
   On the basis of the foregoing, we conclude that the
trial court did not err in affirming the authority’s deter-
mination that the plaintiffs’ computation of the amount
of electricity used by each residential unit in using the
HVAC system, and the subsequent billing in proportion
to each rental space’s use, constituted unauthorized
submetering of electricity.
      The judgment is affirmed.
      In this opinion the other judges concurred.
  1
     The other defendants in this appeal are the state Office of Consumer
Counsel, The United Illuminating Company, and The Connecticut Light and
Power Company. In addition, the Office of the Attorney General, Greater
Hartford Legal Aid, Inc., and Mitsubishi Electric Cooling & Heating, a division
of Mitsubishi Electric & Electronics USA, Inc., were also named as defen-
dants but are not parties to this appeal. To avoid confusion, we refer to
each of the plaintiffs and the defendants by name where necessary.
   2
     The definition of electrical utility submetering is at the heart of this
appeal. Indeed, our research reveals that our General Statutes, regulations,
and case law have not defined submetering in this context. New York case
law has defined submetering in the electric utility context as when ‘‘[t]he
owner or operator of a building buys current from a public utility at the
wholesale rate and resells it through separate meters to individual tenants,
usually at a retail rate.’’ Campo Corp. v. Feinberg, 279 A.D. 302, 303,
110 N.Y.S.2d 250, aff’d, 303 N.Y. 995, 106 N.E.2d 70 (1952). This definition
is consistent with how the authority has defined the term in connection
with the submetering of natural gas, as discussed in part I of this opinion.
   3
     The plaintiffs note in their brief before this court that, although the trial
court used the acronym HVAC in describing the system, the Mitsubishi
system does not have a ventilation component.
   4
     Additionally, although the court concluded that the authority lacked the
statutory power to order rebates in this case, it ordered the parties to arrange
for the return, with interest, of tenant submetering funds to the tenants,
which had been escrowed during the pendency of the appeal to the trial
court. The plaintiffs have not challenged this order on appeal.
   5
     General Statutes (Rev. to 2011) § 16-19ff, as amended by Public Acts
2011, No. 11-80, § 1, provides: ‘‘(a) Notwithstanding any provisions of the
general statutes to the contrary, each electric company or electric distribu-
tion company shall allow the installation of submeters at a recreational
campground, individual slips at marinas for metering the electric use by
individual boat owners or in any other location as approved by the authority
and shall provide electricity to such campground at a rate no greater than
the residential rate for the service territory in which the campground or
marina is located, provided nothing in this section shall permit the installa-
tion of submeters for nonresidential use including, but not limited to, general
outdoor lighting marina operations, repair facilities, restaurants or other
retail recreational facilities. Service to nonresidential facilities shall be sepa-
rately metered and billed at the appropriate rate.
   ‘‘(b) The Public Utilities Regulatory Authority shall adopt regulations, in
accordance with the provisions of chapter 54, to carry out the purposes of
this section. Such regulations shall: (1) Require a submetered customer to
pay only his portion of the energy consumed, which cost shall not exceed
the amount paid by the owner of the main meter for such energy; (2) establish
standards for the safe and proper installation of submeters; (3) require that
the ultimate services delivered to a submetered customer are consistent
with any service requirements imposed upon the company; (4) establish
standards for the locations of submeters and may adopt any other provisions
the authority deems necessary to carry out the purposes of this section and
section 16-19ee.’’
   6
     General Statutes § 16-2 (e) provides in relevant part that ‘‘any newly
appointed utility commissioner of the authority shall have education or
training and three or more years of experience in one or more of the following
fields: Economics, engineering, law, accounting, finance, utility regulation,
public or government administration, consumer advocacy, business manage-
ment, and environmental management. . . .’’
   7
     Section 16-11-100 of the Regulations of Connecticut State Agencies pro-
vides in relevant part: ‘‘(f) Submetering Customer means any recreational
campground, or other facility as approved by the Department [of Public
Utility Control], whose electric service is furnished by an electric company
and who is authorized to submeter the service to other parties within
such facility;
   ‘‘(g) Submetered Party means any person, partnership, firm, company,
corporation or organization whose electric service is furnished by a submet-
ering customer of an electric company . . . .’’ (Internal quotation marks
omitted.)
   8
     Sections 16-11-238 of the Regulations of Connecticut State Agencies
provides: ‘‘(a) All watt-hour meters installed and owned by a submetering
customer shall be tested periodically in conformity with the most recent
ANSI Code for Electricity Metering. Meter test data shall be furnished to
the Department [of Public Utility Control] upon request.
   ‘‘(b) Meter records shall be kept by the submetering customer and shall
include the identification of each meter, the date and place of its latest
installation or removal and the date and results of the most current meter
test. These records shall be maintained for the previous two years.
   ‘‘(c) Every submetering customer shall provide to the Department, upon
request data or records as may be deemed necessary by the Department
related to the submetering and furnishing of electric service to submet-
ered parties.’’
   9
     The plaintiffs cite to Interim Decision and Order, Public Utilities Regula-
tory Authority, ‘‘PURA Generic Investigation of Electric Submetering,’’
Docket No. 13-01-26 (August 6, 2014) p. 5, and Decision and Order, Depart-
ment of Public Utility Control, ‘‘Request of Brewers Pilots Point Marine et
al., for a Declaratory Ruling Regarding Electric Service, Submetering and
Rates Applicable to Boat Docks at Marinas,’’ Docket No. 01-08-11 (November
27, 2002) p. 3.